24-7 Property Letting (Glasgow) Ltd v Smith (Transfer of Undertakings)

An Employment Tribunal must give adequate reasons for finding that a relevant transfer occurred under the TUPE Regulations. Where transfer is disputed, the reasons must explain why a transfer took place, when it took place, and the findings which justify fixing liability on the alleged transferee.

A constructive-dismissal finding cannot safely stand where it is unclear whether alleged religious harassment formed an essential part of the repudiatory breach, and whether the alleged harasser acted for the employer. A claim of religious harassment could not be determined by an Employment Judge sitting alone under Employment Tribunal Act 1996, section 4(1).

The claimant, a branch manager in a property-letting business, alleged that her employment transferred to the respondent under the TUPE Regulations. She brought claims for constructive unfair dismissal, notice pay, unauthorised deductions, holiday pay and religious harassment arising from conduct involving the wife of a director of the original company.

An Employment Judge sitting alone upheld all claims and found that a transfer had occurred on 20 July 2012. The respondent appealed. It contended that the reasons did not establish a transfer or the wife’s employment or agency status, and that the Tribunal was not properly constituted to decide the religion-harassment claim.

The central issues were whether the findings and reasons could sustain liability against the alleged transferee, and whether the Tribunal had jurisdiction to determine the harassment claim.

1. Appeal allowed. The Employment Judge sitting alone had no power to determine the religious-harassment claim. Under section 4(1) of the Employment Tribunal Act 1996, that claim required a Tribunal of three persons.

2. The finding of a transfer under the TUPE Regulations could not stand. Although the Employment Judge correctly directed herself on the law, the written reasons did not explain why the evidence established a transfer, why 20 July 2012 was its date, or whether Mrs Wright formed part of the economic entity said to have transferred. Those matters were essential to deciding whether the respondent bore contractual and statutory liability.

3. The constructive-unfair-dismissal finding also could not stand. The reasons did not disclose whether the other alleged conduct was independently sufficient to amount to a fundamental breach, without the alleged religious harassment. Nor did they resolve Mrs Wright’s legal connection with the alleged transferee if her conduct was relied upon.

4. The findings that wages had been unlawfully deducted and that holiday pay was due were not challenged in substance. The fresh Tribunal need determine only the identity of the employer liable for those claims. It must determine notice pay in light of its decision on constructive dismissal.

5. The case was remitted to a freshly constituted Tribunal of three persons to determine transfer, constructive dismissal, religious harassment, employer identity for wage and holiday claims, and notice pay.

• Employment Appeal Tribunal: appeal allowed and the material claims remitted to a fresh Tribunal of three persons.
• Employment Tribunal: Employment Judge sitting alone, following a hearing on 4 November 2013, upheld claims for constructive unfair dismissal, notice pay, unauthorised deductions, holiday pay and religious harassment.