Betts v Brintel Helicopters Ltd

A change of contractor does not itself amount to a transfer of an undertaking under the Transfer of Undertakings (Protection of Employment) Regulations 1981. The decisive question is whether a stable economic entity has been transferred and retained its identity. Similarity of the service before and after the change is relevant but is not decisive.

The inquiry requires an overall assessment of the entity’s workforce, assets, organisation, operating methods and activity. In a labour-intensive undertaking, a new contractor’s taking over a major part of the workforce may preserve the entity’s identity. For an undertaking with substantial assets and infrastructure, retention of only a limited contractual facility or activity will not suffice.

Brintel provided helicopter services for Shell’s southern North Sea sector from its Beccles base. When that fixed-term contract expired, Shell awarded a new southern-sector contract to KLM. KLM operated from Norwich using different helicopters and crews. It acquired no Brintel staff, helicopters or Beccles infrastructure. The claimants, formerly employed at Beccles, sought declarations that their employment had transferred to KLM by operation of the Transfer of Undertakings (Protection of Employment) Regulations 1981.

Scott Baker J granted the declarations but refused an injunction. KLM appealed. The central issue was whether Brintel’s Beccles operation had been transferred to KLM while retaining its identity.

1. Appeal allowed unanimously. Kennedy LJ, with whom Auld LJ and Sir Roger Parker agreed, held that Brintel’s Beccles operation was an undertaking or economic entity, but that it had not transferred to KLM with its identity retained.
2. The governing inquiry under regulation 3(1) of the Transfer of Undertakings (Protection of Employment) Regulations 1981, construed consistently with article 1(1) of Council Directive 77/187/EEC, is whether the entity retains its identity. This requires a factual assessment of the whole entity, not merely whether the same service is performed.
3. The relevant entity comprised the helicopters, Beccles landing strip, premises and buildings, staff, Aberdeen maintenance and support resources, the Shell contract, and the associated right to land on and use oil-rig facilities. KLM acquired no helicopters, infrastructure or staff. It performed the new contract from a different base with different helicopters and crews. Even assuming that the oil-rig facilities were an asset transferred, that was too limited a part of the entity to establish a transfer of the undertaking.
4. Ayse Suzen clarified that similarity of activities and the mere loss of a contract to a competitor do not demonstrate a transfer. In labour-intensive activities, transfer of a major part of the workforce may preserve identity, as illustrated by Dines. This helicopter operation was not such an undertaking: its workforce was not its sole or dominant asset.
5. The court found no basis for treating the 1981 Regulations as going beyond the Directive and therefore did not decide the alternative argument that any excess would be ultra vires section 2(2) of the European Communities Act 1972. The declarations were accordingly set aside.

• Court of Appeal (Civil Division): Allowed KLM’s appeal and set aside declarations granted by Scott Baker J.
• High Court: Scott Baker J, on 28 July 1995, granted declarations that the claimants’ employment had transferred under the Transfer of Undertakings (Protection of Employment) Regulations 1981, but dismissed their application for an injunction.