IN THE MANCHESTER EMPLOYMENT TRIBUNAL Case number 2405784/2012 BETWEEN: NATIONAL UNION OF TEACHERS Claimant - and SEFTON METROPOLITAN

BOROUGH COUNCIL Respondent ___________________________________________________ OPINION ON THE MERITS AND OTHER MATTERS ___________________________________________________ Introduction

I am asked to advise on several matters relating to the merits of a claim which has been made, and the best way to deal with a situation which has arisen (seemingly for the first time in England), in relation to the kind of school which has been called by the current Government a free school. The situation has given rise to a claim made by the National Union of Teachers (NUT) of a failure to comply with the requirements of regulation 13 of the Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246 (TUPE). That claim has been made against Sefton Metropolitan Borough Council (the Council), by which I am instructed. I have so far advised orally in conference and by email on certain aspects of the matter. I have also drafted the grounds on which the claim made by the NUT will be resisted. More information has become available since I advised in conference and drafted those grounds, and I am now asked to advise on the merits of the claim that TUPE applies. I am also asked to advise whether or not it would be advisable to seek a declaration from the High Court as to the applicability or otherwise of TUPE in the circumstances, which include that the body which is responsible for the new free school (The Hawthornes Free School, to which I refer as Hawthornes), refuses to accept that TUPE applies.

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In what follows, I first state the relevant facts as far as they are now known. I then state my views on the likely applicability or otherwise of TUPE, and in the course of doing so, I discuss the stated reasons of Hawthornes for its current stance (which is that TUPE does not apply and that Hawthornes has not yet been joined as a party to the claim). Finally, I discuss the best way forward in practical terms.

The facts as far as they are currently known

Hawthornes was originally proposed as a replacement school for two schools which were, for several reasons, going to be closed in any event: St Wilfrids Catholic High School (St Wilfrids) and St George of England High School (St Georges). (I take this information from the notes of the trade union consultation meeting of 7 December 2011 at page TU3 of the papers which have been sent to me.)

St Georges and St Wilfrids closed for most practical purposes at the end of the Summer term of this year, but they are officially closing (i.e. ceasing to be maintained by the Council) on 31 August 2012. Hawthornes will on 1 September 2012 open as an Academy within the meaning of the Academies Act 2010 (as amended). St Georges was a community school within the meaning of section 20(1)(a) of the School Standards and Framework Act 1998 (SSFA 1998). St Wilfrids was a voluntary aided school within the meaning of section 20(1)(c)(i) of that Act. Accordingly, the employer as far as the law of contract was concerned of the staff of St Georges was (and of course remains until 31 August 2012) the Council and the employer of the staff of St Wilfrids was (and remains until that date) the governing body of that school (see sections 35 and 36 of the Education Act 2002 respectively).

Hawthornes relies on the following factual matters (which were set out in a letter dated 17 August 2012 from the Ven Ricky Panter, the Chair of Trustees of Hawthornes, to Mr -2-

Colin Pettigrew, the Councils Director, Young People and Families), to justify its stance that TUPE does not apply:

5.1

There will be fundamental differences between the staffing structure at Hawthornes and those at St Georges and St Wilfrids (for example, of the 34 teaching positions at Hawthornes, there were only 12 that the job descriptions of the current teachers at St Georges would have directly matched on a like for like basis (although not on the same pay)); Pupils were not automatically transferred from St Wilfrids or St Georges to Hawthornes. Parents and carers had a choice as to where to send them; Hawthornes will have other pupils who have not moved from St Wilfrids or St Georges; Hawthornes will not be using all of the assets acquired from St Georges; Only very minimal assets amounting to 5,000 have been purchased from St Wilfrids on closure of that site and the Hawthornes will not be operating on St Wilfrids site; Hawthornes will not have any religious designation. St Wilfrids is a Catholic faith school; St. Georges is a specialist Engineering College. St Wilfrids had no specialism. Hawthornes will have a Business/Enterprise focus; Subject to limited transitional arrangements in the first year, the curriculum will be the fundamentally different curriculum designed by Hawthornes. Existing courses offered by St Georges and St Wilfrids leading to the award of engineering, psychology, leisure and tourism, child development and religious education GCSEs will not be offered by The Hawthornes within our new curriculum. Hawthornes will have a Business/Enterprise focus and offer a wider range of Extra Curricular activities than either St Wilfrids or St Georges; and The catchment area of Hawthornes is different to that of St Wilfrids and St Georges and includes areas covered by other local authorities.

5.2

5.3

5.4 5.5

5.6

5.7

5.8

5.9

In fact, I am instructed (and I can see from the documents which I have been sent, including page AI1), the 5,000 which was paid for assets of St Wilfrids was a knockdown price for assets which would have cost more than 25,000 new. In addition,

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Hawthornes will be based in the building which used to house St Georges and will have in it most of the fixtures, fittings, furniture and movable equipment which was used by that school before it closed.

Furthermore, I am instructed that most of the pupils at Hawthornes will be former pupils of either St Wilfrids or St Georges. The latest numbers, as stated by the Councils school admissions service on 23 August 2012 on the basis of the most recent information, are these: there will be a total of 423 pupils, of whom 7.1 40 will come as entrants into the first year of entry, Year 7, directly from local primary schools; 7.2 6 will transfer from other schools (and even these 6 are, I am instructed, mostly former pupils of either St Wilfrids or St Georges who had moved to different schools and are now moving back); 7.3 7.4 181 will come directly from St Wilfrids; and 196 will come directly from St Georges.

In addition, I am instructed, of the 59 members of the staff of Hawthornes, 21 are coming from St Wilfrids, 21 are coming from St Georges and 17 have been recruited externally. The head teacher of Hawthornes was the head teacher of St Georges. The two deputy head teachers of Hawthornes were also formerly employed at St Georges.

The relevant law

TUPE will apply here only if there will be the transfer of one or more undertakings, or parts of undertakings, within the meaning of regulation 3(1)(a) of TUPE (i.e. since it cannot be said that there will be a service provision change within the meaning of regulation 3(1)(b) of TUPE). In fact, as I see it, there is the possibility of a transfer of two undertakings, or parts of two undertakings. Regulation 3(1)(b) reflects the wording of -4-

Article 1(1)(b) of the European Directive which gave rise to TUPE, namely 2001/23/EC. (That Directive is usually referred to as the Acquired Rights Directive.) That Directives wording itself reflects the jurisprudence of the European Court of Justice (ECJ) as it stood in 2001. Regulation 3(1)(a) applies only where there is a transfer of an economic entity which retains its identity.

10

In Klarenberg v Ferrotron Technologies GmbH [2009] ICR 1263, the ECJ held (to quote the headnote of that report, which is borne out by the judgment of the ECJ) that

the condition laid down in article 1(1)(b) of Directive 2001/23, whereby a transfer falling within the scope of the Directive had to be of an economic entity which retained its identity after transfer, required the retention, not of the specific organisation of the elements of production, but of such a functional link of interdependence and complementarity between those elements as enabled the transferee to use them to pursue an identical or analogous economic activity, even if after the transfer they were integrated in a new and different organisational structure; and that it was for the national court to ascertain, in the light of those considerations and making a global assessment of all the facts characterising the transaction, whether the identity of the economic entity transferred had been preserved.

11

In Fairhurst Ward Abbotts Ltd v Botes Building Ltd [2004] ICR 919, the Court of Appeal (again, quoting the headnote, which is borne out by the text of the judgments of the court) held:

that, where there was a transfer of something less than an entire undertaking, it was sufficient for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981, depending on the evidence in the particular case, if a part of an economic entity became identified for the first time as a separate economic entity when the transfer separated the part from the whole, and it was not necessary for the particular part transferred itself to exist as a discrete and identifiable economic entity before the date of the transfer.

12

In Askew v Governing Body of Clifton Middle School [2000] ICR 286, which concerned the closure of what would under the SSFA 1998 have been two community schools and -5-

the opening in their place of a single community school, the Court of Appeal held this (according to the headnote):

(Chadwick L.J. dissenting), (1) that when the local authority ceased to maintain the first and middle schools there was no amalgamation or merger of responsibilities, which were concepts alien to the statutory scheme for maintaining schools, but a cessation of both and the establishment of a new school; that on the cesser of maintenance it was inevitable that the governing body of the middle school would have to recommend the dismissal of the staff, and the local authority would have to give effect to that recommendation; and that it was plain that the applicant was dismissed for redundancy, or some other substantial reason justifying the dismissal, namely, the reorganisation, and that that dismissal was not unfair (post, pp. 294F-295D, 300A-D, 306D-E). (2) That it was clear from the definitions of employee and contract of employment in regulation 2(1) of the Transfer of Undertakings (Protection of Employment) Regulations 1981 that the Regulations proceeded on the basis that there was a contract of employment of a person employed by the transferor in the undertaking transferred and that the employee was employed by the transferor and would become an employee of the transferee; that, although it was accepted that the middle school was an undertaking capable of being transferred for the purposes of regulation 3 of the Regulations of 1981, there could be no relevant transfer unless the transferor was also the employer; and that the applicant, with no contract with the governing body of the middle school and never employed by that body, was not an employee of the governing body for the purposes of regulation 8 (post, pp. 298F-299A, 304D-305B, 307F-308A, 310G-311C). (3) That (Chadwick L.J. dissenting), (per Peter Gibson L.J.) although the term employment relationship in article 3(1) of Directive 77/187 must go wider than contract of employment, it was clear that the Directive contemplated that the employment relationship, no less than the contract of employment, must give rise to obligations on the transferor with rights for the employee to enforce the liability in respect of those obligations; that the only rights and obligations that the applicant contended arose from his relationship with the governing body were obligations arising from the employment contract which were obligations of the local authority and not of the governing body; that, accordingly, the applicant was not protected as an employee of the governing body by virtue of an employment relationship; that (per Ward L.J.) article 1(1) of Directive 77/187 explicitly required the transfer of the undertaking to another employer; that the governing bodies were not the employers of staff at the schools, the reality being that the local authority would be the employer of staff at the new school just as it had been the employer of the staff at the old school; and that, accordingly, there was no change of employer and no transfer for the purposes of the Directive (post, pp. 297C-E, 298A-B, 303G-304D). -6-

Will there be a TUPE transfer here?

13

It has not to my knowledge been disputed for a long time (i.e. I am not aware that it has been disputed during a period of a number of years) that when there is the closure of a maintained school (i.e. its discontinuance within the meaning of e.g. section 22(2) of the SSFA 1998) and the opening of a new school in its place where the staff of the new school have a different employer from that of the staff of the discontinued school, there is a TUPE transfer. In my view that is because there will in most (if not all) circumstances be such a transfer.

14

I find it difficult to see how an employment tribunal could lawfully avoid the conclusion that there have been transfers governed by TUPE from both St Georges and St Wilfrids to Hawthornes. This is not least because it is now clear that there needs only to be an analogous economic activity in existence after a claimed transfer.

15

I see from the letter dated 17 August 2012 from the Chair of Trustees of Hawthornes that reliance is likely to be placed on Askew in support of the proposition that TUPE does not apply here. In my view, that reliance is mistaken. In my view, (a) Askew was wrongly decided for the reasons stated by Chadwick LJ at pages 312B-313B, and (b) in any event the decision of the majority turned (see in particular at pages 298H and 300H) on the fact that there was in the circumstances no change of the contractual employer of the staff concerned. Here, there clearly will be changes in the employer of the staff of both St Wilfrids and St Georges if any of them work for Hawthornes.

Has Hawthornes been joined as a party yet?

16

Paragraphs 6 and 7 of the grounds on which the Respondent will resist the claim are in these terms. -7-

Furthermore, and in any event, the Respondent has (in a letter dated 9 May 2012) given the Claimant sufficient information to comply with the Respondents duty under regulation 13(2) of TUPE except to the extent that the Respondent may have failed to comply with the duty in regulation 13(2)(d). In so far as the Respondent may have failed to comply with regulation 13(2)(d), it did so because 6.1 it was not reasonably practicable to comply with that duty, which in turn is because the proprietor of the new school, The Hawthornes Free School (the Proprietor), has failed to comply with its duty under regulation 13(4) of TUPE.

6.2

The Respondent has notified the Proprietor of the Respondents intention to show that if and in so far as the Respondent failed to comply with its duty under regulation 13(2)(d) of TUPE, it did so because the Proprietor failed to comply with its duty under regulation 13(4) of TUPE, and accordingly by reason of regulation 15(5) of TUPE, the Proprietor is now a party to these proceedings.

17

Regulation 15(5) of TUPE is in these terms:

On a complaint against a transferor that he had failed to perform the duty imposed upon him by virtue of regulation 13(2)(d) or, so far as relating thereto, regulation 13(9), he may not show that it was not reasonably practicable for him to perform the duty in question for the reason that the transferee had failed to give him the requisite information at the requisite time in accordance with regulation 13(4) unless he gives the transferee notice of his intention to show that fact; and the giving of the notice shall make the transferee a party to the proceedings.

18

It is claimed by Hawthornes that it is not yet a party to the proceedings. It has made that claim on the basis that the NUT has not made a claim against the Council of a failure to comply with regulation 13(2)(d). However, the NUTs claim is (so far as relevant) in these terms:

Despite the Respondents being of the view that TUPE does apply there has been no consultation with the National Union of Teachers contrary to Regulation 13 of the TUPE Regulations 2006. -8-

In the circumstances a claim is being made for a declaration that the Respondents are in breach of their obligations under the TUPE Regulations and for a protective award.

19

Given the breadth of the claim and the fact that it is expressly of a failure to comply with the Councils obligations under the TUPE Regulations, I rather doubt that an employment tribunal would agree with Hawthornes stance in this regard.

Would seeking a declaration from the High Court be the best way forward?

20

Finally, I turn to the question of the best way forward here: whether or not it would make practical sense for a declaration concerning the application (or otherwise) of TUPE to be sought as a matter of urgency from the High Court.

(1) Observations of two potential parties

21

In that regard, I note that Thompsons, the solicitors acting for the NASUWT (i.e. the National Association of Schoolmasters/Union of Women Teachers), have included in a letter dated 10 August 2012 a passage in the following terms:

Our client notes, with some surprise, that the council is considering an application to the High Court for a declaration that TUPE applies. We would make the following points on this issue:1. It is unlikely that a declaration could be obtained before the free school opens on 1 September 2012. Even if a declaration could be obtained very quickly, it would effectively come too late for most of our clients members. The free school appears to have already filled nearly all of the available posts and is unlikely, in the middle of the summer holidays, to review its decisions on recruitment. The House of Lords made it clear, in Wilson and others v St Helens Borough Council [I998] IRLR 706, that TUPE does not mean that unlawful transfer connected dismissals by either the transferor or -9-

2.

3.

transferee are a nullity. Contrary to what the council has suggested to our clients members, employees who are unlawfully dismissed for a transfer connected reason cannot compel the free school to employ them on the same terms and conditions as they were employed by their current employer. Their only remedy is an unfair dismissal claim. Whilst it is true that they may request reinstatement or re-engagement, you will be aware that such orders are exceptionally rare. 4. Therefore, an application to the high court is unlikely to resolve matters, so far as our clients members are concerned because, even if the court finds that TUPE applies, they will still have to bring employment tribunal claims to obtain legal redress.

We formally request urgent disclosure of the legal advice the council has received, on the merits of an application to the High Court for a declaration, so that our client may consider its position further.

22

In addition, in Hawthornes Chair of Trustees letter of 17 August 2012, there is this paragraph:

I note your reference to the possibility of applying to the High Court for a declaration that TUPE applies. You will no doubt be aware that this would be a costly process. Even if the High Court were to entertain the application (which we have been advised is unlikely), no decision would be made prior to 1 September. I would therefore question how you could justify spending public monies on such an application when surely your focus should be on honouring your obligations to your employees.

(2) Relevant legal principles

23

The question whether a declaration would be made here is affected by a considerable body of case law. The effect of that case law is the subject of extensive consideration in the third edition of Zamir & Woolfs book The Declaratory Judgment (2002, Sweet & Maxwell). The first relevant principle to be borne in mind here is that the High Court when deciding whether or not to grant an application for a declaration exercises a discretion, although that discretion must be exercised judicially. Only if the discretion is exercised in favour of the applicant for the grant of a declaration is the declaration made. -10-

24

A declaration need not be a declaration of right (which it used to have to be). Nor need an application for a declaration be accompanied by an application for some other remedy: see CPR r 40.20.

25

A further relevant principle of the case law is stated in the first sentence of paragraph 4.113 of Zamir & Woolf, which is in these terms:

The court may not regard a declaration as of sufficient utility if it may not finally settle the dispute between the parties.

However, this is certainly not a hard and fast rule.

26

The availability of an alternative procedure will always be a relevant factor for a court to take into account when deciding whether to grant an application for a declaration. Again, though, this factor should not in itself be determinative. Nevertheless, in circumstances such as these, the availability of an alternative procedure may be determinative.

27

In paragraph 4.206 of Zamir & Woolf, this is said:

The courts will always expect a party to adopt the most convenient procedure. If he adopts a procedure which involves greater expense the court may grant him the relief to which he is entitled but refuse to award him the whole or part of his costs. However, the general principle is that where there are two procedures available, it is for the litigant to decide which he wishes to adopt.

28

However, in paragraph 4.208, this is said:

In cases in which a specific remedy is provided by legislation, it will usually be presumed that even though the Legislature has not expressly excluded the power of the High Court to grant declaratory relief, it intends that normally the prescribed remedy and no other should be pursued. Naturally the courts will attach importance to this indication given by Parliament. [Footnote] This is -11-

particularly so where the issue is assigned to a tribunal rather than the High Court. [Footnote.] Where a particular tribunal is set up to deal with the disputes in question, there are likely to be obvious advantages in encouraging litigants to use that tribunal to resolve disputes: it is likely to have greater expertise on the particular subject and its procedures should be designed to deal effectively with the issues raised. The composition of its members, as in the case of industrial tribunals, may mean that it possesses first hand experience which is not available to the ordinary courts, and although disputes may ultimately go from the tribunal to the courts on appeal, it is clearly valuable that there should be some expert input before the appeal is considered by the courts. [Footnote.] Resort to a tribunal will also relieve the pressure on the courts.

29

Finally, there is this passage in paragraph 4.214 of Zamir & Woolf (the heading to which is The approach to discretion, in the part of the chapter concerned with alternative remedies):

Where there is an alternative procedure, the approach of the courts is entirely pragmatic. They will exercise their jurisdiction where this is justified by the circumstances of the particular case. This may be because the statutory remedy is either ineffective or incapable of doing full justice to the claimant [Footnote] for example because all the points which the appellant wants determined cannot be determined on the statutory appeal [Footnote] or because relevant evidence cannot be adduced [Footnote]; or it may be because the statutory procedure is more lengthy and complex and therefore less satisfactory than declaratory proceedings. [Footnote] Proceedings for declaratory relief will therefore probably be allowed to continue when there is no right of appeal from a tribunal on a preliminary point and determination of the point will make it unnecessary to have a lengthy hearing to determine other questions [Footnote] or possibly where the case raises issue of principle which have not previously been determined by the courts. [Footnote] The merits of the applicants claim may be so obvious that they can be immediately determined in the High Court and therefore the decision of the specialist tribunal may be unnecessary. On the other hand, the questions of law involved may be so difficult and complex that it is preferable for the High Court to resolve them. [Footnote]

(3) A discussion

30

A number of factors are relevant here. One is that there would probably be an order for the costs of any High Court proceedings, whereas there is unlikely to be any award of -12-

costs in the employment tribunal. Another is that the High Court could decline to make a ruling if there was a need for the making of findings of fact because one or more parties was refusing to accept certain factual assertions made by the Council (which is distinctly possible here). This is because of the existence of a specialist tribunal which already has the dispute before it, namely the Manchester Employment Tribunal which has jurisdiction in relation to the application or otherwise of TUPE. Nevertheless, an application for a declaration could be made under CPR Part 7, i.e. the court hearing the application could hear oral evidence and make findings of fact.

31

Furthermore, it could be said that the merits of the situation giving rise to the application for a declaration are so obvious that they can be immediately determined by the High Court (to quote some of the words of paragraph 4.214 of Zamir & Woolf, set out in paragraph 29 above) so that the decision of the relevant specialist tribunal (the Manchester Employment Tribunal) would not be necessary on the issue in question. However, there would still be a need for some further determinations by that tribunal in any event, unless all of the relevant claims were settled. In fact, if the outcome of the High Court proceedings would be likely to cause such settlement, then that would be likely to incline the High Court in favour of the grant of the remedy of a declaration. In addition, the fact that there would in all probability be a need for the determination in a preliminary hearing in the employment tribunal of the same question which would be put before the High Court is a factor which would bear on the exercise of the discretion to make a declaration. The fact that that preliminary ruling in the employment tribunal would almost certainly be made by an Employment Judge sitting alone (i.e. and without industrial lay members) is of course also a relevant factor. If the High Court could assign the application for a declaration to a judge who has much experience of employment law (such as Mr Justice Underhill), then that would of course be likely to be helpful to the parties here.

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32

Of course if the High Court refused to make a declaration, then the Council would in all probability be ordered to pay the costs of the claim.

33

I note that in Kenny v South Manchester College [1993] ICR 934, the claimants had to rely directly on the wording of the then-applicable Acquired Rights Directive, so that their application for a declaration did not obviously concern a matter which was best left to the industrial tribunal (as it was then called).

34

Here, if no application for a declaration is made, then it is distinctly possible that the financial circumstances of a fairly large number of employees will be unknown for a considerable period of time, i.e. a longer period of time than if a declaration were made.

35

Given all of these factors, it is clear that there are valid arguments pointing both ways on the question of whether or not a declaration could usefully be sought here. However, on balance, I tend to the view that it would be likely to be beneficial for a declaration to be sought. In any event, in my view it would be sensible to make urgent inquiries as to the willingness of Hawthornes to agree particular facts (and such willingness might well be increased by a consideration of the factors to which I refer above), and then to see how quickly the employment tribunal would be likely to determine, in a manner which would bind all relevant parties, at least the preliminary question of whether or not TUPE applies here. Of course, if any application for a declaration is to be made, then it will have to be made as quickly as is reasonably possible.

In conclusion

36

I have not addressed in this opinion the merits of the claim of a failure to consult. This is in the main because that claim is likely to need to be responded to in any event. If, however, you would like me to address the merits of that claim, please let me know and -14-

I shall be glad to do so.

37

In the meantime, I trust that that which I say above is sufficient for present purposes.

OLIVER HYAMS Devereux Chambers Queen Elizabeth Building Temple London EC4Y 9BS hyams@devchambers.co.uk 29 August 2012

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IN THE MANCHESTER EMPLOYMENT TRIBUNAL Case number 2405784/2012 BETWEEN: NATIONAL UNION OF TEACHERS Claimant - and SEFTON METROPOLITAN BOROUGH COUNCIL Respondent

____________________________________________ OPINION ON THE MERITS AND OTHER MATTERS ____________________________________________

Mrs Jill Coule Head of Corporate Legal Services Ground Floor Magdalene House 30 Trinity Road Bootle Merseyside L20 3NJ Telephone: 0151 934 2032 Fax:0151 934 2194 e-mail: Jill.Coule@Sefton.gov.uk