Grounds for Appeal   TO THE EMPLOYMENT APPEAL TRIBUNAL   ON APPEAL FROM THE EMPLOYMENT TRIBUNAL AT STRATFORD (SITTING AT WOBURN PLACE)   CASE No.66244/94   B E T W E E N :   Ms.S.Ralton and Others Applicants/Appellants   - and -   Havering College of Further and Higher Education Respondents         GROUNDS OF APPEAL   1. This is the Applicants' appeal from the reserved decision of the Employment Tribunal herein, which is dated 12 April 2000. The Applicants are employed by the Respondent College. It is conceded by the College that it has been the subject of a relevant transfer for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) and Council Directive 77/187/EEC (the Acquired Rights Directive (ARD)), and that the College is an emanation of the state for these purposes. It is not in dispute that the Applicants' terms of employment were altered after the transfer (and the Tribunal has correctly held the new terms to be "fundamentally different"; decision, para.24).   2. The Applicants sought the enforcement of their TUPE and/or directly enforceable Community law right, namely to be employed on their previous(more advantageous) terms of employment. An action for unfair dismissal/damages being inadequate to achieve that aim, the only effective remedy to achieve the Applicants' aim was to seek a declaration of their true terms of employment. The right to the pre-transfer terms of employment is a Community law right introduced into English law through the ARD. National courts and tribunals must give effect to such Community rights, and Member States must enact the necessary legislation to allow the courts to give that effect. Where there is no directly relevant remedy, the national courts must apply the most closely analogous remedy or (in the final alternative) create the necessary remedy (see e.g. Case C-213/89 Factortame [1990] ECR I-2474, at para. 23). The only analogous or effective remedy in the Employment Tribunals is a declaration of the (correct) terms of the Applicants' employment under section 11 of the Employment Rights Act 1996. Accordingly the Applicants sought a declaration in the following terms:   3. "That the Applicants be granted a declaration, pursuant to section 11 of the Employment Rights Act 1996, and pursuant to their rights under the Acquired Rights Directive, that their pre-Transfer employment terms and conditions ("the Silver Book terms") have continued and will continue to apply to their employment at the College, such that where the apparent terms and conditions of their contested contracts are less advantageous to the Applicants than the Silver Book terms, these will be overridden by the Silver Book terms, leaving unaffected the other terms and conditions conferring employment rights, such as the clause governing contractual pay.""     4. In its decision the Tribunal concluded (decision, at page 19, para. 27(xviii)):   "The Applicants' terms and conditions of employment are not governed by the pre-transfer Silver Book terms and the declaration sought under section 11 of the Employment Rights Act 1996 is refused."   5. There were also contractual claims made on behalf of two of the Applicants. These are not pursued on appeal.   6. The Applicants now seek leave to appeal, and will argue the appeal on the basis that:   1) the Tribunal erred on the law both as to the Community law questions and those of national law; and 2) the Tribunal misdirected itself on the facts, in that: a) no reasonable tribunal could have so found on the facts; b) in certain respects the Tribunal has failed to make any or any sufficient relevant findings of fact at all; and in any event 3) the Tribunal's decision is so unreasonable as to be perverse.     The Tribunal Decision   Community Meaning of 'Collective Agreement'   7. The Tribunal erred on the law in its principal finding that the term "collective agreement" in Article 3(2) ARD does not bear a Community law meaning. The collective agreement in question is the so-called 'Silver Book'. It is the Applicant's case that the collective agreement is still binding on the College. It is not in dispute that no new collective agreement has been negotiated. The College principal gave evidence that the collective agreement was still in place (and indeed it is accepted that some College employees are still on Silver Book terms). In the premises, under the Applicants' directly effective ARD rights, the terms of the Silver Book continue to apply to the College. Insofar as Regulation 6 of TUPE may derogate from that right, then TUPE has failed properly to implement Article 3(2) ARD, and the directly effective terms of the Directive must prevail.   8. The Respondent argued that a collective agreement is not legally binding between a trades union and an employer unless it contains an express condition in writing to that effect (s.179, Trade Union and Labour Relations (Consolidation) Act 1992). The Applicants believe it to be common ground however that the collective agreement was binding as between the College and individual employees during the currency of their contracts, and that, indeed, it would be impossible to establish the terms and conditions of those contracts of employment save by reference to that collective agreement. The Tribunal thus fell into error when it found that the collective agreement in question was not binding upon the College in relation to the transferred employees for the purposes of the ARD. That finding renders the collective agreement inapplicable in the precise circumstances in which the ARD seeks to render protection, and thus runs counter to the entire purpose and objective of the ARD.   9. The ARD expressly permits Member States to limit the effect of a collective agreement in time (but not less than one year: Art.3(2)). It follows that no other limitation may be imposed upon the effectiveness of collective agreements. The UK has in fact not taken advantage of even that limited limitation. To impose a further, national limitation is thus contrary not only to the spirit but also the letter of the ARD. The Tribunal further erred in its interpretation of Case 287/86 Ny M¯lle Kro [1990] ECR 5465, from which it follows that employers employed at the time of transfer are entitled under the Directive to rely on any collective agreement then extant. It follows from the above that the Tribunal was in error in relying the Opinion of Lord Slynn in Wilson v St. Helens Borough Council [1998] ICR 1141 at 1145F to support its finding that the Applicants cannot rely on the ARD to support their submissions on collective agreements. This is so because: (1) the term "collective agreement" bears a Community meaning in the ARD; (2) the ARD could not be "reasonably capable of bearing such a meaning" (i.e. the meaning that the Tribunal ascribes to it; see per Lord Slynn, ibid at 1145G); (3) in any event the case of Wilson did not concern the present point on collective agreements and must therefore be distinguished.   10. It is further submitted that this question can only be finally resolved by a reference to the European Court of Justice and the Tribunal erred further in finding that the issues of Community Law are "clear".     Existing Contractual Silver Book duties   11. Further or alternatively the Tribunal did in any event err on the law in holding that the College was not bound to offer contracts on Silver Book terms under existing English law. 12. It is not in dispute that the Silver Book terms were incorporated into the Applicants' contracts and binding upon the College. It is further not in dispute that there was no 'gap' between the old-style contracts and the new-style contracts. This applied both to the majority of the Applicants, who were on fixed-term (or "roll-on") contracts, as well as the remaining Applicant (Ms George) who was (and remains) on a permanent contract.   13. The Tribunal misdirected itself on the effect of Pfaffinger v City of Liverpool Community College [1997] ICR 142 in this regard. In that case the fixed term contract had already expired at the time of renewal, and could therefore not be broken (see report at 152E). In the present case, the employer was in breach of contract at the time the new contracts were offered and accepted (under protest). By reason of the Community law meaning and effect of the collective agreement, the only contract that the College lawfully offer (whether as a further fixed term contract or as a contract to a promotee) was a contract on Silver Book terms. Accordingly, the Applicants were then (and thus remain) entitled to Silver Book terms.     Continuity of employment: Community remedy   14. The Applicants will further rely upon the fact that in English law the continuity of employment is recognised in fixed-term contracts (see e.g. University of Aston v Malik [1984] ICR 492); and that in situations where a fixed-term contract comes to an end there exists the remedy of unfair dismissal (which was recognised by the Tribunal, at para.27(vii) but wrongly dismissed as "an entirely separate point"). The Applicants would have been entitled to rely upon the terms of their existing contracts (including Silver Book) under the 'unfair dismissal' jurisdiction of the Court; but that jurisdiction would not have given effective protection to their Community law rights (see paragraph 2 above). Their rights under the ARD are rights to continue in employment under the pre-existing terms and conditions. The Tribunal erroneously found that the Applicants could not rely upon the Silver Book terms of their existing contracts when seeking to preserve those terms under the ARD by the only effective means possible, i.e. a declaration.   15. Furthermore, the Applicants did not have the option of taking a different job whilst preserving their Community rights under the ARD. Employment at a different further or higher education college could not have been on Silver Book terms. This is so because the Applicants would not have been at that other college at the time of the relevant transfer and therefore would not there enjoy ARD rights. The Applicants' Community rights could only be preserved by remaining employed by the College and bringing this action. On the facts, the only way the Applicants could remain at the College was by accepting the new contract terms, albeit that they did so under protest (and if the Tribunal has found that they were not remaining under protest - which it is submitted is not clear from the decision - then the Tribunal clearly erred in so finding: the Applicants signed the Petition and also brought these actions). Thus the Applicants have throughout acted in the only way reasonably open to them.   16. It is submitted that it is not open to the Tribunal (as the national court that must determine the Applicant's relevant employment rights) to find that the applicants enjoy different rights vis a vis their employer, depending which (national) remedy is applied for. The Tribunal should have interpreted national law in such a way as to give full effect to the Community law right: see Case 106/89 Marleasing SA v La Comercial Internacional de Alimentacion SA [1990] ECR I-4135.   17. Further the Tribunal's finding that the Applicant's only potential remedy would be one of unfair dismissal constitutes a denial of the Applicants' right to an effective remedy. See: Litster v Foster Dry Dock and Engineering Co. [1990] 1 AC 546; Case 237/84 Commission v Belgium [1988] ECR 1247; Case C-382/92 Commission v United Kingdom [1994] ECR I-2435; Case C-472/93 Spano v Fiat Geotech SpA & aor [1995] ECR I-4321.     Error on facts and law   18. The Applicants agree with and endorse the Tribunal's finding that "it is clear that the employees of the Respondent at the time of the transfer had to be employed on Silver Book terms" (decision, para.27(viii), page 16). It is however submitted that the Tribunal clearly erred in its findings in the next sentences of that paragraph (which paragraph therefore lacks even internal consistency).   19. It is submitted that whatever the legal situation in relation to fixed-term contracts or collective agreements generally, the Tribunal fell into error in disregarding the actual conduct and intentions of the parties prior to the transfer: it clearly emerged from the evidence that the parties at all times acted on the basis that pre-transfer contracts could only be offered on Silver Book terms; further that the "roll-on" contracts would be (and continue to be) on Silver Book terms.   20. For this reason also the Tribunal fell into error (on both fact and law) in finding that the College could have offered non-Silver Book terms prior to transfer. In particular, the evidence of the College principal, Mr. Clarke, that the Silver Book exercised a "stranglehold" over the College prior to transfer, shows clearly that the parties' constant intention prior to transfer was that contracts be continued on Silver Book terms.   21. The Tribunal should have found (but failed to do so) that the relevant employment relationship pre-transfer necessarily included Silver Book conditions. It follows that the same conditions should apply post-transfer (see e.g. the extract from Bork cited at para.27(iii) of the decision).   Error on variation   22. The Tribunal further fell into error in finding that the Applicants had entered into "fresh contracts". First, the Tribunal erred on the law, in that it was not open to the Applicants to enter into such new contracts in any event: Case 324/86 Foreningen af Arbejdsledere i Danmark v Daddy's Dance Hall A/S [1988] ECR 739, (an employee cannot waive the mandatory rights under the ARD, even in a situation where as well as giving up employment rights in connection with a transfer there are also benefits conveyed upon him by the revised agreement and where, as a whole, he is not in a worse position). Secondly, the Tribunal was wrong on the facts to find that there had been 'fresh contracts' in circumstances where the Applicants had been working under protest.   23. In relation to Ms George the Tribunal in any event erred on the law in finding that her employment relationship after promotion was such a 'fresh contract' (i.e. that there was termination and a new contract). If it be the case that the Tribunal found that Ms George's intention and "all the surrounding circumstances" pointed towards a 'fresh contract', then the Tribunal clearly fell into an error of mixed fact and law in this regard; the circumstances of this case (not least the litigation itself) cannot reasonably allow that conclusion.     Article 4(2)   24. The Tribunal erred on the law in rejecting the Appellant's argument on Article 4(2) of the ARD. It is clear from the evidence that the termination of the Silver Book employment relationship because of the transfer involved a substantial change in working conditions to the detriment of the employee. Thus the College cannot escape its automatic responsibility under Article 4(2) of the ARD.   25. It is again submitted that the application of Article 4(2) (independently of Article 4(1)) would - if it became necessary - require a ruling from the European Court of Justice.     "Permissible variation"   26. In a final alternative finding the Tribunal held that any variation would constitute a 'permissible variation'. It is not understood whether by this finding the Tribunal is referring to Article 4(1) ARD "economic, technical or organisational" ("ETO") reasons (in which case it is in any event in error, since there were no changes in the workforce) or whether it merely concerns general variation. If the Tribunal has purported to make a finding on ETO reasons, then it is submitted that it has failed to make any of the findings of fact that would have been necessary to support this conclusion in law (e.g. the nature of such ETO requirements; the nature of changes in the workforce). Even if the Tribunal has made a finding only that the variation was not connected to the transfer, it has failed to make any or any sufficient findings of fact in that regard; in particular it has failed to have regard to conclusive evidence that a main purpose of the transfer was to alter the employees' terms of employment. Whatever the Tribunal's intention, it is submitted that it is in error, both on the facts as actually presented and even on the facts as found earlier in its decision.   27. Having found that there is "no doubt that it was Government policy to encourage all the corporations to introduce new employment terms which differed from the Silver Book" (para.17) and having found that the Government introduced legislation, including the "central pressure" mechanism of a 2% clawback (para.16), which was adopted by the College (para.21), it is in the Applicant's submission perverse to find that the change in contractual conditions was not due to the transfer. This is a fortiori in view of further relevant evidence before the Tribunal, but which the Tribunal has failed to take into account. The Applicants reserve the right to refer to the documentary evidence on appeal. Furthermore, the Tribunal has failed to take into account properly or at all the extraordinary coincidence in time between the transfer and the instigation of contractual change. Furthermore, the College clearly did feel obliged (see paras.20 and 21) to introduce new terms upon transfer (and independently of whether Government intended this or not), so that for all relevant purposes, the changes were due to the transfer.   28. The findings of the Tribunal are further perverse in a transfer case such as the present, which must be considered an extreme example of the genre, where the entire transfer (N.B. by statute) was intended by the transferor (and as it happens in this case the transferee) to effect a negative change in employment conditions of the employees of Further Education establishments. This was thus a deliberate attempt (in the first instance by the Member State; secondly by the College) to avoid the mandatory rules of the ARD in direct contravention of Community law duties. The Applicants will again refer to the relevant documentation in support of its arguments.   29. In any event the Tribunal's findings at para.27(xiv) are devoid of detailed findings of fact to support the baldly stated conclusion that "the variations of contract were permissible". After six days of evidence, half a paragraph is manifestly inadequate for a supposed finding of fact of considerable potential importance, and the Tribunal has thus failed to address itself properly or at all to all the relevant evidence   Affirmation   30. The Tribunal erred in law and patently on the facts in its (albeit partial) holding that there was prima facie affirmation (decision, para.27(xv)). The Tribunal erroneously distinguished Rigby v Ferodo [1987] IRLR 517 (where the conditions worked under do not constitute a material difference for distinction). The interpretation of Daddy's Dance Hall (ibid) is however accepted and endorsed by the Applicants.     Spirit and Purpose of the ARD   31. It is submitted in conclusion that the Tribunal's decision is so unreasonable as to be perverse in a case where the employer has perpetrated precisely the mischief that the ARD and TUPE are intended to prevent, i.e.: transferee employers depriving the transferred employees of their rights and imposing worse and detrimental conditions of employment upon them.   32. The Applicants therefore seek:   (i) leave to appeal;   and   (ii) on appeal:   (a) that the Tribunal's findings be overturned;   (b) the declaration set out at paragraph 3 above.       ELEANOR SHARPSTON QC   PHILIP MOSER   23 May 2000       Return to top of Page