EMPLOYMENT — Transfer of undertaking — Applicants seconded by transferor to work for transferee's business — Applicants later becoming employees of transferee — Whether change of employer “by reason of” transfer of undertaking — Council Directive 77/187/EEC, art 3(1)

North Wales Training and Enterprise Council Ltd (t/a Celtec) v Astley and others

HL (Lord Bingham of Cornhill, Lord Hope of Craighead, Lord Rodger of Earlsferry, Lord Carswell and Lord Mance): 21 June 2006

A group of civil servants whose department was privatised in 1990 were to be deemed to have transferred to the new undertaking at that time even though they initially worked for it on secondment and did not resign from the civil service to become employees of the transferee until 1993. They had thus changed employer “by reason of” the transfer of the undertaking within art 3(1) of the “Acquired Rights” Directive 77/187/EEC and their continuous employment began when they had commenced work for the Civil Service.

The House of Lords so held (Lord Mance dissenting and Lord Rodger of Earlsferry dissenting in part) in dismissing an appeal (following a referral to the European Court of Justice [2005] ICR 1409) by North Wales Training and Enterprise Council Ltd (trading as Celtec) from the order of the Court of Appeal [2002] ICR 1289 allowing an appeal by John Astley, Julie Owens and Deborah Hawkes against the decision of the Employment Appeal Tribunal to reverse the employment tribunal's finding that they had continuous service under the Acquired Rights Directive (on the approximation of the laws of the Member States relating to the safeguarding of employees's rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses).

LORD BINGHAM said that the arguments of the parties were advanced below on a basis somewhat different from that which they now put forward. Celtec had said that the transfer was in September 1990, but the applicants were not (in effect) part of what was then transferred so they could not gain the benefit of the legislation. The applicants had contended that the transfer took place over a period, and each applicant was part of what was transferred from time to time, so that they could claim the benefit of the legislation. The European Court accepted neither of these approaches, ruling that transfer took place on a single date on which responsibility as employer for carrying on the business transferred moved from the transferor to the transferee and that that date could not be postponed to another date at the will of either. It seemed to follow inexorably that the transfer took place in September 1990 and the later dates of transfer agreed with the individual applicants were to be disregarded.

Appearances: John Bowers QC and Jeremy Lewis (Mace & Jones, Manchester) for Celtec. Gavin Millar QC and Thomas Linden (Russell Jones & Walker) for the applicants.

Reported by: C T Beresford, barrister