Carrington v Harwich Dock Co Ltd [1998] IRLR 567 (EAT) and Clarke and Tokeley Ltd v Oakes [1998] IRLR 577 (EAT)
In two recently reported cases further guidance has been given over when an apparent break in service will be treated as such when the issue of continuity of employment is considered.In Carrington V Harwich Dock Co Ltd the Employment Appeal Tribunal considered the application of section 212(1) of the Employment Rights Act 1996 to a break in service.
That section provides: "any week during the whole or part of which an employee's relations are governed by a contract of employment counts in computing the employee's period of employment."
Mr Carrington was employed by the company and had been for many years. To ensure that his pension would be calculated to take advantage of his highest earnings level, in agreement with the company, he tendered his resignation.
Thereafter he was able to draw his pension. The company undertook to re-engage him, though that re-engagement was said to be on the basis that he had no continuity of employment. In line with that undertaking Mr Carrington resigned on the Friday and started back to work the following Monday. Four months later the company dismissed him.
When his unfair dismissal claim was lodged the company took the view that he could not pursue the claim because he had less than 2 years' service. The Employment Tribunal took the view that the company's argument was right, he had broken his service and could not now claim unfair dismissal.
The tribunal considered themselves bound by the earlier decision in Roach V CSB (Moulds) Ltd [1991] IRLR 76 though that case is easily distinguished by the fact that there the employee , after leaving, worked for another employer for 11 days.
In Carrington, the EAT found that the wording of section 212 (1) was clear and that the employment obligations continued and there had been no break in service. The fact that new terms of employment had been signed by Mr Carrington which specifically stated that he was to regard himself as having no continuity of service was in the EAT's view of no effect, it being impossible for an individual to contract out of his/her rights as regards unfair dismissal. This must be right.
In Clarke & Tokeley Ltd t/a Spellbrook Ltd - V - Oakes the Court of Appeal considered the effect of paragraph 17(2) of Schedule 13 of the Employment Protection (Consolidation) Act 1978 (now found at section 218(2) of the Employment Rights Act 1996) where there had been a transfer of an undertaking.
The company to which Mr Oakes transferred argued that as he had been dismissed by an appointed liquidator prior to employment with them, there was a break in service which was fatal to his attempts to pursue a claim for unfair dismissal.
Mr Oakes worked for company B. Negotiations to sell Company B and its associated company had been entered into with C&T Ltd in late 1995. Whilst agreements were reached in principle, because Company B and its associated company were in financial difficulties, on 7 March 1996 both companies went into voluntary liquidation and a liquidator was appointed. On 14 March 1996 the liquidator dismissed all the staff including Mr Oakes.
At the request of receivers involved, Mr Oakes continued to go into the premises of company B and carried on his job. The business was still functioning and was subsequently sold as a going concern to C&T Ltd on 21 March.
Mr Oakes was then employed by C&T Ltd but was dismissed nine days later. He presented a claim to the employment tribunal for unfair dismissal against C&T Ltd. They contested the claim on the basis that he had not had two years' service with them and, therefore, the tribunal had no jurisdiction to hear his case.
Mr Oakes did not seek to argue that his employment was transferred to C&T Ltd by reason of Regulation 5 of the TUPE Regulations 1981. Instead, he pursued his case on the basis that he had continuity of employment by operation of what is now Section 218(2) of the ERA 1996 which provides:
"If a trade or business or undertaking...is transferred from one person to another - the period of employment of an employee in the trade or business or undertaking at the time of transfer counts as a period of employment with the transferee, and the change of employer does not break the continuity of the period of employment."
The Court of Appeal took the view that the ET and EAT had correctly interpreted the words at the time of transfer by looking at the transfer as a whole process rather than narrowly to state that it occurred when the so-called sale took place on 21 March. Lord Justice Mummery said:
"A trade or a business will usually be a going concern of some complexity, giving rise to different considerations than [will] a simple transfer of ...property. The trade, business or undertaking may comprise ....property, stock-in-trade,...goodwill and work in progress, the benefit of existing contracts and the employees themselves. The completion of the transfer of these different elements of the trade, business or undertaking may occur at different times. Such a transfer is more in the nature of a process extending over time than an event timed to take place only at a particular moment..."
Thus the Court was prepared to hold that there were no disqualifying gaps of service and Mr Oakes had continuity allowing him to pursue his unfair dismissal claim. Although the facts were not the same, by way of contrast it is notable that the other employees who solely relied upon TUPE were apparently unsuccessful.
The clear lesson to be learnt must be not to overlook the value of section 218(2) to protect employees. In the right case it may be of greater assistance than TUPE which is, perhaps, the law that most would initially have considered the relevant tool to pursue the case.