Oakland v Wellswood (Yorkshire) Ltd

The Court of Appeal allowed an appeal on the narrow point that, for the purpose of establishing continuity of employment under the Employment Rights Act 1996, section 218(2) operated to treat service with the transferor as service with the transferee where a trade or business was transferred. The court held that the appellant could raise a point of pure law at this stage because it caused no injustice to the other side. As a result the appellant could count his period of employment with the old company towards the one‑year qualifying period for unfair dismissal under section 108(1) and so the Employment Tribunal had jurisdiction to hear the unfair dismissal claim.

The court declined to decide the contested construction of Regulation 8(7) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (the TUPE Regulations) in relation to administration, noting that there were reasons of representation and wider interest making it unwise to reach a definitive conclusion on that issue in this appeal.

Background and parties: The appellant, Mr Oakland, had been general manager of Wellswood Limited ("Oldco") until it entered administration on 6 December 2006. A new company wholly owned by a customer ("Newco") acquired Oldco's business and some employees transferred to Newco. Shortly before completing one year of employment with Newco, Mr Oakland was dismissed and brought an unfair dismissal claim under the Employment Rights Act 1996, section 94.

Procedural posture: The Employment Tribunal (Regional Employment Judge Sneath) accepted a concession that Oldco's undertaking had been transferred to Newco but found, applying Regulation 8(7) of the Transfer of Undertakings (Protection of Employment) Regulations 2006, that because Oldco was in administration and liquidation was likely, the contract of employment had not transferred. The Employment Appeal Tribunal (HHJ Peter Clark) dismissed the appeal. Permission to appeal to the Court of Appeal was granted by Mummery LJ.

Nature of the claim / relief sought: A declaration or finding that the appellant had sufficient continuous employment to bring an unfair dismissal claim (one year qualifying period), and consequentially a determination on the merits of the unfair dismissal claim by the Employment Tribunal.

Issues framed by the court:

• Whether Regulation 8(7) of the TUPE Regulations excluded a transfer of contracts where the transferor was in administration which was effectively for liquidation.
• Whether, independently of TUPE, section 218 of the Employment Rights Act 1996 permitted the appellant to count his service with Oldco as service with Newco for continuity purposes.
• Whether the appellant could raise the point under section 218 on appeal despite not having relied on it earlier.

Court’s reasoning and decision: The Court of Appeal held that the new point under section 218 was a point of pure law requiring no factual enquiry and that raising it on appeal caused no injustice to the respondent. The court concluded that, if the statutory test in section 218(2) was satisfied because the trade or business had been transferred by concession, the period of employment with the transferor counts as employment with the transferee and continuity is preserved for the purposes of section 108(1). Given that conclusion, the appellant could meet the one‑year qualifying period for unfair dismissal and the Employment Tribunal had jurisdiction to hear the claim. The court nevertheless declined to determine the substantive question of the correct construction of Regulation 8(7) in relation to administration, because interested parties and the Secretary of State were not present to address that point fully and because Newco was unrepresented and in liquidation.

Additional points: The court emphasised that there are rare circumstances in which a fresh, dispositive point of pure law may be taken on appeal where no injustice is caused. The order was that the appeal be allowed.

Appeal allowed. The Court of Appeal held that the appellant could raise, on appeal, a point of pure law under section 218 of the Employment Rights Act 1996 that the period of employment with the transferor counts as employment with the transferee where a trade or business has been transferred, thereby preserving continuity and giving the Employment Tribunal jurisdiction to hear the unfair dismissal claim. The court declined to decide the separate question whether Regulation 8(7) of the TUPE Regulations excluded transfer in the context of administration.

Appeal from the Employment Appeal Tribunal (HHJ Peter Clark) which had dismissed the appellant's challenge to the Employment Tribunal's decision (Regional Employment Judge Sneath). Permission to appeal to the Court of Appeal was granted by Mummery LJ. Final judgment in the Court of Appeal: [2009] EWCA Civ 1094.