Lister v Forth Dry Dock

Lister v Forth Dry Dock & Engineering Co Ltd [1988] UKHL 10

Confirmed that domestic legislation ought be interpreted so as to give effect to EC law.

Facts

Following financial difficulties, the defendants, Forth Dry Dock, entered receivership. Forth Dry Dock was sold to a third party company, however shortly beforehand the company’s receiver fired all of the company’s twelve employees as they intended to replace them with a group of employees who were prepared to work for lower salaries. Moreover, the receivers lacked the funds to pay the fire employees the money that they ought. Whilst the EC Tuper Regulation 1981 5(3) found that employees dismissed ‘immediately’ prior to a company’s transfer remained entitled to certain rights, the question was thus whether the employees could be considered to have been in employment ‘immediately’ before the transfer when they had been dismissed one hour prior to the transfer.

Issues

In the event of unfair collective dismissal immediately prior to a company’s transfer, does the duty to compensate transfer to the receiver.

Decision/Outcome

Initially, the Court found for the defendants, however on appeal to the House of Lords, the Court found for the complainants. Rather than taking a literal approach to statutory interpretation, the Court decided to take a purposive approach so as to give application to case law authorities from the European Court of Justice. Lord Oliver noted that the rights provided under European Community law meant that ‘in the case of an insolvent transferor [such rights] are largely illusory unless they can be exerted against the transferee’. Furthermore, European Community law applied to persons immediately employed before the company’s transfer and those who ought have been employed had they not been dismissed inequitable.

Words: 283