London Borough of Hillingdon v Gormanley & Ors

For a service provision change under Transfer of Undertakings (Protection of Employment) Regulations 2006, the existence of an organised grouping and an individual employee’s assignment to it are related but distinct questions. Assignment requires consideration of the transferor’s organisational structure and the employee’s role within it. Actual work at a particular time is not alone determinative; contractual duties may be material.

A Polkey assessment asks how long employment would probably have continued but for the unfair dismissal. Predictions must rest on evidence, even though they necessarily involve an element of uncertainty. A tribunal must address material causation and mitigation arguments and give sufficient reasons for its conclusions.

RG Gormanley Ltd had undertaken housing repair and maintenance work for the London Borough of Hillingdon. When Hillingdon brought the work in-house, an Employment Judge held that the three remaining claimants transferred under TUPE and awarded compensation for unfair and wrongful dismissal and for failures to inform and consult.

Hillingdon appealed. It challenged the finding that the claimants were assigned to the relevant organised grouping, the refusal to make a Polkey reduction, the causation of two claimants’ later losses following redundancy by RG Gormanley Ltd, and findings on mitigation. It also challenged the consequential TUPE awards.

The central issues were whether assignment had been properly determined and whether the remedy findings were supported by evidence and adequate reasons.

1. Appeal allowed. The Employment Judge’s decisions on assignment, compensation, causation and mitigation were set aside. The case was remitted to a different Employment Judge.

2. The earlier pre-hearing review determined that there was a service provision change within Transfer of Undertakings (Protection of Employment) Regulations 2006 regulation 3. It did not determine whether any particular claimant was assigned to the organised grouping under regulation 4(1). The Employment Judge therefore erred in treating assignment as res judicata.

3. Assignment is a fact-sensitive question. Applying Botzen, the tribunal had to consider the organisational framework in which each employment relationship took effect. It should also consider contractual duties, including duties that the employee could be required to perform, rather than relying only on the work actually done when the Hillingdon contract ended. The Employment Judge made insufficient findings on those matters.

4. The refusal of a Polkey reduction applied the wrong counterfactual. The inquiry was what would probably have happened had there been no unfair dismissal, not whether Hillingdon would have ended its contract with RG Gormanley Ltd had it appreciated that TUPE applied. The finding on that latter question was unsupported speculation. The Employment Judge also failed to determine the chance of dismissal in the later redundancy process and did not address the argument that a fair redundancy dismissal would have occurred on transfer.

5. The judgment did not address the argument that the later redundancy dismissals by RG Gormanley Ltd, rather than Hillingdon’s dismissal, caused Robert and Graham Gormanley’s loss after 9 August 2013. It was therefore not Meek-compliant. The mitigation conclusions for Anne and Robert Gormanley were likewise insufficiently reasoned because the Employment Judge did not identify their evidential basis.

6. The consequential finding of breach of TUPE regulation 13 was also set aside. The claimants were ordered jointly and severally to pay Hillingdon £1,600 in appeal fees.

• Employment Appeal Tribunal: Allowed Hillingdon’s appeal, set aside the Employment Judge’s decisions and remitted the listed issues to a different Employment Judge.
• Employment Tribunal: Employment Judge Jack held that the claimants had transferred under Transfer of Undertakings (Protection of Employment) Regulations 2006 and made compensation awards. An earlier pre-hearing review before Employment Judge Heal held that a service provision change had occurred.