I Lab Facilities Ltd v Metcalfe & Ors (Transfer of Undertakings : Transfer)

For a transfer to fall within regulation 3(1)(a) of the Transfer of Undertakings (Protection of Employment) Regulations 2006, the tribunal must make findings that an economic entity transferred and retained its identity. A common intention that a business or part of it should continue is relevant to whether dismissals were transfer-related under regulation 7(1), but it cannot itself establish a relevant transfer. The tribunal must identify and determine the transfer question by reference to the relevant facts, including the date and circumstances of the putative transfer.

Ten employees were employed in the post-production business of I Lab UK Ltd after a merger with RKT Post-Production Ltd. Their employment was terminated on 11 July 2009. I Lab Facilities Ltd later purchased plant, machinery, goodwill, the company name and client data from I Lab UK Ltd’s liquidator.

The Employment Tribunal found that a relevant transfer had occurred and that the dismissals were transfer-related under regulation 7(1). Facilities appealed, arguing that the Tribunal had made no findings showing that the relevant economic entity retained its identity after the putative transfer.

1. The appeal was allowed. The Employment Tribunal had not made factual findings capable of supporting the conclusion that the post-production economic entity in which the Claimants worked transferred to Facilities and retained its identity within regulation 3(1)(a) of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

2. The Tribunal had not identified the date of the putative transfer. It was unclear whether the relevant date was the date of dismissal, the later sale by the liquidator, or another date. Findings were also required on the circumstances and effect of the alleged transfer.

3. The intention of Mr Tadros, as the person directing both companies, that Facilities should take over as much of the post-production work as possible could be relevant to whether the dismissals were for a transfer-related reason under regulation 7(1). That intention was, however, dependent upon there first being a relevant transfer under regulation 3(1)(a). It could not replace the necessary findings on transfer and retention of identity.

4. The purposive approach in Litster v Forth Dry Dock & Engineering Co Limited (in receivership) [1989] IRLR 161 did not assist. In Litster there was already a relevant transfer, whereas the present Tribunal had made no findings establishing one.

5. The case was remitted to a fresh Employment Tribunal for the necessary findings and determination. The Employment Appeal Tribunal expressed no view on a separate argument concerning regulation 13, which was not before it.

• Employment Appeal Tribunal: allowed the appeal from the Employment Tribunal’s pre-hearing review judgment dated 28 June 2010 and remitted the case to a fresh Employment Tribunal.