Celtec Limited v Astley and others

This appeal raised the proper interpretation of Article 3(1) of Council Directive 77/187/EEC concerning the meaning of "the date of a transfer" for the purposes of preserving employees' accrued rights on a transfer of an undertaking. The domestic proceedings concerned whether former civil servants seconded to newly created Training and Enterprise Councils (TECs) enjoyed continuity of employment when they left the Civil Service and took up employment with the TECs as part of a planned, phased transfer.

The House of Lords concluded that the correct interpretation of the Directive was a question of Community law requiring a preliminary ruling by the Court of Justice of the European Communities. The committee therefore referred specific questions about whether the Directive presupposes a single point in time for transfer or can cover a transfer effected by a series of transactions and stayed the appeal pending that ruling. Key statutory matters addressed in the domestic proceedings included section 218 of the Employment Rights Act 1996 (formerly paragraph 17(1) of Schedule 13 to the Employment Protection (Consolidation) Act 1978) and the Transfer of Undertakings (Protection of Employment) Regulations 1981.

Background and parties. Celtec Limited (successor to NEWTEC) managed locally organised post-16 vocational training and enterprise activities. The respondents, former civil servants (Mr Astley, Ms Owens and Ms Hawkes), were seconded from the Department of Employment to NEWTEC and later resigned from the Civil Service to become employees of the TEC as part of a planned transfer of the undertaking. The respondents sought recognition of continuity of employment so as to preserve accrued employment rights; one respondent was later dismissed for redundancy.

Procedural history. An Employment Tribunal held that the respondents had continuity of employment under domestic law and by virtue of the Directive. The Employment Appeal Tribunal (majority) held that the transfer was completed when the transferee took actual occupation and control and that the protection was triggered at that point. The Court of Appeal reversed the Employment Appeal Tribunal and interpreted Article 3(1) of the Directive as wide enough to embrace a transfer effected over a period. The House of Lords identified a need for a preliminary ruling from the Court of Justice on the meaning of "the date of a transfer" in Article 3(1).

Nature of the application and issues. The respondents sought a determination that their periods of service were continuous so as to attract protection under Article 3(1) of Council Directive 77/187/EEC and corresponding domestic provisions. The central issues framed were (i) whether Article 3(1)'s reference to "the date of a transfer" presupposes a single, identifiable moment at which the transfer is completed, (ii) if so, how that moment is to be identified, and (iii) if not, how the expression should be interpreted where a transfer is effected by a series of transactions over time.

Court's reasoning and disposition. After summarising the factual matrix — notably the planned phased secondment, the absence of any break in employment when respondents moved from the Civil Service to the TEC and the governmental role in creating the TECs — the House of Lords concluded that the correct interpretation of the Directive in those circumstances was a matter of Community law which fell to the Court of Justice. The committee therefore referred the three questions on Article 3(1) to the Court of Justice under Article 234 of the Treaty and ordered the appeal stayed pending the preliminary ruling, reserving costs.

The House of Lords decided to refer questions on the interpretation of Article 3(1) of Council Directive 77/187/EEC to the Court of Justice of the European Communities for a preliminary ruling and stayed all proceedings in the appeal pending that ruling. The rationale was that the questions raised concerned the correct interpretation of Community law (in particular whether "the date of a transfer" denotes a single point in time or can encompass a transfer effected by a series of transactions) and therefore required the Court of Justice's authoritative guidance. Costs were reserved.

Employment Tribunal decision dated 22 December 1999; Employment Appeal Tribunal [2001] IRLR 788; Court of Appeal [2002] ICR 1289; appeal to House of Lords [2003] UKHL 73 (reference to the Court of Justice ordered).