On appeal

Continuing
a regular series spelling out the implications of important cases which have
been heard recently in the appeal courts. Sarah Lamont looks at the issues

All
change on the buses
Oy Liikenne Ab v Liskojarvi and another, C-172/99, 2001, IRLR 171

Following
a tender process, Liskojarvi was awarded the contract for seven local bus
routes for three years, taking over from Hakunilan which then dismissed 45 of
its drivers. L re-engaged 33 of these but on less favourable terms. No vehicles
or other assets were transferred from Hakunilan to Liskojarvi.

Two
of the 33 drivers claimed they were entitled to the same conditions which they
previously enjoyed with Hakunilan. The district court ruled in their favour but
referred a number of issues to the ECJ.

First,
the ECJ confirmed that the fact that a public award of contracts was governed
by specific competition rules did not prevent the EC Acquired Rights Directive
applying. Second, it considered whether there was a transfer of an undertaking
in the circumstances, the key question being “whether the entity in question
retains its identity, in particular if the operation is continued or resumed”.

The
ECJ stated that it was necessary to consider all the characteristics of the
transaction, including the type of undertaking, whether assets were
transferred, whether core employers were transferred, the degree of similarity
before and after the change in contractor and the period for which those
activities were suspended.

It
held that bus transport is not “an activity based essentially on manpower, as
it requires substantial plant and equipment… which contribute significantly to
the performance of the activity”. So, “the absence of a transfer to a
significant extent from the old to the new contractor of such assets… must lead
to the conclusion that the entity does not retain its identity”.

This
conflicts with UK cases which appears to show a divergence between the approach
of the ECJ and the UK courts. Whether it means there will be no transfer of an
asset-reliant undertaking unless there is a significant transfer of assets is
therefore not clear and can only be clarified by developments.

Account
of profits may be ordered for breach of contract
Attorney General v Blake, 2001, IRLR 36

Blake,
a former member of the intelligence services, published his autobiography in
breach of a contractual undertaking of non-disclosure. The attorney-general
commenced proceedings with a view to ensuring Blake did not benefit from this
breach.

However,
by the time of publication, the information was no longer confidential or
damaging and the court held that his lifelong fiduciary duty of non-disclosure,
as ex-intelligence service, only covered confidential information, so he was
not in breach.

The
Court of Appeal agreed, but thought that the Crown might have a private law
claim for restitutionary damages for breach of the confidentiality undertaking
he had signed – ie recover the profits he had made from the book. This meant
giving an account of profits as a remedy for breach of contract where there is
no financial loss to the innocent party.

The
House of Lords held that in exceptional circumstances it would be open to a
court to require an account of profits gained by the defendant from its breach
and that this case was one such example.

This
case may be very useful to employers whose former employees breach restrictive
covenants or misuse confidential information but it should be noted that Blake
had been guilty of criminal conduct in a blatant way and it will be more
difficult to apply to commercial situations.

Part-timers
and pensions
(1) Preston and others v Wolverhampton Healthcare Trust and others; (2)
Fletcher and others v Midland Bank, IDS Brief 680, March 2001, ECJ

This
is a long-running saga, the latest instalment of which is the House of Lords’
decision applying the ECJ’s earlier ruling. The claim was that in excluding
part-time employees from an occupational pension scheme, their employers had
indirectly discriminated against them on grounds of sex (because a greater
number of part-time workers are women).

The
employees argued that the six-month time limit for bringing claims under the
Equal Pay Act and the rule preventing them backdating pension membership
earlier than two years before the date they brought proceedings were in breach
of Article 141 Treaty of Rome.

The
ECJ had held that the two-year rule was in breach of Article 141 but left the
issue of the six-month time limit to the House of Lords.

The
Lords held that employees could claim retroactive membership of occupational
pension schemes backdated to the beginning of their employment or 8 April 1976,
whichever is the later. But the claims must be brought within six months of the
employment ending.

Racial
discrimination for being English
BBC Scotland v Souster, IRLR 150, 2001, Court of Session

Souster
was employed by BBC Scotland as a presenter until his contract was not renewed
and he was replaced by a Scottish woman. He complained of racial discrimination
because of his “national origins”.

The
Court of Session held that “national origins” under the Act is not limited to a
person’s birth place. Souster could therefore claim race discrimination on the
grounds that he was English.

Cumulative
breakdown amounts to repudiatory breach
Abbey National v Robinson, IRLB 657, EAT January 2001

Robinson
was bullied at work by her manager. She complained in April 1997. Her complaint
was upheld, but the manager remained in the department in which they both
worked.

In
August 1997, Abbey tried to resolve the situation, but failed to offer her an
alternative. By this time Mrs Robinson was off work with illness and in July
1998 she resigned, claiming constructive dismissal.

An
employment tribunal upheld her claim. Abbey National appealed, arguing that Mrs
Robinson should have resigned more than a year earlier when the claim had
actually arisen.

The
EAT held that, if the reason for resignation is the cumulative effect of a
course of events it is the end of that series of events which must be looked at
to consider whether the employee has delayed too long to claim constructive
dismissal.

Sarah
Lamont is a partner at Bevan Ashford, tel: 0117-923 0111

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