Gabriel v Peninsula Business Services Ltd & Anor

At common law, a contract of employment cannot be transferred to a new employer without the employee’s real consent, whether express or implied. A change in payroll arrangements, payslips or tax documentation will not establish implied consent where the employee was not informed that the employer had changed and continued to treat the original employer as such.

Absent an applicable statutory transfer regime, the original employer remains liable for claims arising during the continuing employment. Where transitional provisions disapply the statutory grievance procedure, failure to comply with that procedure cannot bar the claim.

The claimant brought sex and race discrimination claims against Peninsula Business Services Ltd. She had worked in its Taxwise department and was later paid through the payroll of Taxwise Services Ltd. The respondents contended that her employment had transferred to the second respondent on 1 April 2009.

At a pre-hearing review, the Employment Tribunal held that the transfer had occurred. It dismissed the claims against the first respondent as time-barred, while allowing specified claims against the second respondent to continue.

The claimant appealed. The central issue was whether her contract of employment had transferred to the second respondent despite her lack of knowledge of, or assent to, the alleged transfer.

1. Appeal allowed. The Employment Judge erred in law in finding that the claimant’s employment transferred from the first to the second respondent on 1 April 2009.

2. The applicable common-law rule was that a contract of service cannot be transferred by substituting a new employer without the employee’s real consent, express or implied. Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 remained the common-law position. Although statutory transfer arrangements could alter that position, the respondents did not contend that there had been a transfer under the TUPE Regulations.

3. Denham v Midland Employers’ Mutual Assurance Ltd [1955] 2 QB 437 was consistent with that rule. Its reference to a temporary employer concerned liability for negligence and did not support a novation of the employee’s contract without consent.

4. There was no express assent. The findings also precluded implied assent: the claimant had not received the email notifying colleagues of the proposed change, had never been notified that her employer’s identity had changed, addressed her grievance to the first respondent, and named it alone in both claim forms. Payroll, payslip and P60 material did not establish consent on the facts found.

5. The first respondent therefore remained the claimant’s general employer throughout the alleged discriminatory period. The transitional provisions in article 3 of the Employment Act Commencement No. 1 (Transitional Provisions and Savings) Order 2008 meant that the statutory grievance procedure under section 32 of the Employment Act 2002 did not apply. The claim against the first respondent was not time-barred.

6. There was no cross-appeal against the ruling permitting the claims against the second respondent to proceed. The case was remitted to the Employment Tribunal for a substantive hearing of the claims against both respondents. The Tribunal expressed no view on any eventual joint or several liability under the discrimination legislation.

• Employment Appeal Tribunal: allowed the claimant’s appeal and remitted the claims against both respondents for a substantive hearing.
• Employment Tribunal (Manchester): at a pre-hearing review, held that employment had transferred to the second respondent on 1 April 2009; dismissed the claims against the first respondent as time-barred; and permitted specified claims against the second respondent to proceed.