North Wales Training and Enterprise Council Limited (t/a Celtec) (Appellants) v Astley and others (Respondents) (formerly Celtec Limited (Appellants) v Astley and others (Respondents))

on appeal from [2002] EWCA Civ 1035

OPINIONS

OF THE LORDS OF APPEAL

FOR JUDGMENT IN THE CAUSE

North Wales Training and Enterprise Council Limited (t/a Celtec) (Appellants) v. Astley and others (Respondents) (formerly Celtec Limited (Appellants) v. Astley and others (Respondents))

Appellate Committee

Lord Bingham of Cornhill

Counsel

Appellants:	Respondents:
John Bowers QC	Gavin Millar QC
Jeremy Lewis	Thomas Linden

(Instructed by Mace & Jones )

(Instructed by Russell Jones & Walker)

Hearing date: 4 April 2006

ON
WEDNESDAY 21 JUNE 2006

HOUSE OF LORDS

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE

North Wales Training and Enterprise Council Limited (t/a Celtec) (Appellants) v. Astley and others (Respondents) (formerly Celtec

Limited (Appellants) v. Astley and others (Respondents))

[2006] UKHL 29

LORD BINGHAM OF CORNHILL

My Lords,

1. I have had the advantage of reading in draft the opinions of my noble and learned friends Lord Hope of Craighead, Lord Rodger of Earlsferry and Lord Mance. I am greatly indebted to them for their summary of the facts, materials and decisions relevant to this appeal, which I need not attempt to repeat. I shall for convenience refer throughout to Celtec, since nothing turns on the transfer from Newtec to it.

2. If an employer transferred his business undertaking to another party, the position at common law of an employee who worked for the first employer before the transfer and for the new employer after it was in principle clear. His previous contract of employment was not varied, because the second contract was made between different parties. But the first contract was the subject of an express or implied novation, involving the termination of the first contract and its replacement by a new contract. This was a readily intelligible and rational analysis. But it could work disadvantageously to the employee in any situation where his rights depended on showing that his employment had been continuous for a given period, since a novation necessarily involved a discontinuity. It was this disadvantage which the legislation now under consideration was intended to obviate. The benign intent of the legislation is not in question. But its effect is, inevitably, to introduce a fictional element into this tripartite relationship, since (where the legislative conditions are satisfied) the employee is treated as having been employed by the new employer all along and ex hypothesi such is not the case. The European Court of Justice [2005] IRLR 647 acknowledges this in para 43 of its judgment on the reference in this case, when it rules that

“… the workers assigned to the undertaking transferred are deemed to be handed over, on that date, from the transferor to the transferee, regardless of what has been agreed between the parties to the transfer process in that respect.”

In legal parlance, a matter is only deemed to be the case when it is not, or may not, in fact be so, or would not or might not be thought to be so if not deemed to be so. The complexity of this case, I think, derives from the fiction which underlies it.

3. Certain very important questions, which were the subject of discussion and argument below, have effectively ceased to be controversial. The employment tribunal began, in a logical way, by seeking to define the undertaking whose transfer was in issue. Its answer (in para 11 of its reasons) was clear:

“the management of the government-funded post-16 vocational training and enterprise activities in England and Wales together with the information systems and database, some staff and some premises. That we think is a recognisable and definable economic entity.”

It went on (para 12) to observe that the undertaking in question was a “labour intensive” undertaking, and therefore the movement of staff from the Department to Celtec was an important defining part of the undertaking and transfer. The Employment Appeal Tribunal [2001] IRLR 788 did not understand Celtec to attack this description (para 46 of its judgment) and thought the tribunal’s description could not be faulted. The Court of Appeal [2002] ICR 1289, para 7 took the same view.

4. The employment tribunal then asked (para 13) whether the individual respondents were assigned to the undertaking at the time of the transfer commencing. In its view they clearly were. The Court of Appeal considered (para 30) that the tribunal had been fully entitled to conclude that the management skills of such of the Department’s employees as were happy to continue in work under the supervision of Celtec formed part of the undertaking which was being transferred.

5. It was of course necessary for the employment tribunal to decide whether the undertaking it had defined had been transferred. It concluded (paras 11-12) that it had. In the EAT (paras 3 and 43) Celtec accepted that there had been a transfer of an undertaking. In the Court of Appeal (para 7(ii)) it was effectively agreed that the undertaking had been transferred.

6. What was and remains the divisive question is when the transfer occurred. The employment tribunal (para 20) assumed that September 1990 when Celtec commenced business was the date on which the transfer commenced, but thought transfer was a long process “starting some time in 1990 as affects these applicants and ending on a national basis some time in 1996”. In the EAT the majority view (para 99) was that the tribunal, rightly directing itself, would have concluded that the transfer was probably completed in about September 1990 and certainly long before 1993. The Court of Appeal (para 32) accepted the tribunal’s test and its conclusion. In the statement of facts and issues agreed in the House (para 12) it was accepted that Celtec became operational in September 1990. In summarising the essential facts agreed between the parties in its reference to the ECJ the House recorded in para (13) that the respondent employees were “full-time employees whose work was dedicated to the undertaking and they were therefore assigned to the undertaking prior to the transfer”, and the summary continued in para (14):

“On the day in September 1990 when NEWTEC commenced operations there was no difference between the work they did and the work they had done as civil servants the day before. They worked from the same desks, in the same building. The programmes which the Government had guaranteed to provide for prospective, and current, trainees had to be continued. The careers of young people depended on these and there could be no interruption of activities. The Government had a responsibility to the trainees which could not be interrupted. A seamless transition was important even if the economic structure was to change with time.”

In its written case on this appeal Celtec affirms that Celtec “commenced operations in September 1990 when it took over the premises, information systems and databases of the DoE area offices”.

7. As the opinions of my noble and learned friends make clear, the arguments of the parties were advanced below on a basis somewhat different from that which they now put forward. Celtec said that the transfer was in September 1990; but the respondent employees were not (in effect) part of what was then transferred; so they cannot gain the benefit of the legislation. The respondent employees contended that the transfer took place over a period, and each of the respondent employees was part of what was transferred from time to time, so that they could claim the benefit of the legislation. The ECJ accepted neither of these approaches, ruling (if I understand the judgment correctly) that transfer must take place on a single date on which responsibility as employer for carrying on the business transferred moves from the transferor to the transferee and that this date cannot be postponed to another date at the will of either. It seems to me to follow inexorably that the transfer took place in September 1990 and the later dates of transfer agreed with the individual respondent employees are to be disregarded.

8. In agreement with my noble and learned friend Lord Hope I conceive it to be the duty of this House to give effect to the law as declared in Luxembourg. But I agree, of course, that if it would unfairly prejudice Celtec to do so without giving it an opportunity to adduce further evidence or argument that course would have to be followed, however reluctantly after the lapse of so many years. In this instance, I agree with my noble and learned friend that such a course need not be followed, for two main reasons:

(1) Celtec have long accepted September 1990 as the date of effective transfer. This is a matter partly of fact, partly of law. But the factual element is very prominent. The facts cannot be changed because an unforeseen legal argument makes them damaging to Celtec’s case.

(2) It is plain from the findings made below that Celtec set up in business in September 1990 and the employees seconded from the Department were the core of the business: without them there could have been no effective transfer. It is scarcely an exaggeration to say that they were the business.

I readily accept that the respondent employees did not think that they became employees of Celtec in September 1990, and it was not intended that they should become employees then. There are other potential difficulties and problems in concluding that they did. But these spring from the fiction to which I alluded at the outset, and from the Government’s decision to structure the transfer in this unusual way.

9. For the reasons given by Lord Hope, and these brief reasons of

my own, I would dismiss this appeal and invite written submissions on
costs within 21 days.

LORD HOPE OF CRAIGHEAD

My Lords,

10. This case arises out of a dispute between the appellant, North Wales Training and Enterprise Ltd, trading as Celtec (“Celtec”), and a group of its employees about the length of their continuous employment with the company for the purpose of establishing redundancy entitlements and other accrued rights. The dispute relates to the interpretation and application of article 3(1) of Council Directive 77/187/EEC on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses (“the Acquired Rights Directive”), which has now been consolidated with subsequent amendments and repealed by Council Directive 2001/23/EC.

11. The respondents, John Astley, Julie Owens and Deborah Lynn Hawkes, were all employed by the Department of Employment (“the DoE”) as civil servants before they took up direct employment with a predecessor of Celtec following the transfer of part of the DoE’s undertaking to the predecessor as part of a privatisation initiative. They contend that their periods of continuous employment with Celtec and its predecessor should include their periods of service with the civil service prior to the date when they entered into the direct employment of the predecessor. Celtec contend that the respondents’ periods of service with the civil service should be excluded from the computation. The respondents raised proceedings for determination of this issue in the employment tribunal as representatives of the group of employees to which they belong. The issue affects a large number of other civil servants who transferred from the civil service to other employers in the private sector during the early 1990s in similar circumstances.

Background

12. Until 1989 the DoE managed the training of young people and unemployed adults in England and Wales through about 60 local area offices. These area offices were all staffed by civil servants. In December 1988 the government published a White Paper entitled “Employment For the 1990s” (Cm 540) which set out an agenda for action for the next decade. Among the changes which it envisaged was the transfer of part of the DoE’s vocational training responsibilities to bodies to be known as training and enterprise councils (“TECs”). The TECs were to plan and deliver training and to promote and support the development of small businesses and self-employment within their area under contracts with the government. They were to take over all the training work that had previously been carried on in the area offices. These proposals were put into effect, and 82 TECs were set up. By November 1991 all the TECs in England and Wales had become operational.

13. It was understood from the outset between the TECs and the DoE, on whom the TECs were dependent for the funding of their operations, that the TECs were to be entitled to recruit their own staff. Most of them did so from the date they became operational. But they were new organisations, and the work to be undertaken required an understanding of the government policy that the contracts were designed to deliver. So the DoE, with the agreement of the TECs, issued an invitation to staff in its area offices to volunteer for secondment to the newly created TECs. They were invited to do so initially for a period of three years. Those who wished to volunteer were told that during the secondment period they would continue to be civil servants employed by the DoE. As such, they would retain their normal pay and terms and conditions of employment as embodied in the department’s personnel handbook. They were also told that they could, if they wished, accept additional payments and benefits offered to them by the TEC, but that the right to any such payments or benefits would cease at the end of their secondment. They would not form part of their terms and conditions of employment as civil servants.

14. The TECs welcomed the contribution made by the seconded staff. But they made it clear that, as private companies, they wanted to employ all their own staff on terms and conditions determined by them. In 1991 discussions took place with the TECs, seconded staff and the relevant trade unions about future staffing arrangements. All seconded staff were informed that they would be free to choose any offer of employment that a TEC might make or, if they preferred, to return to the DoE or the wider civil service for redeployment. In December 1991 the Secretary of State announced that secondments would be phased out by the end of each TEC’s fifth year of operation. The DoE agreed with the TECs that it would reimburse them should a court or tribunal decide, in the case of a dismissal of a former civil servant, that his or her period of employment with the TEC must be deemed to have been continuous with that in the civil service for the purpose of calculating that person’s rights on redundancy.

15. The area offices of the DoE in Wrexham and Bangor were taken over by the North East Wales TEC (“Newtec”). It had a board of directors drawn from local businessmen. It became operational in September 1990. On 1 April 1997 Newtec and the TEC for North West Wales, called Targed, were merged by the creation of a new body called Celtec. 43 civil servants were initially seconded to Newtec. When the secondments ended 18 of them resigned from the civil service and took up employment with Newtec. 10 chose to remain as civil servants, and they were redeployed. 13 resigned from the civil service, and 2 left the civil service for other reasons. Of the 40 civil servants seconded to Targed, 10 resigned to take up employment with the TEC, 9 retired and the rest left for other reasons.

16. Mr Astley, Ms Hawkes and Ms Owens entered the civil service on 31 August 1973, 4 November 1985 and 21 April 1986 respectively. As civil servants they were responsible for vocational training in North Wales. Their work was entirely devoted to that service prior to its transfer to Newtec. They were all seconded to Newtec when it commenced operations on 17 September 1990. There was no difference between the work they did before and after the date of their secondment. They worked from the same desks in the same building. This arrangement ensured that there was a seamless transition from the old system to the new in the provision of the programmes which the government had undertaken to provide for the trainees. Towards the end of the period of their secondment they resigned from civil service to become direct employees of the TEC. Ms Hawkes and Ms Owens resigned from the civil service on 30 June 1993. Mr Astley resigned on 31 August 1993. Ms Hawkes’ and Ms Owens’ contract of employment with the TEC commenced on 1 July 1993. Mr Astley’s contract commenced on 1 September 1993. There was no gap in time between their resignations from the civil service and their employment by Newtec.

17. In 1998 Ms Hawkes was dismissed by Celtec on the ground of redundancy. The DoE took the view that there was no continuity of service between the periods of her employme nt with the civil service and the TEC, as she had chosen freely to resign from the civil service to take up employment with an employer in the private sector. Mr Astley and Ms Owens feared that they too were at risk of being dismissed for redundancy. All three sought a determination by the employment tribunal as to the length of the period of continuous employment on which they were able to rely. Their argument was that it should include their periods of employment with the civil service as well as those with Newtec and Celtec.

The legislation

18. The respondents all rely on the provisions of the Acquired Rights Directive and section 218 of the Employment Rights Act 1996. Mr Astley also relies on regulation 5 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (SI 1981/1794) (“TUPE”), as amended by section 33 of the Trade Union Reform and Employment Rights Act 1993 with effect from 30 August 1993. As from that date, which was the day before Mr Astley resigned from the civil service, the definition of the expression “undertaking” in regulation 2(1) of TUPE which had previously been restricted to commercial organisations was amended to include any trade or business. It is common ground however that Celtec fails to be treated as an emanation of the state for present purposes and that Mr Astley’s primary claim is under the Directive.

19. The preamble to the Directive stated that it was adopted because it was “necessary to provide for the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded.” Article 1(1) provided:

“This Directive shall apply to the transfer of an undertaking, business or part of a business to another employer as a result of a legal transfer or merger.”

Article 2 provided:

“For the purposes of this Directive—

(a)	‘transferor’ means any natural or legal person who, by reason of a transfer within the meaning of article 1(1), ceases to be the employer in respect of the undertaking, business or part of the business;
(b)	‘transferee’ means any natural or legal person who, by reason of a transfer within the meaning of article 1(1), becomes the employer in respect of the undertaking, business or part of the business.”

20.       Article 3(1) of the Directive was in these terms:

“The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer within the meaning of article 1(1) shall, by reason of such transfer, be transferred to the transferee.

Member States may provide that, after the date of transfer within the meaning of article 1(1) and in addition to the transferee, the transferor shall continue to be liable in respect of obligations which arose from a contract of employment or an employment relationship.”

21. The Directive was transposed into domestic law by TUPE. Regulation 5(1) of TUPE, as amended by section 33 of the 1993 Act, provides:

“Except where objection is made under paragraph 4A below, a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee.”

22. Part XIV of the Employment Rights Act 1996 contains the interpretation provisions for the purposes of the statutory employment rights conferred by the Act. Chapter 1 of that Part deals with the concept of continuous employment, which is entirely a creature of statute. Section 210(1) states that references in any provision of the Act to a period of continuous employment are to a period computed in accordance with that chapter. Section 218 deals with how that period is to be computed in the event of a change of employer. Subsections (1) and (2) of that section are in these terms:

“(1) Subject to the provisions of this section, this Chapter
relates only to employment by the one employer.
(2) If a trade or business, or an undertaking (whether or
not established by or under an Act), is transferred from

one person to another –

(a)	the period of employment of an employee in the trade or business or undertaking at the time of the transfer counts as a period of employment with the transferee, and
(b)	the transfer does not break the continuity of the period of employment.”

The proceedings

23. On 22 December 1999 an employment tribunal sitting at Abergele determined that all three respondents had continuous employment from the start of their employment with the civil service under section 218 of the Employment Rights Act 1996 and the Directive, and that Mr Astley also had continuity of employment by virtue of article 5(1) of TUPE. It found that there had been a TUPE transfer commencing in September 1990 when NEWTEC started business. It also found that the transfer took place over a number of years until 1996 when the last of the secondments to TECs from the civil service came to an end. In para 20 of its determination the tribunal said:

“Our analysis is that each time a seconded employee became directly employed by the TEC there was another transaction and immediately before that transaction (‘any transaction’) that employee was employed by the transferor, ie by the civil service and therefore that

employee’s rights passed over to the transferee which was the TEC. We see no reason in principle why such a very long period should not be found to be a period of the transfer when that was plain from the outset.”

24. On 5 October 2001 the Employment Appeal Tribunal, by a majority, allowed an appeal by Celtec against the employment tribunal’s determination: [2001] IRLR 788. It had been accepted for the purposes of that appeal that the tribunal’s conclusion that there was a transfer of an undertaking was not open to challenge. The appeal was directed to the question when the transfer took place. It was held that the test for determining the time at which a transfer is completed was when the new employer was in actual occupation and control of the old business. On that basis the tribunal ought to have concluded that the transfer was probably completed in about September 1990 and certainly long before 1993. It followed that the respondents remained employed by the civil service after the transfer, and their continuity of employment was not preserved when they accepted employment with Newtec.

25. On 19 July 2002 the Court of Appeal (Schiemann and Laws LJJ, Jackson J) allowed an appeal by the respondents against the determination of the Employment Appeal Tribunal: [2002] EWCA Civ 1035; [2002] ICR 1289. Delivering the opinion of the court, Schiemann LJ said that the employment tribunal was entitled to hold that the management skills of the seconded employees formed part of the undertaking that was being transferred: para 30. Addressing then the question whether the wording of the Directive implied that the transfer of the undertaking must take place at a moment in time, he said that the Directive was sufficiently wide in its terms to embrace a transfer of a business which took place over a period: para 31. In para 32 he said:

“Once one accepts that a business can be transferred over a period of time, the establishment of the period of time during which the transfer takes place is a task for the tribunal of fact. We see no legal error in what was done by the employment tribunal.”

26. Celtec appealed against that decision to your Lordships’ House. The parties were agreed that the respondents remained employees of the civil service during the period of their secondments. They were also agreed that the issue in the appeal was whether the employment tribunal erred in law in finding that the relevant transfer took place over a long

period of time. They submitted that a reference should be made to the European Court of Justice under article 234 EC for a preliminary ruling on this point. On 10 November 2003 the House referred the following questions to the European Court of Justice:

“1. Are the words ‘the transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer in article 3(1) of Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses to be interpreted as meaning that there is a particular point of time at which the transfer of the undertaking or part thereof is deemed to have been completed and the transfer of rights and obligations pursuant to article 3(1) is effected?

2. If the answer to question 1 is ‘yes’, how is that
particular point of time to be identified?
3. If the answer to question 1 is ‘no’, how are the words
‘on the date of a transfer’ in article 3(1) to be interpreted?”

27. Celtec’s contention before the Court of Justice was that the relevant words in article 3(1) of the Directive should be interpreted as meaning that there was a particular point of time at which a transfer of an undertaking or part thereof was deemed to have been complete and the rights and obligations of the transferor arising from a contract of employment existing on the date of the transfer were transferred to the transferee. They submitted that any later movement of employees from the transferor to the transferee was not within the scope of the Directive. The respondents’ contention was that, while it was necessary to identify a date on or by which a transfer of an undertaking had been completed, this did not preclude the national court from finding that the transfer took place in stages, or over a period of time, or was effected by a series of transactions. They submitted that employees who remained employed in the undertaking during the process of transfer, or who were employed at the time of the stages or transactions by which the transfer was effected and who did not resign from the transferor’s employment voluntarily or otherwise object to the transfer, are entitled to the protection of the Directive.

28. On 26 May 2005 the Court of Justice made the following rulings (Case C-478/03) [2005] IRLR 647:

“1. Article 3(1) of Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses must be interpreted as meaning that the date of a transfer within the meaning of that provision is the date on which responsibility as employer for carrying on the business of the unit transferred moves from the transferor to the transferee. That date is a particular point in time which cannot be postponed to another date at the will of the transferor or transferee.

2. For the purposes of applying that provision, contracts of employment or employment relationships existing on the date of the transfer within the meaning stated in para 1 of the operative part between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over, on that date, from the transferor to the transferee, regardless of what has been agreed between the parties in that respect.”

The issues before the House

29. One might have expected the rulings by the European Court of Justice as to whether the transfer took place over period of time to have resolved the issue between the parties. The case has been argued hitherto on the assumption that the respondents remained civil servants during their secondment to Newtec. A statement to this effect appears in para 7 of the Statement of Facts and Issues. Celtec submit that in the light of the ECJ’s ruling as to the date of the transfer the appeal should be allowed and that it be determined that the respondents’ periods of continuous service began when, after resigning from the civil service, they took up direct employment with Newtec.

30. The respondents submit however that the only issue that has to be determined is whether, in the light of the ECJ’s judgment, their continuity of employment was broken in 1993 when they resigned from the civil service and accepted an offer of employment with Newtec. They contend that, assuming now that the date of the transfer was in September 1990 and not over a period as they had previously submitted, their accrued rights were protected by the Directive. This is because their contracts of employment are deemed to have been handed over to Newtec at the date of the transfer. This, they say, is the inevitable consequence of article 3 of the Directive as interpreted by the ECJ.

31. Mr Bowers QC for Celtec pointed out that the argument which the respondents were now seeking to advance is a new argument. The premise on which the case had been sent for a preliminary ruling was that the only question between the parties was whether there had to be a single date for the transfer. It had been assumed that the answer to that question would determine the case. He submitted that the respondents ought not to be permitted to raise this new point at this stage. In any event, the effect of the ECJ’s ruling was that the employment tribunal had been proceeding on a false premise when it assumed that the transfer could take place over a long period. As a result the basis on which the respondents chose to remain with the transferor after the date of the transfer was not before the tribunal for its determination. So it had not been asked to consider whether it was by their own decision that the respondents agreed to be seconded to Newtec while remaining as employees of the DoE. If this question was to be considered now it would have to be remitted to the tribunal for its determination.

32. There are then two preliminary questions which your Lordships must consider before applying the rulings by the ECJ to the facts of this case. These are whether the respondents should be permitted to argue that the effect of the ruling by the ECJ is that the continuity of their employment was not broken in 1993 despite the fact that the transfer of the undertaking to Newtec must now be held to have taken place on a single date in September 1990 and, if so, whether that issue can be determined by the House on the information that is available or must be remitted to the tribunal for its determination.

The ECJ’s judgment

33. There is no doubt that the ECJ’s ruling went further than was strictly necessary for a determination of the question whether the transfer of the undertaking took place on a single date or over a period. It went out its way to make it plain, in its answer in para 1 to the questions on which a preliminary ruling had been sought, that that date was a particular point of time which could not be postponed to another date at the will of the transferor or transferee. And it went further still when it ruled in para 2, drawing on its previous case law, that contracts of employment existing on the date of the transfer between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over on that date from the transferor to the transferee regardless of what has been agreed between the parties in that respect.

34. I take this to be a clear indication that, notwithstanding the court’s ruling that the transfer took place on a particular point of time and not over a period, it was open to the national court to hold that the respondents’ continuity of employment was not broken when they accepted employment with Newtec in 1993. This feature of the decision makes it necessary to examine the court’s reasoning more closely.

35. The reasoning on which the first sentence of the ruling in paragraph 1 was based appears in paras 26 to 36 of the ECJ’s judgment. In para 26 the court referred to what it has repeatedly held to be the purpose of the Directive in, for example, d’Urso v Ercole Marelli Elettromeccanica Generale SpA (Case C-362/89) [1992] ECR I-4105, para 9. It is intended to safeguard the rights of workers in the event of a change of employer by making it possible for them to continue to work for the new employer on the same conditions as those agreed with the transferor. Its purpose is to ensure, as far as possible, that the contract of employment continues unchanged with the transferee, in order to prevent the workers concerned from being placed in a less favourable position solely as a result of the transfer. Accordingly article 3(1) of the Directive covers the transferor’s rights and obligations arising from a contract of employment existing on the date of the transfer and entered into with employees who, in order to carry out their duties, were assigned to the undertaking transferred: para 28. In para 29 the court said that the protection of article 3(1) covers workers assigned to the unit affected by the transfer whose contract of employment or employment relationship is in force on the “date of a transfer”, and not those who have ceased to be employed by the transferor on that date or those who were engaged by the transferee after that date.

36. In para 30 the court added this observation, the effect of which was to emphasise the close link that exists between establishing the date of the transfer and the protection of workers whose contracts of employment were in force at that date:

“Both the choice of the word ‘date’ and reasons of legal certainty indicate that, in the mind of the Community legislature, the workers entitled to benefit from the protection established by article 3(1) of Directive 77/187 must be identified at a particular point in the transfer process and not in relation to the length of time over which that process extends.”

The court concluded this part of its discussion in para 36 with these words:

“In those circumstances, the term ‘date of a transfer’ in article 3(1) of Directive 77/187 must be understood as referring to the date on which responsibility as employer for carrying on the business of the unit in question moves from the transferor to the transferee.”

37. The court then turned its attention to the issue which it saw as lying at the heart of the reference. This was the subject of the second sentence of its ruling in paragraph 1 and of its ruling in paragraph 2. It introduced this part of the discussion with these observations in paras 37 and 38:

“37 As the court has already held, implementation of the rights conferred on employees by article 3(1) of Directive 77/187 may not be made subject to the consent of either the transferor or the transferee nor to the consent of the employees’ representatives or the employees themselves, with the sole reservation, as regards the workers themselves, that, following a decision freely taken by them, they are at liberty, after the transfer, not to continue the employment relationship with the new employer (see Case 105/84 Danmols Inventar [1985] ECR 2639, para 16 and d’Urso, cited above, paragraph 11).

38 It follows that, with that sole reservation, contracts of employment or employment relationships existing on the date of the transfer referred to in article 3(1) of Directive 77/187 between the transferor and workers assigned to the undertaking transferred are automatically transferred from the transferor to the transferee by the mere fact of the transfer of the undertaking (see d’Urso, cited above, para 20, and Case C-305/94 Rotsart de Hertaing [1997] IRLR 127, para 18).”

38. In para 40 the court referred, in support of that interpretation, to the second subparagraph of article 3(1) which gives Member States the option of providing that, after the date of the transfer, the transferor is to be liable, alongside the transferee, for the obligations arising from a contract of employment or employment relationship. It said that this

rule implies that in any event those obligations are transferred to the transferee on the date of the transfer. In para 42 it added that to allow the transferor or transferee the possibility of choosing the date from which the contract of employment or employment relationship is transferred would amount to allowing employers to derogate, at least temporarily, from the provisions of the Directive. As those provisions are mandatory, it is not possible to derogate from them in a manner unfavourable to employees.

39. The court concluded this part of the discussion with these observations in para 43:

“For the same reasons as those stated in paragraphs 40 to 42 of this judgment, it must be held that, for the purposes of article 3(1) of Directive 77/187, contracts of employment or employment relationships existing on the date of the transfer referred to by that provision between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over, on that date, from the transferor to the transferee, regardless of what has been agreed between the parties to the transfer process in that respect.”

40. The court’s judgment shows that the respondents’ original position, that the continuity of employment which they sought was preserved because the transfer took place over a period of time, was based on a misunderstanding of the effect of article 3(1) of the Directive. But it also shows that there were two aspects to that misunderstanding. The first relates to the date of the transfer. The second relates to the question whether that date can be postponed at the will of the transferor or the transferee. The respondents’ argument had assumed that it was not possible for their contracts of employment to be transferred to the transferee during the period of their secondment. The court’s ruling that contracts of employment existing on the date of the transfer between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over from the transferor to the transferee on the date of the transfer casts an entirely different light on this argument.

Should leave be given to argue this point?

41. The question then is whether the respondents should be permitted to argue that the effect of the ruling by the ECJ is that the continuity of their employment was not broken when they resigned from the civil service and accepted an offer of employment by Newtec, notwithstanding the fact that this took place after the date of the transfer. In effect, the question is whether your Lordships should decline to give effect to the ECJ’s judgment because the ruling which it has given has raised a point that was not previously argued. I would hold that the answer to this question is to be found by applying the principles described in Amministrazione delle Finanze dello Stato v Simmenthal SpA (No 2) (Case 106/77) [1978] 3 CMLR 263. It is necessary also to have regard to article 10 EC, which provides that Member States shall take all appropriate measures to ensure fulfilment of the obligations arising out of the Treaty and abstain from any measure which could jeopardise the attainment of those obligations.

42. In the Simmenthal case the court said that direct applicability of a provision of Community law means that rules of Community law must be fully and uniformly applied in all the Member States as from the date of their entry into force and for so long as they continue in force: para 14. Referring to the structure of article 177 of the EC Treaty (now article 234 EC) which provides for the making of a reference to the court for a preliminary ruling, it said that the effectiveness of that provision would be impaired if the national court were prevented from forthwith applying Community law in its entirety in accordance with the decision or the case law of the court and that it followed that every national court must, in a case within its jurisdiction, apply Community law in its entirety and protect rights which the latter confers on individuals: paras 19 and 20.

43. In the light of that guidance I would reject Celtec’s contention that it is not open to the respondents to argue at this stage that, for the purposes of article 3(1) of the Directive, their contracts of employment must be deemed to have been handed over to Newtec on the date of the transfer. In my opinion it is the duty of the national court to give them that opportunity, in view of the ECJ’s ruling that contracts of employment existing on the date of the transfer between the transferor and workers assigned to the undertaking transferred are deemed to be handed over from the transferor to the transferee on the date of the transfer.

Should the House determine the issue?

44. There remains however the question whether Celtec’s argument that the respondents’ contracts of employment were not transferred to Newtec on the date of the transfer because they freely decided to remain in the civil service can be determined by the House on the information that is available. This question is best divided into two parts. It is first necessary to identify the precise extent of the sole reservation from the general rule that contracts of employment are automatically transferred from the transferor to the transferee on the date of the transfer. It is then necessary to decide whether the question whether the reservation applies to this case can be answered on the existing material or must be remitted to the employment tribunal for its determination.

(a) the extent of the reservation

45. The ECJ dealt with the consent issue in para 37 of its judgment: see para 28 above. The basic proposition which is set out in that paragraph is that implementation of the rights conferred on employees by article 3(1) of the Directive may not be made subject to the consent of either the transferor or the transferee nor to the consent of the employees’ representatives or the employees themselves. From this it follows that the fact that it was agreed between the DoE and the TECs that the staff who understood the government policy that the contracts were designed to deliver would be provided to the TECs on secondment initially for a period of three year is irrelevant to the question whether the respondents’ employment contracts are to be deemed to have been handed over to Newtec on the date of the transfer. So too is the fact that it was agreed between the DoE and those who volunteered for secondment that they would continue to be employed by the civil service during the period of their secondment. But the basic proposition is subject to the sole reservation as regards the workers themselves referred to in para 37, that they are at liberty after the transfer, following a decision freely taken by them, not to continue the employment relationship with the transferee. Are the respondents’ cases caught by that reservation?

46. Celtec’s argument is that the reservation applies to the respondents’ cases because they freely decided to remain civil servants after the date of the transfer by volunteering for secondment to Newtec. It is not in doubt that they volunteered for secondment on the terms that were offered to them. They were to continue to be civil servants employed by the DoE, and they were to retain their normal pay and terms and conditions of employment during the period of their secondment. But is this the kind of arrangement that the ECJ had in mind when expressing what it described as “the sole reservation” in para 37? Mr Millar QC for the respondents submitted that it applied only to cases where the workers objected to taking up employment with the transferee in circumstances where taking up that employment was an option that was available.

47. To answer this question it is necessary to examine the two cases to which reference is made at the end of para 37 of the ECJ’s judgment. These are Foreningen af Arbejdsledere i Danmark v A/S Danmols Inventar, in liquidation (Case 105/84) [1985] ECR 2639, sometimes referred to as the Mikkelsen case after the name of the person whose action against the defendant company led to the making of the reference, and d’Urso v Ercole Marelli Elettromeccanica Generale SpA (Case C- 362/89) [1991] ECR I-4105.

48. In the Mikkelsen case Mr Mikkelsen was employed by the transferor Danmols Inventar A/S as works foreman. The undertaking of that company was transferred to Danmols Inventar og Møbelfabrik A/S. He continued to carry out his duties as works foreman in the new company. He did the same work and he received the same pay in that capacity as before the transfer: para 4. But, unlike his previous situation where he doing his work under a contract of employment, he was a shareholder in the new company. He held 33% of its shares, was chairman of the Board of Directors and held 50% of its voting rights. One of the questions in the case was whether the expression “employee” in article 3(1) of the Directive must be interpreted as applying to persons who were employed by the transferor at the date of the transfer but who did not continue to work as employees of the transferee. The court answered this question in the negative. In para 16 it said that the protection which the Directive was intended to guarantee is redundant where the person concerned decides of his own accord not to continue the employment relationship with the new employer after the transfer, adding:

“That is the case where the employee in question terminates the employment contract or employment relationship of his own free will with effect from the date of the transfer, or where that contract or relationship is terminated with effect from the date of the transfer by virtue of an agreement voluntarily concluded between the worker and the transferor or the transferee of the undertaking. In that situation article 3(1) of the Directive does not apply.”

49. In the d’Urso case Mr d’Urso was one of a group of 518 employees of a company called EMG which was made subject to a special administration procedure in 1981 but was authorised to continue trading. In 1985 its entire undertaking was transferred to a new company called Nuova EMG. Pursuant to the contract of transfer, and in accordance with agreements reached with the trade unions, 940 of the employees of the transferor were transferred into the service of the transferee. But Mr d’Urso and the other employees in his group remained in the service of the transferor. One of the questions in the case was whether article 3(1) of the Directive was to be interpreted as meaning that all the contracts and relationships of employment existing at the date of the transfer are automatically transferred to the transferee by the mere fact of the transfer. In para 10 the court said that it followed from its case law that article 3(1) covered the rights and obligations of the transferor arising from a contract of employment or an employment relationship existing on the date of the transfer and entered into with employees who, in order to carry out their duties, are assigned to the part of the undertaking or business transferred: Arie Botzen and others v Rotterdamsche Droogdok Maatschappij BV (Case 186/83) [1985] ECR 519, para 16. In para 11 it referred to its decision in Foreningen af Arbejdsledere i Danmark v Daddy’s Dance Hall A/S (Case 324/86) [1988] ECR 739, para 14, that the rules of the Directive had to be considered mandatory. It was not possible to derogate from them in a manner unfavourable to employees. The court then added these words:

“The implementation of the rights conferred on employees by the Directive may not therefore be made subject to the consent of either the transferor or the transferee nor the consent of the employees’ representatives or the employees themselves, with the sole reservation, as regards the workers themselves, that, following a decision freely taken by them, they are at liberty, after the transfer, not to continue the employment relationship with the new employer (judgment in Case 105/84 Foreningen af Arbejdsledere i Danmark v A/S Danmols Inventar, in liquidation [1985] ECR 2639, para 16).”

In para 12 the court said that it followed that, in the event of the transfer of an undertaking, the contract of employment or employment relationship between the staff employed by the undertaking transferred may not be maintained with the transferor. It is automatically continued with the transferee.

50. In the Daddy’s Dance Hall case Mr Tellerup was employed as a restaurant manager by the transferor, Irma Catering A/S. When its lease was terminated Irma Catering dismissed all its staff including Mr Tellerup, whose statutory period of notice expired on 30 April 1983. But it continued to run the business with the same staff until 25 February 1983, with effect from which date a new lease was concluded between the landlord and Daddy’s Dance Hall A/S. Daddy’s Dance Hall immediately re-employed the employees of the former lessee including Mr Tellerup to do the same jobs as before. The new management contract which was concluded with Mr Tellerup provided that his remuneration, which had previously been in the form of commission, would take the form of a fixed salary. At his request a trial period of three months was agreed on, during which either side could give 14 days’ notice. This was a shorter period of notice than that to which Mr Tellerup was entitled if his employment with the transferor was taken into account. He was dismissed on 26 April 1983 with 14 days’ notice. One of the questions was whether an employee may waive rights conferred on him by the Directive if the disadvantages resulting from his waiver are offset by such benefits that, taking the matter as a whole, he is not placed in a worse position. The court gave a qualified answer to this question. In para 14 it said that the purpose of the Directive is to ensure that the rights of employees affected by the transfer of an undertaking are safeguarded, adding that:

“Since this protection is a matter of public policy, and therefore independent of the will of the parties to the contract of employment, the rules of the Directive, in particular those concerning the protection of workers against dismissal by reason of the transfer, must be considered to be mandatory, so that it is not possible to derogate from them in a manner unfavourable to employees.

In para 15 the court said that it followed that employees are not entitled to waive the rights conferred on them by the Directive, and that those rights cannot be restricted even with their consent. But in para 16 the court said that the Directive could be relied on only to ensure that the employee is protected in his relations with the transferee to the same extent as he was in his relations with the transferor under the legal rules of the Member State. In para 17 it said:

“Consequently, in so far as national law allows the employment relationship to be altered in a manner unfavourable to employees in situations other than the transfer of an undertaking, in particular as regards their protection against dismissal, such an alternative is not precluded merely because the undertaking has been transferred in the meantime and the agreement has therefore been made with the new employer.”

51. Mr Millar referred to two other cases to illustrate the application of these principles. These were Berg v Besselsen (Joined Cases 144 and 145/87) [1988] ECR 2559 and Katsikas v Konstantinidis (Joined Cases C-132/91, 138/91 and 139/91) [1992] ECR I – 6577.

52. In the Berg case Mr Berg had been employed by a Mr Besselsen who operated a bar-discothèque. The operation of the establishment was taken over by a third party under a lease-purchase agreement entered into between Mr Besselsen and a commercial partnership. The agreement provided that the object sold should not become the property of the purchaser by the mere transfer. Mr Berg continued to work in the establishment following its transfer to the purchaser. The lease- purchase agreement was later terminated on the ground of the purchaser’s non-performance and restored to Mr Berg’s former employer. Mr Berg then applied for an order against Mr Besselsen for payment of his arrears of salary for the period while the establishment was managed by the purchaser. The court said that an analysis of article 3(1) showed that the transfer of an undertaking entails the automatic transfer from the transferor to the transferee of the employer’s obligations arising from a contract of employment or an employment relationship, subject to the right of the Member State to provide for joint liability of the transferor and the transferee following the transfer. It followed that, unless the Member States availed themselves of that possibility, the transferor was released from his obligations as an employer by reason of the transfer. That consequence was not conditional on the consent of the employees: para 11. The court then said, at para 12, referring to its judgment in Daddy’s Dance Hall, that the Directive was intended to safeguard the rights of workers in the event of a change of employer by making it possible for them to work for the transferee under the same conditions as those agreed with the transferor:

“Its purpose is not, however, to ensure that the contract of employment or the employment relationship with the transferor is continued where the undertaking’s employees do not wish to remain in the transferee’s employ.”

53. In the Katsikas case Mr Katsikas objected to continuing to work for the transferee after the date of the transfer. One of the questions in his case was whether he was entitled to do so. The court, referring to its judgment in Daddy’s Dance Hall, said that, while the Directive allowed the employee to remain in the employ of his new employer on the same conditions as were agreed with the transferor, it could not be interpreted as obliging the employee to continue his employment relationship with the transferee: para 31. The court then went on to say this in para 32:

“Such an obligation would jeopardize the fundamental rights of the employee, who must be free to choose his employer and cannot be obliged to work for an employer whom he has not freely chosen.”

54. From this jurisprudence I would draw these conclusions as to the extent of the reservation. The starting point is to be found in the general rule that the contracts of employment of workers assigned to the undertaking transferred are automatically transferred from the transferor to the transferee on the date of the transfer. Then there is the fact that it is not possible for this rule to be derogated from in a manner unfavourable to the employees. The rights conferred on them by the Directive may not be made subject to the consent either of the transferor or the transferee nor the consent of the employees’ representatives or the employees themselves: Daddy’s Dance Hall, para 14; d’Urso, para 11. The gulf between what the parties themselves may have contemplated and what the rule requires may be quite large, as it is in this case. My noble and learned friend Lord Rodger of Earlsferry says that this puts in place a fictional version of events in place of what actually happened. But, as I read paras 37 and 38 of the court’s judgment, it is the rule that must prevail. So I cannot agree with him that, to accommodate the arrangements that the parties thought they were entering into, the date of transfer must be taken to be 1 July 1993. The transfer took place in September 1990 when responsibility as employer for carrying on the business of the unit transferred moved to the TECs from the DoE.

55. On the other hand it is a fundamental right of the employee to be free to choose his employer. So he cannot be obliged to work for an employer whom he has not freely chosen: Katsikas, para 32. From this it follows that it is open to an employee whose contract of employment would otherwise be transferred automatically from the transferor to the transferee on the date of the transfer of his own free will to withdraw from this arrangement by declining to enter the employment of the transferee: Mikkelsen, para 16; Berg, para 12; Katsikas, para 32. That, then, is the extent of the sole reservation referred to in para 37. It does not, as my noble and learned friend Lord Mance suggests, work the other way round. It does not enable effect to be given to an employee’s wish to continue to be employed by the transferor while continuing to be employed in the unit to which he has been assigned after its transfer to the transferee. But the application of the rule that he can withdraw from the arrangement depends on two things: first, that the employee is in a position to choose whether or not to enter the employment of the transferee after the date of the transfer; and second, that he in fact exercises that choice by deciding of his own free will not to do so.

(b) the facts

56. The crucial question then is whether, in the light of that jurisprudence, the reservation to which the ECJ referred in para 37 applies in this case. Were the respondents in a position on or after the date of the transfer to choose whether or not to enter the employment of Newtec? And did they in fact exercise that choice by deciding of their own free will not to do so?

57. Celtec’s position before the ECJ, as noted by Advocate General Poiares Maduro in para 45 of his opinion, was that the respondents implicitly refused to allow their contracts of employment to be transferred to Newtec. This was because they entered into a voluntary agreement with the DoE that they were to be seconded to the TECs whilst remaining DoE employees. This, Celtec argued, must be taken as a refusal by them to transfer their contracts of employment to the TECs. In para 46 the Advocate General said:

“Such an analysis cannot be accepted, since Celtec acknowledged at the hearing that the Department of Employment employees had not been offered a contract of employment with the TECs in September 1990. In any event, to accept that employees can tacitly refuse to transfer their contracts of employment would run counter to the spirit of Directive 77/187, which instead provides for the automatic transfer of contracts of employment as the consequence of the transfer.”

58. I have not been able to find anything in the material before your Lordships that is inconsistent with the opinion on this issue which was formed by the Advocate General. The arrangements for the setting up of the TECs are described in a note by Andrew Tabor of the Operations Directorate in the Department for Education and Employment, which was formed on the merger of the DoE and the Department of Education in 1996. He makes it clear in para 8 of this note that the arrangement which led to the invitation to staff in the DoE’s area offices to volunteer for secondment was arrived at by agreement between the Department and the TECs. There is no suggestion that it was envisaged that the staff were to be presented with the option of taking up employment direct with the TECs at that stage. Nor is there any mention in the letters which were issued to the staff, of which the letter written to Mr Astley on 3 September 1990 is an example, of any such option. The only choice that he was offered was whether or not to apply for secondment.

110. Mr Bowers further submits, correctly in my view, that none of the other previous European Court decisions touches on a situation comparable with the present. In d’Urso v Ercole Marelli Elettromeccanica Generale SpA (Case C-362/81); [1991] ECR I-4105, the 518 employees who were ostensibly not transferred to the transferee (but whose employment relationship the European Court held was in law nevertheless automatically transferred) had been laid off (p I-4108), their employment relationship had been “suspended” and a third party, the Cassa Integrazione Guadagni Straordinaria (CIGS), had assumed “responsibility for their pay” instead of the transferor. Quite clearly there was nothing welcome or voluntary about any of that, as far as those employees were concerned. (One might add that their employment relationship with the transferor would also appear, effectively, to have been determined.)

111. In Foreningen af Arbejdsledere i Danmark v Daddy’s Dance Hall A/S (Case 324/86) [1988] ECR 739 the European Court explained the rationale of the Directive as follows, at para 14:

“14 .…. the purpose of Directive 77/187/EEC is to ensure that the rights resulting from a contract of employment or employment relationship of employees affected by the transfer of an undertaking are safeguarded. Since this protection is a matter of public policy, and therefore independent of the will of the parties to the contract of employment, the rules of the Directive, in particular those concerning the protection of workers against dismissal by reason of the transfer, must be considered to be mandatory, so that it is not possible to derogate from them in a manner unfavourable to employees.”

The Directive aims therefore to protect against dismissal by reason of the transfer of an undertaking. In the present case, the offer made to employees had the same purpose and effect of safeguarding the civil servants’ rights arising from their employment relationship with the Department, and of protecting against dismissal by reason of the transfer. Employees were to be deployed elsewhere in the Department (as Celtec maintains was the Department’s right) or, if they wished, they could choose to continue to work in training and be seconded to Celtec. On neither basis was there any question of cessation of their continuous employment or of dismissal. The European Court also held that, although “employees are not entitled to waive the rights conferred on them by the Directive” (paragraph 15), nevertheless “the Directive can be relied on only to ensure that the employee is protected in his relations with the transferee to the same extent as he was in his relations with the transferor under the legal rules of the Member State concerned” (paragraph 16). So, the court concluded, “the Directive does not preclude an agreement with the new employer to alter the employment relationship, in so far as such an alteration is permitted by the applicable national law in situations other than the transfer of an undertaking”. Nothing in the Directive was therefore aimed at removing or varying any right which the Department had under the terms of the relevant employment relationships to deploy civil servants in different situations outside the training and enterprise activities transferred to the TECs. That being so, it is again difficult to see why employees should not instead volunteer for secondment to a transferee of the undertaking constituted by such activities, without thereby forfeiting their civil service status - contrary almost certainly to what would have been their will at the time.

112. In Berg v. Besselsen (Joined Cases 144 and 145/87) [1988] ECR 2559, the European Court spoke in paragraph 12 of the Directive as:

“intended to safeguard the rights of workers in the event of a change of employer by making it possible for them to continue to work for the transferee under the same conditions as those agreed with the transferor. Its purpose is not, however, to ensure that the contract of employment or the employment relationship with the transferor is continued where the undertaking’s employees do not wish to remain in the transferee’s employ.”

In paragraph 13 it spoke also of the rules as “intended to safeguard, in the interests of the employees, the existing employment relationships which are part of the economic entity transferred”. Neither of these statements was addressing a situation where the transferor was both entitled and willing to offer continuing employment elsewhere in its organisation, and would have done so but for the employee’s voluntary offer to continue to serve on secondment in the same area as the undertaking transferred.

113. Katsikas v. Kostantinidis (Joined Cases C-132/91, C-138/91 and C-139/91); [1992] ECR I-6577 concerned employees who had objected to becoming employees of the transferee, an attitude which the transferor (who then dismissed them) argued was not open to them in the light of the Directive. Not surprisingly, the European Court held that the Directive did not have the purpose or effect of compulsorily transferring an employee’s employment contract or relationship against his or her will, but that, in such a case, it was for the law of the relevant Member State to determine whether the contract or relationship was to be regarded as terminated by the transferor or transferee or to be maintained with the transferor. The case may explain references evidently made before the European Court in the present case to situations of “refusal” to be employed by a transferee, but its facts were far removed from the present.

114. In summary, I consider that the respondents should have leave to argue their new point, but that it raises potentially both factual matters which it would require further investigation to resolve and legal issues which would merit further argument, at least before there could be any question of dismissing this appeal. The situation is not, of course, at all a happy one in a case which is already old. But the problem about its resolution now arises from the respondents’ own admitted failure to argue the case at any previous stage on the new basis which they now belatedly seek leave to raise. One option open to the House would be to refer the matter yet again to the European Court for determination of the question of law whether - on the hypothesis that the facts are as the Department, in answer to the respondents’ new point, maintain – the employment relationship of civil servants who volunteered for secondment in September 1990 was, contrary to their evident intention and belief, transferred willy-nilly to the relevant TEC to which they thought they were being seconded. But even that would not necessarily resolve the case, in view of the first point made in paragraph 104 above; and anyway it is in my opinion preferable that the law should be reviewed and decided on a solid basis of findings regarding the actual facts.

115. In my opinion, therefore, the appeal should be allowed and the Court of Appeal’s decision set aside and the case should be remitted to the employment tribunal for the facts to be investigated and for appropriate findings to be made, on the basis of which the legal position should then be further considered. The parties should have 21 days in which to make submissions as to the appropriate costs order.