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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Scanfuture UK Ltd v. Bird & Ors [2001] UKEAT 980_99_2303 (23 March 2001)
URL: http://www.bailii.org/uk/cases/UKEAT/2001/980_99_2303.html
Cite as: [2001] UKEAT 980_99_2303, [2001] ICR 1096, [2001] IRLR 416, [2001] Emp LR 590

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BAILII case number: [2001] UKEAT 980_99_2303
Appeal No. EAT/980/99 EAT/1353/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
             At the Tribunal
             On 17&18 January 2001
             Judgment delivered on 23 March 2001

Before

THE HONOURABLE MR JUSTICE LINDSAY (PRESIDENT)

MS B SWITZER

MRS R A VICKERS



EAT/980/99
SCANFUTURE UK LTD

APPELLANT

MR K BIRD
(1) MRS J M LINK
(2) MR C J BENNETT
(3) SECRETARY OF STATE FOR DEPARTMEN T OF TRADE & INDUSTRY
(4)




RESPONDENT



EAT/1353/99
MRS J M LINK
APPELLANT

SECRETARY OF STATE FOR DEPARTMENT OF TRADE
& INDUSTRY
RESPONDENT


Transcript of Proceedings

JUDGMENT

Revised

© Copyright 2001


    APPEARANCES

     

    For the Appellant MR J QUIGLEY (Solicitor)
    Instructed by
    Messrs Colman Coyle
    Solicitors
    Wells House
    80 Upper Street
    London
    N1 ONU


    MISS A HADLEY (Solicitor)
    Instructed by
    Messrs Rice Jones & Smiths
    Solicitors
    1 Catton Street
    London
    WC1R 4AB

    For the Respondent MR P SALES (Counsel)
    MISS S MOORE (Counsel)
    Instructed by
    The Treasury Solicitor
    Queen Anne's Chambers
    28 Broadway
    London
    SW1H 9JS


     

    MR JUSTICE LINDSAY (PRESIDENT)

  1. This appeal, whilst dealing with issues under the Transfer of Undertakings (Protection of Employment) Regulations 1981, will be found of more general interest because it deals with the questions of whether, given the various rôles played by the Secretary of Trade and Industry in relation to Employment Tribunals, such Tribunals have previously been, or now are, Article 6 -compliant when dealing with cases in which the Secretary of State is a party.
  2. A. Introduction

  3. On the 16th December 1998 the Employment Tribunal received an IT1 from Mr Keith Bird claiming against the Secretary of State for Trade and Industry a right to be paid certain debts which Mr Bird said were owing to him from his insolvent erstwhile employer, Scanfuture Ltd. ("Scanfuture"). He had, he said, been employed by Scanfuture from 1993 until (as he put it) that company "Filed for insolvency" in October 1998. He said that he was then employed by Scanfuture (UK) Ltd. ("UK"), that he had applied to the DTI for payment of what was owing to him from Scanfuture but that the DTI had refused payment on the ground (which he did not accept) that there had been a relevant transfer from Scanfuture to UK.
  4. On the 29th December 1998 Mr Christopher Bennett presented a similar IT1 and on the 28th January 1999 Mrs Janet Link did the same. Both Mr Bennett and Mrs Link were in the employ of UK.
  5. The DTI in response admitted that Scanfuture was insolvent within the relevant definitions but, as Mr Bird's complaint had anticipated, argued that there had been a relevant transfer from Scanfuture to UK for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE"). In consequence, said the DTI, Scanfuture's obligations under its contracts of employment had been transferred to UK, which, it said, was not insolvent. The Applicants, said the DTI, were thus not entitled to payment from the National Insurance Fund under sections 166, 167 and 182 of the Employment Rights Act 1996.
  6. On the 16th February 1999 UK was joined as a Respondent to the proceedings. UK's request for a witness order against the liquidator of Scanfuture was declined by the Employment Tribunal although it was indicated that if it became clear at the hearing that his evidence would be central to the issue as to the manner in which the three employees came to work for UK then UK might wish to reapply for such a witness order.
  7. Directions were given that all three cases should come on together for hearing on the 30th April 1999, as they did, before a Tribunal at Hull under the Chairmanship of Mr J.M.Q. Hepworth. It would seem that no renewed application for a witness order was made. Mr Bird and Mr Bennett gave evidence but were unrepresented. Mrs Link did not attend but her husband did; he also gave evidence. UK was represented by a director, the very same Mr Link. The Secretary of State was represented and made submissions but called no evidence. Mr Bird and Mr Bennett claimed against the DTI and UK; Mrs Link claimed only against the DTI. The Employment Tribunal's decision was sent to the parties on the 30th June 1999. It was unanimous. It was held that there had been a relevant transfer from Scanfuture to UK and that accordingly all claims against the Secretary of State failed. Mr Bird's and Mr Bennett's claims against UK succeeded and UK was ordered to pay £709 and £825 respectively to them in respect of unlawful deduction from wages.
  8. On the 10th August 1999 the EAT received a Notice of Appeal from UK and thereabouts also a separate Notice of Appeal from Mrs Link. None of Mrs Link, Mr Bird and Mr Bennett sought to resist UK's appeal. Mr Bird and Mr Bennett have taken no part in the hearing before us. The Secretary of State resists both appeals and in doing so does not purport to go outside the grounds relied upon by the Employment Tribunal but the Notices of Appeal raised new issues as to the conduct of the hearing below, especially in relation to the reception and comprehension of evidence (issues it will be convenient to call "the Conduct Issues") and as to whether the Tribunal below was truly independent because, as was said, "the Lay Persons and indirectly the salary of the Chairman were determined by the Respondent, the DTI" (which, to anticipate, we will call "the Article 6 Issue" by reference to the entitlement in that Article to a fair and public hearing "by an independent and impartial Tribunal").
  9. The appeals came on for a Preliminary Hearing together at the Employment Appeal Tribunal on the 4th February 2000. Only two descriptions of issues were directed to go forward to a Full Hearing namely issues in relation to TUPE ("the TUPE issues") and the Article 6 Issue. Although the Conduct Issues were not specifically addressed in the order of the 4th February those issues were, by implication, not permitted to come forward to this Full Hearing.
  10. Before us the Applicants' solicitors divided their task between them; on behalf of both Appellants Mr Quigley dealt with the TUPE Issues and Miss Hadley the Article 6 Issues. Both appeared pro bono and we are grateful for the time and attention they have thus given to the parties and, in consequence, for the assistance they have given us.
  11. The Secretary of State appears in both appeals by Mr Philip Sales and Miss Sarah Moore.

  12. It is not possible wholly to separate the TUPE and the Article 6 Issues because one can imagine a case in which the reasoning of a Tribunal in relation to questions put before it is so inadequate or biased as to conduce to a view that the Tribunal was not independent or impartial. Although the Article 6 Issue has occupied by far the greater part of the argument before us we will accordingly first look at the TUPE Issues to determine whether, in relation to those issues, the Tribunal below erred in law and whether its handling of those issues points in any way that may be relevant to the Article 6 Issue which we will later come on to.
  13. B. The TUPE Issues

  14. Leave was given to the Appellants to broaden their appeal to include not only that the Employment Tribunal had failed to take account of Charlton -v- Charlton [1995] IRLR 79 but that it failed also to consider Süzen -v- Zehnacker [1997] IRLR 255 E.C.J. and Betts -v- Brintel Helicopters [1997] IRLR 361 C.A.. Although a failure on the Tribunal's part to take account of Charlton -v- Charlton supra was a matter relied on by the Appellants at the preliminary hearing that case has, in our view rightly, not been addressed before us. There is nothing in it to assist the Appellants.
  15. The Tribunal below found the following facts in relation to the TUPE Issues. Scanfuture had lost £50,000 in last year of trading. It dismissed all 17 of its employees on the 13th November 1998. Mrs Link had been its Company Secretary and Personal Secretary to a director, Mr Link (her husband). She carried out paperwork and book-keeping duties. Mr Bird was a Product Manager and Mr Bennett a Junior Designer. Scanfuture had provided services including design and manufacture of panels. After its liquidation 7 of its employees moved to employment by UK. All other of the Scanfuture employees were made redundant. The site of employment moved from Scanfuture's premises to other premises in the same Industrial Estate. UK's telephone and fax numbers were the same as had been Scanfuture's, as was its logo. The Employment Tribunal held that the customers of UK were similar to those of Scanfuture. Mr Bird continued as an employee of UK after the liquidation to work on a contract which had earlier been a contract of Scanfuture's, as also did Mr Bennett. Mrs Link worked for UK but only part-time, carrying out the duties of a Payroll Clerk. UK's business was design consultancy (thus being in the same area, it would seem, as had been a part of Scanfuture's). The Employment Tribunal held:-
  16. "The conclusion of the Tribunal was that following the liquidation of Scanfuture Ltd a part of the business of Scanfuture Ltd was taken over by Scanfuture (UK) Ltd. Scanfuture Ltd had provided design consultancy services. Scanfuture (UK) Ltd provided design consultancy services. These were initially on the same contracts as Scanfuture Ltd had been working. The Tribunal found that Mr Bird specifically continued to work on the same project following the transfer and although his management duties did not continue within the new business he was still concerned with providing design consultancy. So far as Mr Bennett was concerned his expertise in design and drafting continued through the transfer of the business. So far as Mrs Link was concerned, although she was no longer Company Secretary in the new company, her responsibilities continued in relation to the payroll. The overall conclusion of the Tribunal was that that part of the business of Scanfuture concerning design consultancy continued under the name of Scanfuture (UK) Ltd and, on balance, the facts of the case indicated that this was so. The conclusion of the Tribunal was that Scanfuture Ltd retained its identity in Scanfuture (UK) Ltd so far as its design consultancy work was concerned. Seven employees out of seventeen (the remainder were made redundant) transferred to the transferee. Although there was no transfer of assets or buildings, customers were transferred and the work relating to design consultancy was very similar to that of Scanfuture Ltd. There was no real interruption in these activities. The conclusion of the Tribunal was that, therefore, following the application of the Regulations and taking into account the facts decided by the Tribunal, in the case of all three Applicants, they were not dismissed at the time of the transfer, that their employment continued with Scanfuture (UK) Ltd, and that they retained continuity of employment with their new employer."

  17. The Employment Tribunal directed itself correctly as to Regulations 3 and 5 of TUPE and then referred to Spijkers -v- Gebreoders Benedik Abattoir CV [1986] ECR 119. The Employment Tribunal then said, again correctly, firstly, that that case indicates that "the decisive criterion" for establishing the existence of a relevant transfer is whether the entity in question retains it identity and secondly, that the Tribunal was to bear in mind that TUPE applies not only to a transfer of an undertaking as a whole but also to any transfer of part of an undertaking - see TUPE Regulations 3 (1), (2) and (4) and 2 (2). The Employment Tribunal continued:-
  18. "The European Court of Justice in the Spijkers case also suggested that it was necessary to take into account all of the circumstances in this type of case including the type of business or undertaking involved, the transfer or otherwise of tangible assets such as building and stock, value of intangible assets at the date of transfer, whether the majority of staff were taken over by the new employer, the transfer or otherwise of customers, the degree of similarity of activities before and after the transfer and the duration of any interruption in those activities. This Tribunal had to make a decision on the balance of probabilities and take into account all those factors and any others which were relevant as to the whether the regulations applied in this case."

    The language there used by the Employment Tribunal differs a little, but not significantly, from that used in Spijkers itself - see para 13 thereof.

    The Appellants' attack on the Tribunal's decision in this part of the case divides into four.

  19. First it is said that the Tribunal fails to identify any stable and discrete economic entity, any undertaking capable of being and in fact transferred. That, it seems to us, is hypercritical; it is plain enough that the Tribunal regarded that part of the business of Scanfuture which was concerned design consultancy as the relevant entity and as an entity stable enough and discrete enough to be capable of being transferred and, as the Tribunal held, in fact transferred.
  20. Secondly, the Appellants complain that insufficient consideration was given to Süzen and Betts supra. However, the primacy conferred by the Employment Tribunal on Spijkers has, in effect, been held appropriate by the Court of Appeal in ECM (Vehicle Delivery Services) -v- Brian Cox and others [1999] IRLR 559 C.A. where Mummery L.J. said at para 23:-
  21. "The importance of Süzen had, I think, been overstated."

    and where the Court of Appeal recognise that the "Decisive criterion" identified in Spijkers (and relied on by the Employment Tribunal in the case at hand) had been confirmed by Süzen. In ECM the earlier case of Betts in the Court of Appeal was fully considered and, in so far as there are tensions between the two, the Employment Appeal Tribunal not only may but should follow the later case - see RCO Support Services & Aintree Hospital Trust -v- UNISON and others [2000] IRLR 624 at 627, para 18.

  22. Thirdly, the Appellants urged that at any time at which, consistent with the Employment Tribunal's view, there could have occurred the transfer which the Tribunal held to exist, Scanfuture was not in its directors' hands but those of its liquidator and that the liquidator took no steps to effect any transfer and no evidence of any intention in him to effect a transfer was given. But that is to misunderstand the nature of some TUPE transfers. It is entirely possible for there to be a relevant transfer without any tangible or intangible assets passing. ECM supra was such a case - see p. 561 para 17. There can thus be transfers which involve no action on the part of the liquidator of the putative transferor. That such a liquidator is not to be seen to have intended a transfer and cannot be seen to have taken part in it does thus not indicate that there has not been a transfer. Moreover, whilst in many cases the fact that a transfer was intended by one or both sides may be relevant to the question of whether there was a transfer, it is no necessary part of a transfer that it should have been intended by the transferee. ECM provides a good example; in that case there was held to be a relevant transfer notwithstanding that the transferee (who took over no assets either) deliberately did not employ any of the transferor's staff with a view, as it hoped, to ensuring that there should have been no transfer.
  23. Fourthly, the Appellants complains that the Tribunal failed to identify who had been employed in the part of the undertaking that was transferred. It had no need to do so. It was directly concerned only with Mr Bird, Mr Bennett and Mrs Link, although it did hold that, in all, seven employees went from Scanfuture over to UK. The Tribunal described the respective rôles of the three principals both before and after the transfer. Mr Bennett was held to have ceased employment with Scanfuture on the 11th October 1998 and to have begun with UK on the 19th October 1998. Mr Bird also ceased employment on the 11th October 1998 and the Tribunal held:-
  24. "He continued working for [UK]."

    Mrs Link fell within the description of those dismissed on the 13th November 1998 and of her it was said that:-

    "Her responsibilities continued in relation to the payroll" (our emphasis)

    and that:-

    "she continued to work but only on a part-time basis for [UK]."

    We have no reason to suppose that her payroll duties for Scanfuture did not include such duties in relation to those employed in the design consultancy part of its business. The Tribunal held there had been no real interruption in the activities between Scanfuture and UK. Whilst the specific dates given by the Tribunal may in some respect be open to challenge, there is nothing here which puts the substance of the Tribunal's findings in jeopardy and in any event we must remind ourselves that our function is only in relation to errors of law rather than as to errors, if such there be, of fact.

  25. We have been unable to detect any error of law in this part of the Tribunal's reasoning. We have in mind, depending on our judgment as to Article 6, that we may here be referring to a tribunal which was not impartial or independent but to such extent, if any, as its reasoning may reflect on whether it was operating as an impartial and independent Tribunal, its judgment in this part of the case affords no reason for any suspicion that it was not such a body.
  26. C. The Article 6 Issues

  27. The case here requires us to look at 4 different headings thus:-
  28. (i) What does the Article require?
    (ii) By what standard or tests are shortcomings in, or satisfaction of, those requirements to be judged?
    (iii) Judged by such standards or tests, were there any material shortcomings in relation to the Employment Tribunal's position from the date of the hearing in April 1999 down to the promulgation of its decision in June 1999?
    (iv) If there were, what is to be done about that? If we find that the Employment Tribunal was not Article 6-compliant in 1999 and if that leads us to set aside the decision below, we would have to consider whether Employment Tribunals are now compliant before we could remit to a fresh Tribunal. There would be no point in remitting to another non-compliant Tribunal.

  29. However, even before we deal with those questions there are some features we must mention. Firstly, although these issues were not argued before the Employment Tribunal, no-one urges that, as they were not raised below, they cannot be raised here. Secondly, no-one urges that those questions are outside section 21 (1) of the Employment Tribunals Act 1996. Thirdly, no-one has suggested that we ourselves, in whole or in part. represent a body which is not independent and impartial or otherwise unfit to rule on the issues here laid before us. With that preamble behind us we turn to the 4 questions we have raised.
  30. (i) The Article's requirements

  31. By section 6 of the Human Rights Act 1998, brought into effect on the 2nd October 2000, it was made unlawful for a Tribunal to act in a way which is incompatible with Convention rights - section 6 (1) and (3) (a). An act includes a failure to act - section 6 (6). The Convention rights include those defined in Article 6 of the European Convention of Human Rights which provides, so far as relevant for immediate purposes, that:-
  32. "In the determination of his civil rights and obligations .... everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law...."

    Section 1 (2) of the 1998 Act provides that, inter alios, Article 6 is to have effect subject only to some derogations and reservations not here relevant. Material which must be taken into "account in the interpretation of Convention rights is specified in section 2. It includes judgments of the European Court of Human Rights and opinions of the Commission. A person claiming that a Tribunal has acted in a way which is incompatible with the Convention right may, if he is a victim of that unlawful act, rely upon the Convention right in any legal proceedings - section 7 (1) (b) and 7 (6) (b). It can be seen that there may be a number of ways in which a complaint might be made to the Employment Appeal Tribunal of an Employment Tribunal having been other than one which was independent and impartial. A "gateway" may, for example, be open by way of the Member States' guarantee of holiday pay upon the employer's insolvency. Another way of bringing matters before the Employment Appeal Tribunal might be to say that the Tribunal below had failed to recuse itself. However, any such technicalities are not developed before us nor is anything sought to be made of the fact that the Employment Tribunal process had been completed before the 1998 Act came into effect. Mr Sales puts the Secretary of State's case entirely on the basis that there has been no breach of Article 6 in any event. We do not understand Miss Hadley to resist or to have any cause to resist that attractive approach.

  33. As for the meaning of "independent and impartial" in Article 6, Miss Hadley refers us to Findlay -v- The United Kingdom (1997) 24 EHRR 221 ECHR at p. 237 where, in relation to "independence", the Commission says:-
  34. "The Commission recalls the established criteria to which the Court has regard in assessing the independence of Tribunals, in particular from the parties. These include, the manner of appointment of Members, the duration of their terms of office, the guarantees afforded by the procedure against outside pressures and whether the body presents an appearance of independence."

    - see also Ciraklar -v- Turkey (1998) VII R.J.D. 3071 at para 38.

  35. As for "impartiality" the Commission describes it as divided into that judged by a subjective test ("that is, on the basis of a personal conviction of a particular judge in a given case" - p. 236 para 89 - or what is commonly referred to as "actual bias") and that tested by an objective test (the appearance of bias). There is no case made before us as to impartiality of the actual kind, as to which the ECHR indicates that the impartiality of the judge is to be assumed until there is proof to the contrary, which here there is not.
  36. As for impartiality under the objective test (the appearance of bias) the test to be applied is:-
  37. ".... ascertaining whether sufficient guarantees exist to exclude any legitimate doubt in this respect. It must be determined whether there were ascertainable facts, particularly of internal organisation, which might raise doubts as to impartiality. In this respect, even appearances may be important what is at stake is the confidence which the Court must inspire in the accused in criminal proceedings and what is decisive is whether the Applicants' fear as to a lack of impartiality can be regarded as objectively justifiable."

    - see Findlay supra at para 90, Ciraklar supra at para 38. We shall assume that parties in civil proceedings are no less entitled to a Tribunal which inspires that confidence. The word "guarantees" in the context in which it appears in Findlay seems to us, familiar with both what is its usual technical and its common everyday use in English, to be potentially misleading; it may be that the word "safeguards" would be more apt but we shall attempt to keep in mind the word "guarantees".

  38. "Independence" plainly includes independence from the parties but here, where one of the parties is the Secretary of State, a member of the Executive, and where the Executive is properly to be regarded as indivisible, it must in the case before us include also independence from the Executive Branch of Government as a whole.
  39. In relation to the appearance of bias or partiality, Miss Hadley builds upon that reference in Findlay para 90 supra by reference to McGonnell -v- The United Kingdom (2000) 8 B.H.R.C. 56. There the Applicant who owned land in Guernsey for which planning permission had been refused made a representation to a planning inquiry which was considering detailed development plan ("the DDP6"). The Inspector conducting that inquiry suggested that the land should remain agricultural and reported in that sense to the Island's Development Council. That IDC, also adopting the same view, then passed the proposal, the DDP6, to the States of Deliberation, a legislature, for its passage into legislation. The States of Deliberation were presided over by the Deputy Bailiff and in 1990 under his Presidency they deliberated upon and adopted DDP6. Later the Applicant was convicted by the Magistrate's Court of a planning offence and there were then a number of consequential and other proceedings in relation to planning or breaches of it which finally came before a Court in Guernsey comprised of a number of laymen and one Judge which included, by then as the Bailiff, the Senior Judge, the same individual who had been the Deputy Bailiff in the States of Deliberation in 1990. As the Senior Judge in the case the Bailiff in 1995 summed up and was the sole arbiter on the law in those proceedings. It was not suggested that in 1990, when Deputy Bailiff, that that individual had had any direct involvement in the adoption of the DDP6 in the States of Deliberation but the ECHR held (at para 57):-
  40. "The Court thus considers that the mere fact that the Deputy Bailiff presided over the States of Deliberation when DDP6 was adopted in 1990 as capable of casting doubts on his impartiality when he subsequently determined, as the sole Judge of the law in the case, the Applicant's planning appeal. The Applicant therefore had legitimate grounds for fearing that the Bailiff may have been influenced by his prior participation in the adoption of DDP6. That doubt in itself, however slighte its justification, is sufficient to vitiate the impartiality of the Royal Court, as it is therefore unnecessary for the Court to look into the other aspects of the complaint."

    In a concurring opinion Sir John Laws, sitting as an ad hoc Judge said:-

    "I add a few words of my own merely to emphasise that the only objective basis upon which, on the facts of this case, a violation of Article 6 (1) may properly be found, depends in my view entirely upon the fact that the bailiff who presided over the Royal Court in the legal proceedings giving rise to this case presided also (as Deputy Bailiff) over the States of Deliberation in 1990 when DDP6 was adopted. That is the thrust of the reasoning in paragraph 57 of the principal judgment, with whose terms I entirely agree."

    The case represents a striking example of just how little may properly be taken to give rise to a want of an appearance of independence or to a legitimate fear of bias or partiality.

  41. Miss Hadley also refers to R -v- Bow Street Metropolitan Stipendary Magistrate and others Ex parte Pinochet Ugarte (No. 2) [1999] 1 All ER 577 but that was a case in which the Judge at issue was held to have had an interest in the outcome of the proceedings and to have been accordingly "automatically" disqualified; the case was not dependent upon bias or the appearance of bias on his part - see e.g. p. 586f; p. 592 d-f.
  42. (ii) The standard or test to be applied.

  43. In his concurring opinion in McGonnell supra Sir John Laws said at p. 11:-
  44. "Where there is no question of actual bias, our task under Article 6 (1) must be to determine whether the reasonable bystander - a fully informed layman who has no axe to grind - would on objective grounds fear that the .... Court lacks independence and impartiality."

    It may be that that "and" should be an "or". In the Courts Martial Appeal Court in R -v- J. Spear and others 15th January 2001 Laws L.J., giving the judgment of the Court, said at para 35:-

    "We consider that in the context of our domestic jurisdiction, a useful but by no means exclusive approach to the objective requirements of Article 6 may be to invoke the common law's reasonable man. Would the reasonable man, apprised of all the relevant facts about the particular case and the general practice, conclude that there existed any real doubts as to the Court's impartiality or independence?" (The Court Martials Appeal Court's emphasis).

    Spear does not bind us but the judgment commands respect. In Director General of Fair Trading -v- The Proprietary Association of Great Britain Case No. C/2000/3582 C.A. Lord Phillips M.R. giving the judgment of the Court, after a review of both domestic and European Court of Justice cases continued at para 84:-

    "84. We would summarise the principles to be derived from this line of cases as follows:
    (1) If a Judge is shown to have been influenced by actual bias his decision must be set aside.
    (2) Where actual bias has not been established the personal impartiality of the Judge is to be presumed.
    (3) The Court then has to decide whether, on an objective appraisal, the material facts give rise to a legitimate fear that the Judge might not have been impartial. If they do the decision of the Judge must be set aside.
    (4) The material facts are not limited to those which were apparent to the Applicant. They are those which are ascertained upon investigation by the Court.
    (5) An important consideration in making an objective appraisal of the facts is the desirability that the public should remain confident in the administration of justice .......
    85. .............
    86. When the Strasbourg jurisprudence is taken into account, we believe that a modest adjustment of the test in Gough is called for which makes it plain that it is, in effect, no different from the test applied in most of the Commonwealth and in Scotland. The Court must first ascertain all the circumstances which have a bearing on the suggestion that the Judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility or a real danger, the two being the same, that the Tribunal was biased."

    These references to an "informed" observer (the Director General case) or "a fully informed layman" (McGonnell) and "a reasonable man apprised of all the relevant facts about the particular case and the general practice" (Spear) do raise difficulties about the reasonable man's sources of information. There is no difficulty, it seems to us, in ascribing to him all information which can be said to be in the public domain even if only a persistent busy-body would be likely to have learned of it but if he is to have ascribed to him information only available to anyone through the exercise of the powers of the Court in the case being examined or otherwise available by reason only of those proceedings then a problem does, as it seems to us, arise. The problem would be that one would then be ascribing to the reasonable observer information not available to the public yet doing so as part of an exercise which was intended to ensure that it was the public that was to be procured to remain confident in the administration of justice. If, on truly publicly available information, there would be a real doubt as to the Court's impartiality or independence, that view would be likely to remain the view of the informed public-at-large even if a party to the proceedings or a confidant of a party might have special knowledge which would have dissipated that real doubt. We shall for the time being therefore ascribe to our construct, the fair-minded and informed observer, only such information as could be acquired by a persistent, even dogged, inquirer as a member of the public and not such information as would take him out of that class - the public - whose confidence in the administration of justice was being sought to be preserved.

    (iii) Applying that test, were there shortcomings in 1999?

  45. It is the Applicant's case that the Employment Tribunal was not truly independent within the meaning of Article 6 by reason of an aggregate of factors, namely that the two Lay Members were appointed by the Secretary of State, a party to the proceedings, because their remuneration was fixed by that Secretary of State, because their (short) term of office was fixed by him and their potential for further appointment depended upon him. Although in an affidavit Mr Link complained also as to the position of the professional Chairman of the Employment Tribunal, Miss Hadley's argument has related only to the position of the Lay Members and so we shall limit our inquiry to them.
  46. That there is room for doubt in this area is very plain and Miss Hadley naturally adopts passages from the judgment of the Employment Appeal Tribunal delivered by Morison J., President, in Smith -v- Secretary of State for Trade and Industry [2000] IRLR 83 where at p. 86, after recording that the Secretary of State's Counsel in that case had not wished to make submissions on Article 6 and also that the Attorney-General had not been notified or given opportunity to address the Appeals Tribunal, said:-
  47. "We will, therefore, not make any formal ruling upon the Article 6 question but we do express our disquiet about the appearance of a lack of impartiality of the Employment Tribunals when adjudicating upon claims against the Secretary of State."

    That disquiet was then explained at greater length from p.89:-

    "The question at issue is whether the Employment Tribunal is an "independent and impartial" Tribunal in relation to a determination of claims brought by complainants against the Secretary of State for the DTI. We wish to make it quite clear that no suggestion is being made nor could be made that this particular Employment Tribunal has acted in any way improperly or incorrectly. The Lay Members of the Employment Tribunals are appointed by the Secretary of State for the DTI and are paid for by him out of funds made available to the DTI from the Treasury. The DTI, in turn, provides funds to the Employment Tribunal Service, the agency which provides the administration services for Employment Tribunals [the Agency]. Lay Members hold their appointment through an instrument of appointment, the terms of which may be varied by the Secretary of State. The remuneration, fees and allowances for the Lay Members are determined by the Secretary of State [see section 5 of the Employment Tribunals Act 1996]. They hold office for the duration specified in their Letter of Appointment. Under the Instrument, their appointment made be terminated by the Secretary of State, with the consent of the Lord Chancellor, on one month's notice or summarily for misconduct."

    After a reference to the position of Employment Tribunal Chairmen with which we are not concerned Morison J. continued:-

    "The rules of procedure of the Employment Tribunals are made by the Secretary of State. Under them, he has wide powers to intervene in cases to which he is not party."

    At p. 91 Morison J. continued:-

    "There are other Tribunals within the Court structure which are administered by an agency of the Lord Chancellor. It is something of an anomaly that the Employment Tribunals should have such close links with an executive arm of the Government .... It is our view that there is a real and troubling question as to whether Employment Tribunals may properly and lawfully adjudicate on claims made against the Secretary of State, having regard to Article 6 of the Convention."

  48. In the case before us no evidence was laid before the Tribunal below as to the rôle of the Secretary of State but without any objection to our receiving it or any opposition to it, we have been supplied with a very full affidavit from Sarah Rhodes, Assistant Director of Tribunals Policy and Appointments at the DTI. Although the affidavit ranges over other subjects we shall in this part of the case concentrate upon the position of the DTI in relation to Lay Members of the Tribunal in and around April to June 1999, the period when this matter was before the Employment Tribunal. The more material facts emerging from Sarah Rhodes's affidavit are in our opinion these:-
  49. (i) The Secretary of State has no rôle in determining the composition of the Employment Tribunal in any given case.

    (ii) Mrs Link's and UK's case was heard by a panel of three which had as its Chairman a full-time Chairman, a person with a minimum of 7 years legal qualification and who had been appointed by the Lord Chancellor to hold office indefinitely up to the compulsory retirement age of 70 subject only to removal from office by the Lord Chancellor on grounds of misbehaviour or incapacity and to a provision which also allowed the Lord Chancellor to remove or suspend from any office any Chairman who was unsuitable to perform the duties of office for any other cause or if there was any likelihood that public confidence in his or her impartiality might be impaired.

    (iii) The lay members in Mrs Link's and UK's case (as in others) were picked from a panel of part-time lay members appointed to the panel by the Secretary of State. As to this panel Miss Rhodes says:-

    "The Secretary of State appoints the other two panels which are made up of part-time Lay Members. One comprises persons appointed after consultation with the employers' organisations whilst the other is made up of persons appointed after consultation with organisations which represent employees. The policy intention behind the involvement of the Secretary of State and his predecessors, as opposed to the Lord Chancellor, in this process is that with his responsibility for employment relations, he is in a better position to assess the nature and suitability of the employment relations experience of candidates for Lay membership."

    (iv) Speaking of the selection process as it was in early 1999, the provisions which had applied to the lay members in Mrs Link's and UK's case, Miss Rhodes says:-

    "...... The Secretary of State would invite a number of employer and employee organisations ("the nominating bodies") to put forward suitable candidates for consideration by the Secretary of State. Candidates would be sifted by officials against a criteria previously published by the Secretary of State, and those who scored highest for each panel and region would be recommended by the Secretary of State for appointment."

    (v) As for the terms of appointment as they were in April to June 1999, they included that the Secretary of State might, with the consent of the Lord Chancellor, terminate an appointment without cause shown on one month's notice or, without notice. with the Lord Chancellor's consent, where (in the "without notice" case) in the opinion of the Secretary of State the lay member had (inter alia) been guilty of serious misconduct or where there was a likelihood that public confidence in the member's impartiality had been or would be impaired.

    (vi) The terms of employment included a "sitting" requirement, that a Member should be available for at least 15 days per annum and they provided also that a lay member must recuse himself in circumstances which might give rise to doubt as to his impartiality.

    (vii) The standard length of appointment prior to the 25th October 1998 had been for 3 years. On that day existing lay members were re-appointed for 1 year only. This was chiefly because consultation was about to begin as to new arrangements for the appointment and selection of lay members and a short term of office was adopted so as not to prejudice the earlier adoption of whatever new arrangements emerged by having numbers of previous appointees still holding office under the earlier provisions. Thus, fortuitously untypical of practice both before and after, in April to June 1999 numbers of lay members, including the lay members in the case before us, were holding office on short-terms with only months to run.

    (viii) At that time, too, the Secretary of State had a discretion as to their re-appointment. In practice eligible lay members had been re-appointed unless the President of the Employment Tribunals, a full-time Judge, acting on the advice of the appropriate Regional Chairman, had requested that there should be no re-appointment of the particular individual concerned or, exceptionally, where evidence was presented to the Secretary of State that the lay member concerned had been involved in conduct incompatible with his re-appointment. The DTI wrote to the President of the Employment Tribunals asking him to name Lay Members who should not be re-appointed. A Lay Member thus not renewed had a right to ask the Secretary of State to review his case. Judicial review of a decision not to renew would also have been possible.

    (ix) Some measure of the practice as to re-appointment, although related to the 25th October 1999 and thus only in the future at the time we are here concerned with, was that of 1960 Lay Members then on the Panel 1927 were re-appointed, 12 were not and 21 either resigned or retired. Of the 12 who were not re-appointed, 11 had failed to sit frequently enough and 1 had become a Parliamentary Candidate.

    (x) As we have seen, at the time of Mrs Link and UK hearings the Secretary of State had the ability, with the consent of the Lord Chancellor, to terminate a lay member's office without cause shown on 1 months' written notice. Miss Rhodes says:-

    "However, as far as I am aware, this provision was never invoked. Again, Lay Members could seek Judicial Review of decisions to remove them from office but I do not believe that this has ever happened."

    (xi) The money required to pay lay members of the Employment tribunal comes from the budget allowed to the Employment Tribunals Service, which is an Executive Agency of, and wholly funded by, the Department of Trade and Industry. The ETS makes an annual budget bid to the DTI which includes the ETS's estimate of the funds necessary to meet fees and expenses of lay members of the Employment Tribunals.

    (xii) The Secretary of State may pay such fees and allowances to lay members of the Employment Tribunal as he may, with the consent of the Treasury, determine - Employment Tribunals Act 1996 section 5 (2).

    (xiii) Lay members' fees are specified in their Instruments of Appointment. In early 1999 they stood at £121 a day. There appears to be no express power in the DTI or ETS to procure that different lay members sitting at the same time should be paid different fees and it is not suggested that that has ever happened. Travel expenses in excess of £5 and some other expenses are allowable such as overnight accommodation when necessary and claims for them are checked by ETS staff.

    (xiv) Miss Rhodes ends her affidavit by saying:-

    "It emerges from the above that the Secretary of State has not in practice, through the nature of that relationship, had any possible means of influencing the decisions of Lay Members in Tribunal cases through "preferment". He is not involved in the allocation of Lay Members to cases, he has been guided almost exclusively by judicial advice in making re-appointments and removal decisions, and the remuneration policy and practices operated by the ETS do not discriminate between Lay Members."

  50. Although the information in Miss Rhodes's affidavit was conveniently collected for the purposes of these proceedings we see nothing there which was beyond the reach of a persistent lay observer even in the absence of proceedings. Even the details in (ix) above would, we expect, have been capable of being extracted from the DTI or the ETS upon a serious inquiry being made. The information, in other words, falls within the nature of the material knowledge of which we are prepared to ascribe to our fair-minded and informed observer and we need not decide whether it would have been appropriate to go further and to attribute to him information not available but for the proceedings.
  51. Given all this information, how would such an observer react? He would see the DTI, a party to the proceedings, to have had a large rôle in the appointment of two of the three Members of the Employment Tribunal (all three having an equal voice), having a substantial rôle in the fixing of their lengths of appointment, in their possible re-appointment, in their possible removal, and in their remuneration. He would no doubt be comforted to some extent upon reflecting that, whatever the full theoretical range of the Secretary of State's powers, in practice the observer would not have come across any instance of any unwarranted or improper pressure upon any lay member.
  52. He would have in mind that in testing for the appearance of a want of independence or impartiality a strong argument can be mounted that a Court is entitled to pay less regard to the theoretical possibilities of influence or abuse and rather more to what the European Court of Justice has called "the realities of the situation" - see Eccles, McPhillips and McShane -v- Ireland (1988) 59 DR 212 at 218. Accordingly, although, in that case, the Judges of the Irish Special Criminal Court could be removed at the will of the Government - p. 214 - and could, at the instance of the Ministry of Finance, have their remuneration and allowances reduced, increased, annihilated or made different from that of fellow Judges, because there was no evidence of executive interference in the Court that Court was found to be independent. Nor does the fact that the members of a Court or Tribunal had been appointed by or on behalf of a party to a dispute necessarily disprove the independence of that Court or Tribunal - see Lithgow -v- United Kingdom (1986) 8 EHRR 329, - although it may - see Langborger -v- Sweden (1989) 12 EHRR 416. Indeed, were that not so, it is difficult to see how any tax cases, for example, could fairly be heard in any country where, as is common, the judiciary is appointed by the Executive. It is far from easy to derive a coherent principle from the cases as to how far, if at all, a viceless practice enables the doubts and fears emerging out of a vulnerable theoretical position to be laid to rest. The better course, in our view, is for our observer to look at the more recent cases such as McGonnell supra and to its concentration upon the appearance of things, an approach which seems to us consistent with that adopted in Starrs and Chalmers -v- Procurator Fiscal, Linlithgow [2000] HRLR 191, where at p. 209 the Lord Justice Clerk says:-
  53. "It was not enough for the Solicitor General to refer to the practice which had been followed in recent years. The question was whether the framework within which the temporary Sheriff worked provided protection against improper interference or influence."

  54. As at 1999 there was in our view no such framework in Tribunal cases in which the Secretary of State or his Department was a party. In its absence such comfort as could be derived from practice would not suffice.
  55. In our judgment the fair-minded and informed observer in 1999 would have harboured an objectively justifiable fear that the Employment Tribunal as it was in April-June 1999 lacked both impartiality and independence within the meaning of that expression in Article 6.
  56. As was made clear in Smith supra we, too, wish to make it quite clear that there is no suggestion made that the Employment Tribunal in the case before us acted in any way improperly or incorrectly or, indeed, that the Secretary of State for Trade and Industry did. However, as was the case in Smith, we do find there to be real and troubling questions which have led us to ascribe to our fair-minded and informed observer the fear that we have described.
  57. It does not follow from that there has necessarily been a breach of Article 6. The Employment Tribunal's decision has been appealed to this Appeal Tribunal, as to which no complaint is made as to our non-compliance with Article 6. Accordingly Mr Sales draws attention to Bryan -v- United Kingdom (1995) 21 EHR 342 where at para 40 one finds:-
  58. "As was explained in the Court's Hulbert and Le Compte -v- Belgium judgment, even where an adjudicatory body determining disputes over "civil rights and obligations" does not comply with Article 6 (1) in some respect, no violation of the Convention can be found if the proceedings before that body are "subject to subsequent control by a judicial body that has full jurisdiction and does provide the guarantees of Article 6 (1).""

    That reference to "full jurisdiction" has to be borne in mind. In Bryan the European Court of Human Rights appears to be saying that as, on the appeal to the High Court in that case, the impugned decision by the Planning Inspector below could have been set aside if it had been arrived at by reference to irrelevant factors or without regard to relevant factors or upon evidence incapable of supporting the conclusions at which the Inspector had arrived, or by way of irrational perversity, that sufficed to undo the vice in the decision below in the specialised area of law (Planning law) which was there in issue. But crucial to the reasoning of the Court and a factor which presumably entitled it to depart from the requirement of a "full jurisdiction" to which it had earlier referred, was the finding that there was, in Bryan, on appeal to the High court, no dispute as to primary fact. It is a matter that the Court refers to three times, in paras 42, 43 and 47.

  59. In the case at hand, by contrast, Mrs Link and UK would seek on appeal to challenge primary facts; whilst Mr Quigley and Miss Hadley, knowing of the Employment Appeal Tribunal's functions being limited to errors of law and knowing also of the limitation implied at the Preliminary Hearing at the Employment Appeal Tribunal, have not so argued, Mr Link's affidavit asserts that he was not allowed to adduce what he calls "whole tracks of prepared evidence" and Mrs Link asserts that the Employment Tribunal misunderstood the case and failed to appreciate the severity of the change in her employment from as it had been at Scanfuture to as it was at UK. Laying aside whether employment law would be regarded, as was planning law, as a "specialised area", we distinguish Bryan on the basis that in our case the Appellants, given a chance, would wish to dispute some at least of the primary facts found by the impugned Tribunal below. Thus putting Bryan on one side, we revert to the notion explained in para 40 of Bryan that only where there is a "full jurisdiction" in the appellate body does the presence of the appellate body's ability to control the impugned one negate a breach, otherwise appearing, of Article 6. We cannot regard ourselves, this Appeal Tribunal, as having that full jurisdiction, limited as our jurisdiction is to such questions of law as fall within section 21 (1) of the Employment Tribunals Act 1996. This limb of Mr Sales's argument thus does not, in our judgment, require us to depart from the conclusion we have otherwise reached, namely that there was a breach of Article 6 in relation to the Employment Tribunal's proceedings in April to June 1999. We are not sorry to avoid Bryan; the prospect that a party, able to shew that disputed facts in his case have been found by a body which was neither independent nor impartial, should nonetheless be denied the relief otherwise attendant upon a breach of Article 6 simply because he was entitled to appeal on law only to a compliant tribunal seems to us unjust. The compliant tribunal, so far as concerned disputed facts, would have only the unreliable to rely on.
  60. (iv) What, then, is to be done?

  61. The obvious course upon Article 6 being found to have been breached is first to set aside the decision below. We allow the appeal and set aside the decision below. But we cannot remit the case to another Employment Tribunal for a fresh hearing without examining whether the 2001 Employment Tribunal would, on the remission, provide a forum free of an objectively justified fear of the kind to which we have attributed existence down to June 1999. In many respects this is the most important question in the case and it requires us to look at what the current powers and practices of the Secretary of State are in relation to lay members of Employment Tribunals. As to the changes since 1999, Miss Rhodes deposes:-
  62. (1) Lay members, while still appointed by the Secretary of State - see Employment Tribunals (Constitution etc.) Regs 1993 para 5 (1) (b) and (c), - are now appointed under a system which includes an element of open competition. The fact that members are appointed by the Executive is not sufficient to raise doubts as to the independence or impartiality of lay members "especially as in many contracting states it is the Executive which appoints judges" - Belilos -v- Switzerland (1988) EHRR 466 at p. 488 para 66.

    (2) All appointments are now made for a (renewable) period of 3 years.

    (3) A lay member may still be removed upon a written notice from the Secretary of State upon one or more of five specified grounds (briefly, misbehaviour, incapacity, failure as to training, failure to satisfy the sitting requirements and sustained failure to observe the standards reasonably to be expected of a holder of the office) but there is now a very substantial judicial involvement. The Secretary of State cannot remove a Lay Member unless, having first consulted with the President of the Employment Tribunals, he then notifies the Lord Chief Justice of his concern and requests him (in consultation with the President) to nominate a Judge to investigate all circumstances and report his findings to the Lord Chief Justice and to the Secretary of State. Only if the report of the investigating Judge is that grounds for removal are made out and if the Lord Chief Justice concurs in the removal can the Secretary of State then remove.

    (4) Subject to the age requirement (70 years) and to seven conventional and appropriate specified grounds of non-renewal, a lay member will automatically be offered re-appointment at the end of his first or subsequent terms of 3 years. The Secretary of State's ability not to renew is now subject to substantial judicial control closely following that as to removal described above.

    (5) The tenure of a lay member's office is now for far longer than the untypically short period which operated during Mrs Link's and UK's hearing. Moreover, there is good practical reason for the Secretary of State, as a person familiar with industry and business, to be the person who appoints the lay members representing both the employer - and employee - sides of the Tribunal.

  63. There can now be no removal from office without the substantial judicial involvement we have described and as renewal is automatic (absent, again, substantial judicial involvement in a decision not to renew) there is no need or reason, if ever there was, for any lay member to think that he could curry favour and that it would help him acquire a renewal of his office by his leaning in favour of the Secretary of State in any hearing. The selection of the panel for a particular case is still (as it was in 1999) out of the DTI's hands; it is the President of the Employment Tribunals or the Regional Chairman who picks the panel - Industrial Tribunals (Constitution) Regs 1993 reg 7 (2). In our view there are now in place sufficient guarantees to exclude any legitimate doubt. Neither the Applicants nor any reasonable man, apprised of all the relevant facts about any particular case in which the Secretary of State or his Department is a party and about the general practice, can, in our view, now have any objectively justifiable view as to a lack of impartiality or of independence in an Employment Tribunal appointed and operating under the current system. To revert to the language of Starrs and Chalmers supra, the framework within which the lay members now work provides protection against an improper interference and influence.
  64. We add this; in Spear supra Laws L.J. detected that the decision of the European Court of Justice in Incal -v- Turkey (41/1997/825/1031 9th June 1998) involved that the "guarantees" required by Findlay supra need not ".... be formal, in some way cast in stone". We respectfully agree. Thus regard can be had to the practical safeguards afforded by long tradition and by the self-esteem likely to present on both sides of the issue. Few things could better be made capital of by the Parliamentary opposition in our democracy and few things would more shame a Minister than the fact that he had sought to interfere in or to influence legal proceedings by any form of pressure, however light, however subtle, upon those required to rule upon those proceedings. Further, for it to appear that he had sought to obtain decisions in his favour by packing the Tribunal with lay members likely to be disposed in his favour would similarly draw shame upon him. Equally, few accusations would more alienate a lay member from his fellows at the Tribunal than a suspicion that he had approached any case with a view to ingratiating himself with one party or another or that he might succumb to a party's blandishments. Such safeguards as are thus afforded are not, to use Laws L.J.'s expression, cast in stone, but that is not to say, even in a cynical age, that they are not powerful factors conducing against any want of impartiality or of independence.
  65. Having concluded as we have as to the present system in the Employment Tribunals we have not needed to deal with further arguments based on Simmenthal S.p.a. ECJ 9th March 1978 that Mr Sales mounted and we leave them for resolution in cases where their resolution is necessary.
  66. In the circumstances and subject to one consideration we shall return to in a moment, we have no qualms, having set aside the decision below, in remitting the matter for hearing afresh by a panel composed of Members appointed under the current system, a panel, which, it must be emphasised to it, is to approach both the law and the facts as they see fit, entirely free of any regard for the decision of June 1999.
  67. The one consideration is this. It follows from our judgment on Article 6 that the decision as to TUPE was made by a panel that was not compliant with Article 6 and hence that the decision is to be set aside. But it does not follow from that that the findings of fact or the Tribunal's response to the legal argument which it heard was in any way the product of bias. Unless the Appellants believe they have some measurable prospect of the facts being found differently or the law being decided differently upon a remission then the gaining of the remission will be a merely pyrrhic victory. Rather than ordering an immediate remission we shall thus delay it for 14 days in order that Mrs Link and UK may reflect upon whether either wishes it; if, within that period, either indicates in writing to the Employment Appeal Tribunal that she or it does not wish for a remission we will, as to her or it, instead not remit but rather dismiss the relevant application or applications.


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