Wain & Ors v Guernsey Ship Management Ltd

Whether a group of employees is an economic entity is a question of fact. The tribunal must assess the relevant circumstances together using a multifactorial approach. Contractual status and business role may support the existence of an entity, but are not conclusive. Differences in the work performed and the absence of a team structure may point against it. If no economic entity existed, there could be no transfer of an undertaking under the Transfer of Undertakings (Protection of Employment) Regulations 1981.

Six short-term workers employed by Wightlink (Guernsey) Ltd claimed that their employment had transferred to Guernsey Ship Management Ltd under the Transfer of Undertakings (Protection of Employment) Regulations 1981. They sought the higher wage rates agreed by their former employer before the alleged transfer.

An Employment Tribunal held that the workers did not constitute an economic entity and that no relevant transfer had occurred. The Employment Appeal Tribunal dismissed the appeal, holding that the issue was one of fact: UKEAT/0320/06/CEA. The Court of Appeal considered whether the tribunal had erred in law or made plainly wrong findings of fact.

1. Appeal dismissed. The Employment Tribunal had directed itself correctly by applying the multifactorial approach summarised in Cheesman and others v R Brewer Contracts Ltd [2001] IRLR 144.
2. Whether the group of workers was an economic entity was a question of fact. The tribunal was entitled to consider the workers’ common short-term contractual status and their common role in supplying labour, together with the fact that they performed different jobs on different vessels. Neither factor was conclusive. There was a proper evidential basis for finding that the group was not an economic entity.
3. The fact that workers had similar contractual terms did not, by itself, establish an economic entity: Wynnwith Engineering Co Ltd v Bennett and others [2002] IRLR 170.
4. Because there was no economic entity to be transferred, there could be no transfer of an undertaking or part of an undertaking. The tribunal’s alternative finding that the group had been subsumed into a larger group of the respondent’s employees was immaterial to the result. In any event, the absence of the necessary evidential material and the failure to challenge the finding as perverse below made it too late to reopen that issue on appeal.
5. Lady Justice Arden and Lord Justice May agreed with Lady Justice Smith’s reasons.

• Court of Appeal (Civil Division): appeal dismissed for the reasons given by Lady Justice Smith, with agreement from Lady Justice Arden and Lord Justice May.
• Employment Appeal Tribunal: appeal dismissed; the Employment Tribunal had directed itself correctly in law and was entitled to reach its decision, UKEAT/0320/06/CEA.
• Employment Tribunal, Southampton: claims for unlawful deductions from wages failed after it found no relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981.