CWW Logistics v (1) Ronald (2) Digital Equipment (Scotland) Ltd IDS Brief March 1999 633
In a sensible decision, the Employment Appeal Tribunal takes a broad-brush view as to what constitutes a "transfer of assets" when considering whether or not TUPE applies.
In CWW Logistics v (1) Ronald (2) Digital Equipment (Scotland) Ltd, the EAT finds that the grant of an "informal licence" to use industrial equipment, without a formal sale or lease, can amount to the transfer of an economic entity.
The Applicant worked on Digital's "stage 3" industrial process. In 1996, Digital contracted out the operation of that process to CWWL. The Applicant argued that TUPE applied. The Employment Tribunal had no difficulty in identifying a stable economic entity. It went on to find that the stable economic entity retained its identity after the transfer - on the basis that the employees working on the process did so exclusively, their numbers did not change after the transfer and there was a transfer of assets in terms of the equipment used in the process. It did not matter to the tribunal that the equipment was neither sold nor leased to CWWL.
On appeal, CWWL argued that there could not have been a relevant transfer because there had been no legal transfer of the equipment. Instead, all that had transferred was the use of that equipment. The EAT disagreed, deciding that an informal licence was consistent with there having been a transfer of an economic entity.
Once again, the EAT has adopted a purposive approach to the application of TUPE - in its own words "viewing the whole arrangement at a little distance". This is welcome, particularly when added to the EAT's decisions in Magna Housing Association Limited v Turner and others and Lightways (Contractors) Limited v Hood reported in Issue 32 of LELR (March 1999), and shows once again that domestic courts and tribunals need not be too legalistic in their approach, and indeed don't have to see themselves as shackled by the Suzen decision.