Balfour Beatty Power Networks Ltd & Anor v Wilcox & Ors

Whether an undertaking exists and retains its identity for TUPE purposes is a practical, multifactorial question of fact. An economic entity may be stable even though its future workload or contractual continuation is not guaranteed. Activities need not be classified into mutually exclusive categories of labour-intensive and asset-reliant businesses.

Where equipment is leased rather than owned, its non-transfer does not necessarily prevent the undertaking from retaining its identity. The tribunal must weigh the equipment against the workforce, skills, organisation and operational continuity.

An employment tribunal’s reasons satisfy the law if they disclose the issues, material findings, applicable law and basis of decision. The tribunal need not answer every argument or adopt elaborate drafting.

Hyder performed electricity-network work for Western Power Distribution through separately organised contracts. Its RASP operation used dedicated, trained employees and leased specialist equipment. When Interserve obtained the replacement RASP contract, it recruited Hyder’s project engineer and several former Hyder workers. The Employment Tribunal found that substantially the same work continued with almost the same people and objectives.

The Employment Tribunal held that the RASP operation was an economic entity which retained its identity, so the Transfer of Undertakings (Protection of Employment) Regulations 1991 applied. The Employment Appeal Tribunal rejected Interserve’s challenges concerning the tribunal’s reasons, the stability and definition of the entity, the nature of the work and the non-transfer of equipment.

Interserve appealed on questions of law. The central issues were whether the Employment Appeal Tribunal had failed to identify legal error in the Employment Tribunal’s reasoning or its multifactorial assessment of whether an undertaking had transferred.

1. Appeal dismissed unanimously. The Employment Tribunal understood the governing law and applied it to facts which it was entitled to find. The Employment Appeal Tribunal made no error of law in upholding the conclusion that the RASP undertaking retained its identity.

2. The governing inquiries were whether an identifiable, stable economic entity existed before the alleged transfer and whether it retained its identity afterwards. Those inquiries required consideration of all the facts characterising the transaction. The Employment Tribunal was the primary fact-finder and possessed relevant industrial expertise.

3. The entity was not merely the activity required by a service contract. It was a cohesive, separately managed and organised workforce whose members possessed training and authorisations important to the work. The same work subsequently continued with almost the same people, objectives and practical arrangements. The Employment Tribunal was entitled to reject evidence that the low-voltage work had arisen unexpectedly and to find that recruitment arrangements had been designed to minimise the perceived operation of TUPE.

4. Stability is determined by practical and industrial reality. An entity does not cease to be stable merely because its contractor lacks exclusive rights, future work is not guaranteed, or the contract is subsequently lost. Treating those matters as conclusive would undermine employee protection and facilitate avoidance.

5. The authorities did not establish an exhaustive division between labour-intensive and asset-reliant undertakings. All relevant circumstances remained material. The non-transfer of plant and vehicles was not decisive because Hyder had leased them, Interserve obtained similar equipment, and the trained workforce was more important to the operation. Leased equipment is less readily characterised as an integral business asset than owned production assets.

6. The written-reasons requirements in the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 were a guide rather than a straitjacket. Reasons were legally sufficient where the required matters could reasonably be discerned and the parties knew why they had won or lost. A tribunal need not answer every argument or produce elaborate drafting.

7. The Court of Appeal’s jurisdiction under section 37 of the Employment Tribunals Act 1996 was to hear an appeal from the Employment Appeal Tribunal. Although the Employment Tribunal remained the primary tribunal of fact, the Employment Appeal Tribunal’s reasoning should not be ignored and could properly be examined and adopted.

1. Court of Appeal (Civil Division): Dismissed Interserve’s appeal. It upheld the Employment Appeal Tribunal’s conclusion that the Employment Tribunal had committed no error of law concerning the RASP undertaking.

2. Employment Appeal Tribunal: Rejected the challenges to the Employment Tribunal’s decision concerning Interserve’s RASP contract. It separately remitted the decision concerning Balfour Beatty’s jointing contract for insufficient reasons; that ruling was not before the Court of Appeal.

3. Employment Tribunal: Found that the RASP operation was an identifiable economic entity which retained its identity after Interserve obtained the replacement contract. It held that the Transfer of Undertakings (Protection of Employment) Regulations 1991 applied to the relevant employees.