The capacity of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (SI 81/1794) (TUPE) to cause problems for the practitioner and to generate academic debate is seemingly inexhaustible.

The most recent example of this comes in the decision of the Employment Appeal Tribunal (EAT), given by its president, Mr Justice Mummery, in Milligan v Securicor Cleaning Ltd [1995] IRLR 288 which represents an important extension to the rights of employees dismissed in connection with the transfer of an undertaking in circumstances where TUPE applies.

The right to bring a claim for unfair dismissal before an industrial tribunal is limited to those employees who have the necessary period of qualifying service.

The qualifying period is currently two years continuous service (see s.64 of the Employment Protection (Consolidation) Act 1978) save in certain exceptional circumstances, where there is no qualifying period, for example, dismissals on grounds related to trade union membership or activities, and dismissals on grounds of pregnancy or childbirth.

In Milligan, neither of the two applicants, who were cleaners employed by North Yorkshire County Council, had the necessary period of continuous service at the time of the termination of their employment.

The dismissals arose in connection with the transfer of cleaning work from the council to Securicor Cleaning Ltd, which was not prepared to offer terms of employment comparable to those offered by the council.

It was conceded, for the purposes of ascertaining whether or not the industrial tribunal had jurisdiction to hear the applications, that the dismissals were for a reason connected with the transfer, and that the transfer fell within the scope of TUPE.

The industrial tribunal threw the applicants' case out on the basis that to proceed with a claim for unfair dismissal they woul d need the necessary period of qualifying service.

They appealed on this point to the EAT.

The EAT records that its initial reaction was to confirm the decision of the industrial tribunal.

However, they were persuaded by 'an argument of exceptional interest, subtlety and clarity from Mr Brian Langstaff QC' for the applicants, that the industrial tribunal had jurisdiction to consider the applications for unfair dismissal, notwithstanding that the applicants did not have the necessary two years' qualifying service.

Alas, we must enquire whether the silver tongue of counsel for the applicants has led the EAT astray from a perfectly proper initial reaction to a surprising and somewhat inappropriate conclusion.

Reg 8 of TUPE concerns the dismissal of an employee by reason of a transfer falling within the scope of TUPE: '(1) Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of part V of the 1978 Act and articles 20 to 41 of the 1976 Order (unfair dismissal) as unfairly dismissed if the transfer or a reason connected with it is the reason or principal reason for his dismissal.

(2) Where an economic, technical or organisational reason entailing changes in the workforce of either the transferor or the transferee before or after a relevant transfer is the reason or principal reason for dismissing an employee: (a) paragraph (1) above shall not apply to his dismissal; but (b) without prejudice to the application of s.57(3) of the 1978 Act or art 20(10) of the 1976 Order (test of fair dismissal) the dismissal shall for the purposes of s.

57(1)(b) of that Act and art 22(1)(b) of that Order (substantial reason for dismissal) be regarded as having been for a substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held.' Art 4 of the Acquired Rights Directive (EC 77/187) (the Directive), which TUPE was introduced to implement into English law, provides as follows: '1.

The transfer of an undertaking, business or part of a business shall not in itself constitute grounds for dismissal by the transferor or the transferee.

This provision shall not stand in the way of dismissals that may take place for economic, technical or organisational reasons entailing changes in the work force.

Member states may provide that the first sub-paragraph shall not apply to certain specific categories of employees who are not covered by the laws or practice of member states in respect of protection against dismissal.' The EAT began its analysis with the Directive and in particular the provisions in art 4 that the transfer of an undertaking shall not constitute grounds for dismissal.

The EAT saw this right as freestanding, notwithstanding that certain of a member state's employees may not be protected against dismissal for other reasons.

They noted that the second part of art 4(1) permitted the exclusion of certain specific categories of employees, but they found nothing in reg 8 of TUPE that had the effect of excluding employees with less than two years' service from that protection.

The EAT stated that any such exception would have to be identified specifically.

The parties to a business transfer to which TUPE applies would now be well advised to make plans on the assumption that all employees who are dismissed in connection with the transfer may, regardless of their length of service, bring a claim for unfair dismissal.

Moreover, these dismissals will be automatically unfair pursuant to reg 8( 1), unless there is an 'economic, technical or organisational reason' behind the dismissal (see reg 8(2)), in which case the industrial tribunal may consider the merits of the case in the ordinary way.

However, should an employer be faced with similar circumstances in future, it should not necessarily roll over and die.

It is worth noting that the decision of the EAT in Milligan goes against the (obiter) dicta of the EAT on the same issue in Macer v Abfast [1990] ICR 234.

Moreover, Mummery J wrongly stated in Milligan that 'the point is not referred to in Harrison Bowden v Bowden [1994] ICR 186'.

The issue was referred to, and (again, obiter) comments were made that conflict with the decision in Milligan.

It is understood that Securicor has no plans to appeal, despite being granted leave to do so, and hence the opportunity to invite the Court of Appeal to reconsider the compelling arguments against the EAT's judgment has been missed.

For the moment, therefore, industrial tribunals must consider themselves bound by Milligan.

In due course it may be that another division of the EAT will decide the issue differently or an appeal will be taken to a higher court.

Furthermore, one cannot rule out the possibility of legislative intervention to reverse the effect of the Milligan judgment, particularly if a flood of back claims is generated.

The reported 'initial reaction' of the EAT that the applicants were not entitled to bring a claim for unfair dismissal without the necessary qualifying service accords with the opinions of most commentators prior to Milligan, and with the opinion of the EAT in previous cases (supra).

The decision therefore comes as something of a surprise.

It is open to objection both on grounds of policy and of interpretation.

The Directive is concerned principally with the safeguarding of employee rights on a change of employer.

As interpreted by the EAT in Milligan, there is not so much a transfer of acquired rights as the acquisition of fresh rights.

An employee with less than two years' service is vulnerable to dismissal for a range of unfair reasons without being in a position to seek a remedy from an industrial tribunal, however capricious or unfair the reason for that dismissal.

Under Milligan, if the dismissal is in connection with a business transfer under TUPE, an employee with less than two years' service is entitled to bring a claim.

Is there any reason why an employee in those circumstances needs an enhanced level of protection? Is there a mischief here that needs special treatment akin to that available in trade union or pregnancy-related dismissals? Moreover, given that the government had the option under the Directive to either include or exclude these employees from protection, is it really consistent with the way in which unfair dismissal law has been developed for these employees to be given such protection?The question of how the protection in the Directive is provided to employees is a matter for each member state (see Bork [1989] IRLR 41).

The proviso to art 4(1) of the Directive allows member states to fit the protection into the existing framework of dismissal protection.

The protection fits easily into English unfair dismissal law -- all that is needed in respect of art 4(1) is to provide that, unless there is an 'economic, technical or organisational reason' for the dismissal, a transfer-related dismissal cannot be a potentially fair dismissal.

With the emphasis (in practice) in English law being on financial compensation, the question then is simply one of when an employee be comes entitled to compensation.

It is not so much a matter of protection as a matter of compensation.

Qualification is generally by length of service, rather than by category of unfairness.

The qualifying period is only lifted in specific cases where an exceptional degree of protection is justified.

In certain other jurisdictions within the EU, by contrast, the emphasis is on the continuity of the employment relationship -- hence, the fact that the transfer of a business is not a ground which justifies dismissal will result in the continuity of the employment relationship.

The ground for dismissal (and hence the validity of the dismissal) is the central issue, and this is why the point is spelled out in the Directive.

The EAT argued that the exclusion of any category of employees pursuant to the proviso to art 4(1) must be express, and held that any exclusion in TUPE was merely implicit.

However, this is not so.

A dismissal (regardless of its reason) automatically takes the case within the scope of the protection against dismissal afforded by pt V of the Employment Protection (Consolidation) Act 1978.

Employees with less than two years' service are removed from protection not implicitly but expressly.

Indeed, all circumstances where there is no qualifying period are the subject of express provisions.

Given that the protection in art 4(1) fits within the pre-existing structure of English unfair dismissal law, it is difficult to see why the EAT has such a great concern that reg 8 was not drafted with a sufficiently clear exemption.

The EAT has in any event been persuaded to apply an unnecessarily strict requirement for the exclusion of certain employees from the art 4(1) protection -- the permitted exclusion in art 4 of 'certain specific categories of employees' does not require a specific exclusion, rather an exclusion of specific categories of employees.

There is nothing either unclear or unspecific, it is suggested, within reg 8(1) and pt V, as drafted; the specific category of excluded employees is those without the necessary qualifying service.

There is no authority for the EAT's proposition that the exclusion must be expressly set out in those terms within TUPE itself.

The fact of a dismissal automatically diverts one's attention to pt V; reg 8 is principally concerned with the introduction of the concept of an automatically unfair dismissal, rather than with the concept of qualification.

The structure of the EAT's judgment is to refer first of all to the Directive, on the basis that under the 'purposive approach' the courts of the UK are under a duty to construe domestic regulations implemented for the purpose of complying with EU Directives in the light of the wording and purpose of those Directives.

It is important to bear in mind in this context the true objective of the purposive approach.

As Lord Keith of Kinkel put it in Pickstone v Freemans [1989] 1 AC 112, 'the words [of the regulations] must be construed purposively in order to give effect to the manifest broad intention of the maker of the regulations and of Parliament'.

The 'manifest broad intention' of the government when TUPE was introduced was to comply with its obligations under European law to implement the provisions of the Directive into English law, reluctantly and without enthusiasm.

There was no intention to go beyond what was the minimum necessary to comply with those obligations, and it is inconceivable that the extension of unfair dismissal rights to those with less than two years' service was a part of their purpose.

Moreover, there is nei ther ambiguity on this point under TUPE, nor a suggestion that the government has failed to abide by its European law obligations -- the core issues that the purposive approach was developed to deal with.

In short, the purposive approach adds little in this case.

Had the EAT approached this issue by considering TUPE, and had then referred to the Directive only to check that TUPE was neither inconsistent with the Directive nor clearly falling short of the Directive's requirements, it is unlikely that the problem of whether or not there had been a sufficiently express exclusion for the purposes of art 4 would have arisen.

However, the purposive approach has developed in courts and tribunals a habit of going straight to the EU legislation.

Where the provisions of the Directive are not mandatory and there is no ambiguity in the domestic law this is not justifiable.

For the moment, tribunals will have to consider themselves bound by Milligan, and practitioners will have to factor this added cost into their calculations when contemplating business transfers.

However, either by legislation or as a result of future case law, there may yet be further chapters to be written in this particular story.