Celtec Limited v Astley and others

Where the outcome of an appeal concerning a transfer of an undertaking depends upon the meaning of “the date of a transfer” in article 3(1) of Council Directive 77/187/EEC, a preliminary ruling may be required on whether the transfer must occur at a single point in time and, if so, how that point is identified. The House referred those questions to the Court of Justice under article 234 of the Treaty establishing the European Communities. It did not determine the substantive appeal, which was stayed pending the ruling or further order.

Former civil servants responsible for vocational training and enterprise activities were seconded to a newly established Training and Enterprise Council. They later resigned from the Civil Service and became its employees without any interruption in their work. They claimed continuity of employment on the basis that their move formed part of a transfer of an undertaking.

The Employment Tribunal upheld the claims. The Employment Appeal Tribunal allowed the employer’s appeal by a majority, holding that the transfer had been completed when the transferee assumed occupation and control in about September 1990. The Court of Appeal, in [2002] EWCA Civ 1035, reported at [2002] ICR 1289, unanimously reversed that decision. It construed article 3(1) of Council Directive 77/187/EEC as capable of embracing a transfer occurring over a period.

The central issue before the House was whether “the date of a transfer” denotes a single point at which the transfer and the resulting transfer of employment rights take effect and, if it does, how that point must be identified.

1. Preliminary reference made; appeal stayed. In the considered opinion of Lord Bingham of Cornhill, Lord Nicholls of Birkenhead, Lord Steyn, Lord Hobhouse of Woodborough and Lord Rodger of Earlsferry, questions concerning the interpretation of article 3(1) of Council Directive 77/187/EEC were necessary before judgment could be given in the appeal. The questions were referred to the Court of Justice under article 234 of the Treaty establishing the European Communities. All proceedings were stayed until the Court of Justice gave its ruling or until further order, and costs were reserved.

2. The dispute concerned an undertaking transferred through a planned process extending over several years. The respondents continued doing the same work during their secondments and later moved from Civil Service employment to the transferee without a temporal break. The appellants contended that article 3(1) recognised only one date of transfer, when the transferee obtained full possession, occupation and control. The respondents contended that the provision must protect employees whose movement formed an integral part of the planned transfer process.

3. The Committee asked whether article 3(1), by referring to an employment relationship existing “on the date of a transfer”, requires a particular point at which the transfer is deemed complete and the employment rights and obligations pass to the transferee. If it does, the Court of Justice was asked how that point is to be identified. If it does not, the Court was asked how the expression should be interpreted.

4. The House made no final ruling on the correct construction of article 3(1), the respondents’ continuity of employment or the disposition of the substantive appeal. Those matters remained dependent upon the preliminary ruling.

1. House of Lords: In [2003] UKHL 73, unanimously referred three questions concerning article 3(1) of Council Directive 77/187/EEC to the Court of Justice and stayed the appeal, with costs reserved.

2. Court of Appeal: In [2002] EWCA Civ 1035, reported at [2002] ICR 1289, unanimously reversed the Employment Appeal Tribunal. It held that article 3(1) was sufficiently wide to embrace a transfer taking place over a period.

3. Employment Appeal Tribunal: In [2001] IRLR 788, by a majority, allowed the employer’s appeal. It concluded that the transfer had been completed when the transferee assumed actual occupation and control of the former business, in about September 1990 and before the respondents became its employees.

4. Employment Tribunal: On 22 December 1999, held that the respondents had continuity of employment under section 218 of the Employment Rights Act 1996 and by virtue of Council Directive 77/187/EEC. It treated their direct employment by the transferee as one step in a planned, lengthy transfer process. It also held that Mr Astley had continuity under the Transfer of Undertakings (Protection of Employment) Regulations 1981.