Transport and General Workers' Union v Swissport (UK) Ltd

EAT: Judge Serota QC: 27 June 2007

The claimants were employed by the first respondent, S Ltd, which provided ground handling services to airlines including, inter alia, the second respondent, A Ltd. When S Ltd became insolvent and went into administration, A Ltd provided the services itself for six months, engaging employees of S Ltd, including the claimants, through an agency and using equipment and premises previously used by S Ltd. The employees subsequently transferred to other companies, resigned or were made redundant. On the claimants' claims for unfair dismissal and a claim by their union for a protective award, an employment tribunal chairman held, as a preliminary issue of law, that there had been no relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981 from S Ltd to A Ltd, as there was no identifiable economic entity providing ground handling services specifically to A Ltd before A Ltd itself commenced provision of those services.

The claimants appealed, and, on the appeal, the respondents sought to uphold the decision of the tribunal on the additional ground that, in any event, S Ltd's insolvency precluded any transfer under the 1981 Regulations, made under section 2 of the European Communities Act 1972 to implement Directive 77/187/EEC, given that the Directive did not apply where an insolvent company would not have continued to trade.

JUDGE SEROTA QC held:
(1) While it might be more difficult to recognise a stable economic entity where part of an undertaking was transferred if that part was not self-contained in some way so as to itself constitute a stable economic entity, an employment tribunal was bound to consider whether what was not recognised as being a stable economic entity before transfer was capable of being one at the time of transfer. The lack of a bundle of resources dedicated to the transferee before transfer could not be determinative of the issue of whether there was a relevant transfer under the 1981 Regulations without having regard to the position at the date of the transfer, when a stable economic entity might be identified. Since the employment tribunal had failed to direct itself to those issues and they were all fact sensitive, the case would be remitted for rehearing.
(2) On a simple construction of the words of regulation 3 of the 1981 Regulations, they could apply where the facts were such as to justify a finding that there had been a transfer of a stable economic entity even where, because of its insolvency, the transferor had not continued trading and there was no sale or transfer of part of the undertaking as a going concern. Section 2 of the European Communities Act 1972 did not have to be construed narrowly so as to restrict construction of the 1981 Regulations to circumstances to which Directive 77/187 had been applied, and, on their plain and ordinary meaning, the Regulations were made applicable to a wider set of circumstances than the Directive because, for the purposes of section 2(2) of the 1972 Act, they dealt with matters "arising out of" or "related to" the implementation of the Community obligation to give effect to the Directive.

The appeal was allowed.

Appearances: Oliver Segal (Thompsons) for the claimants; Gerard Clarke (Olswang) for S Ltd; Brian Napier QC (Speechly Bircham) for A Ltd.