Wain and others v Guernsey Ship Management Ltd: [2007] EWCA Civ 294

CA: May, Arden and Smith LJJ: 3 April 2007

Prior to September 2004 the six claimants were part of a group of 12 employed on short-term contracts by WGL to work on ferries operated by an associate company. Thereafter WGL decided to employ only permanent staff and that the requirement for short-term workers would be supplied by the respondent company, with whom there was already a contract for the supply of seasonal workers. The claimants' contracts were not renewed by WGL and the respondent company offered them employment on the ferries on short-term contracts. The claimants accepted the offer and were rostered to fill their usual positions on the different vessels on which they had worked, but they received lower rates of pay than they would have received with WGL. The claimants complained that the respondent had made unlawful deductions from their wages, contending that there had been the transfer of an undertaking to which the Transfer of Undertakings (Protection of Employment) Regulations 1981 applied and they were entitled to receive the same rate of pay after the transfer as before. The employment tribunal found that the group of employees to which the claimants belonged did not constitute an economic entity capable of being transferred pursuant to the Regulations and that, even if there was such an entity, it did not retain its identity in the hands of the respondent. The Employment Appeal Tribunal upheld that decision on an appeal by the claimants.

The claimants appealed.

The Court of Appeal held:
In considering whether there was an undertaking or a part of an undertaking which formed an economic entity, the tribunal had correctly adopted a multifactorial approach, though it had failed to identify the factors it considered to be important and had not explained how it had weighed the various factors against each other. Although the claimants could be said to belong to a group which could be identified because all members had short-term contracts and fulfilled a specific role in WGL's business, they all did different work, on different vessels. Neither factor was conclusive, and, accordingly, the tribunal was entitled to conclude that the claimants' sub-group was not an economic entity and that there had been no transfer of an undertaking for the purposes of the 1981 Regulations.

The appeal was dismissed.

Appearances: John Hendy QC and Colin Bourne (Bridge McFarland, Lincoln) for the claimants; James Goudie QC and James Cornwell (Simpson & Marwick, Aberdeen) for the employer.