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    19.  The preamble to the Directive stated that it was adopted because it was "necessary to provide for the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded." Article 1(1) provided:

"This Directive shall apply to the transfer of an undertaking, business or part of a business to another employer as a result of a legal transfer or merger."

Article 2 provided:

"For the purposes of this Directive—

(a)  'transferor' means any natural or legal person who, by reason of a transfer within the meaning of article 1(1), ceases to be the employer in respect of the undertaking, business or part of the business;

(b)  'transferee' means any natural or legal person who, by reason of a transfer within the meaning of article 1(1), becomes the employer in respect of the undertaking, business or part of the business."

    20.  Article 3(1) of the Directive was in these terms:

"The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer within the meaning of article 1(1) shall, by reason of such transfer, be transferred to the transferee.

Member States may provide that, after the date of transfer within the meaning of article 1(1) and in addition to the transferee, the transferor shall continue to be liable in respect of obligations which arose from a contract of employment or an employment relationship."

    21.  The Directive was transposed into domestic law by TUPE. Regulation 5(1) of TUPE, as amended by section 33 of the 1993 Act, provides:

"Except where objection is made under paragraph 4A below, a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee."

    22.  Part XIV of the Employment Rights Act 1996 contains the interpretation provisions for the purposes of the statutory employment rights conferred by the Act. Chapter 1 of that Part deals with the concept of continuous employment, which is entirely a creature of statute. Section 210(1) states that references in any provision of the Act to a period of continuous employment are to a period computed in accordance with that chapter. Section 218 deals with how that period is to be computed in the event of a change of employer. Subsections (1) and (2) of that section are in these terms:

"(1) Subject to the provisions of this section, this Chapter relates only to employment by the one employer.

(2) If a trade or business, or an undertaking (whether or not established by or under an Act), is transferred from one person to another -

(a)  the period of employment of an employee in the trade or business or undertaking at the time of the transfer counts as a period of employment with the transferee, and

(b)  the transfer does not break the continuity of the period of employment."

    23.  On 22 December 1999 an employment tribunal sitting at Abergele determined that all three respondents had continuous employment from the start of their employment with the civil service under section 218 of the Employment Rights Act 1996 and the Directive, and that Mr Astley also had continuity of employment by virtue of article 5(1) of TUPE. It found that there had been a TUPE transfer commencing in September 1990 when NEWTEC started business. It also found that the transfer took place over a number of years until 1996 when the last of the secondments to TECs from the civil service came to an end. In para 20 of its determination the tribunal said:

"Our analysis is that each time a seconded employee became directly employed by the TEC there was another transaction and immediately before that transaction ('any transaction') that employee was employed by the transferor, ie by the civil service and therefore that employee's rights passed over to the transferee which was the TEC. We see no reason in principle why such a very long period should not be found to be a period of the transfer when that was plain from the outset."

    24.  On 5 October 2001 the Employment Appeal Tribunal, by a majority, allowed an appeal by Celtec against the employment tribunal's determination: [2001] IRLR 788. It had been accepted for the purposes of that appeal that the tribunal's conclusion that there was a transfer of an undertaking was not open to challenge. The appeal was directed to the question when the transfer took place. It was held that the test for determining the time at which a transfer is completed was when the new employer was in actual occupation and control of the old business. On that basis the tribunal ought to have concluded that the transfer was probably completed in about September 1990 and certainly long before 1993. It followed that the respondents remained employed by the civil service after the transfer, and their continuity of employment was not preserved when they accepted employment with Newtec.

    25.  On 19 July 2002 the Court of Appeal (Schiemann and Laws LJJ, Jackson J) allowed an appeal by the respondents against the determination of the Employment Appeal Tribunal: [2002] EWCA Civ 1035; [2002] ICR 1289. Delivering the opinion of the court, Schiemann LJ said that the employment tribunal was entitled to hold that the management skills of the seconded employees formed part of the undertaking that was being transferred: para 30. Addressing then the question whether the wording of the Directive implied that the transfer of the undertaking must take place at a moment in time, he said that the Directive was sufficiently wide in its terms to embrace a transfer of a business which took place over a period: para 31. In para 32 he said:

"Once one accepts that a business can be transferred over a period of time, the establishment of the period of time during which the transfer takes place is a task for the tribunal of fact. We see no legal error in what was done by the employment tribunal."

    26.  Celtec appealed against that decision to your Lordships' House. The parties were agreed that the respondents remained employees of the civil service during the period of their secondments. They were also agreed that the issue in the appeal was whether the employment tribunal erred in law in finding that the relevant transfer took place over a long period of time. They submitted that a reference should be made to the European Court of Justice under article 234 EC for a preliminary ruling on this point. On 10 November 2003 the House referred the following questions to the European Court of Justice:

"1. Are the words 'the transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer in article 3(1) of Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses to be interpreted as meaning that there is a particular point of time at which the transfer of the undertaking or part thereof is deemed to have been completed and the transfer of rights and obligations pursuant to article 3(1) is effected?

2. If the answer to question 1 is 'yes', how is that particular point of time to be identified?

3. If the answer to question 1 is 'no', how are the words 'on the date of a transfer' in article 3(1) to be interpreted?"

    27.  Celtec's contention before the Court of Justice was that the relevant words in article 3(1) of the Directive should be interpreted as meaning that there was a particular point of time at which a transfer of an undertaking or part thereof was deemed to have been complete and the rights and obligations of the transferor arising from a contract of employment existing on the date of the transfer were transferred to the transferee. They submitted that any later movement of employees from the transferor to the transferee was not within the scope of the Directive. The respondents' contention was that, while it was necessary to identify a date on or by which a transfer of an undertaking had been completed, this did not preclude the national court from finding that the transfer took place in stages, or over a period of time, or was effected by a series of transactions. They submitted that employees who remained employed in the undertaking during the process of transfer, or who were employed at the time of the stages or transactions by which the transfer was effected and who did not resign from the transferor's employment voluntarily or otherwise object to the transfer, are entitled to the protection of the Directive.

    28.  On 26 May 2005 the Court of Justice made the following rulings (Case C-478/03) [2005] IRLR 647:

"1. Article 3(1) of Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses must be interpreted as meaning that the date of a transfer within the meaning of that provision is the date on which responsibility as employer for carrying on the business of the unit transferred moves from the transferor to the transferee. That date is a particular point in time which cannot be postponed to another date at the will of the transferor or transferee.

2. For the purposes of applying that provision, contracts of employment or employment relationships existing on the date of the transfer within the meaning stated in para 1 of the operative part between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over, on that date, from the transferor to the transferee, regardless of what has been agreed between the parties in that respect."

    29.  One might have expected the rulings by the European Court of Justice as to whether the transfer took place over period of time to have resolved the issue between the parties. The case has been argued hitherto on the assumption that the respondents remained civil servants during their secondment to Newtec. A statement to this effect appears in para 7 of the Statement of Facts and Issues. Celtec submit that in the light of the ECJ's ruling as to the date of the transfer the appeal should be allowed and that it be determined that the respondents' periods of continuous service began when, after resigning from the civil service, they took up direct employment with Newtec.

    30.  The respondents submit however that the only issue that has to be determined is whether, in the light of the ECJ's judgment, their continuity of employment was broken in 1993 when they resigned from the civil service and accepted an offer of employment with Newtec. They contend that, assuming now that the date of the transfer was in September 1990 and not over a period as they had previously submitted, their accrued rights were protected by the Directive. This is because their contracts of employment are deemed to have been handed over to Newtec at the date of the transfer. This, they say, is the inevitable consequence of article 3 of the Directive as interpreted by the ECJ.

    31.  Mr Bowers QC for Celtec pointed out that the argument which the respondents were now seeking to advance is a new argument. The premise on which the case had been sent for a preliminary ruling was that the only question between the parties was whether there had to be a single date for the transfer. It had been assumed that the answer to that question would determine the case. He submitted that the respondents ought not to be permitted to raise this new point at this stage. In any event, the effect of the ECJ's ruling was that the employment tribunal had been proceeding on a false premise when it assumed that the transfer could take place over a long period. As a result the basis on which the respondents chose to remain with the transferor after the date of the transfer was not before the tribunal for its determination. So it had not been asked to consider whether it was by their own decision that the respondents agreed to be seconded to Newtec while remaining as employees of the DoE. If this question was to be considered now it would have to be remitted to the tribunal for its determination.

    32.  There are then two preliminary questions which your Lordships must consider before applying the rulings by the ECJ to the facts of this case. These are whether the respondents should be permitted to argue that the effect of the ruling by the ECJ is that the continuity of their employment was not broken in 1993 despite the fact that the transfer of the undertaking to Newtec must now be held to have taken place on a single date in September 1990 and, if so, whether that issue can be determined by the House on the information that is available or must be remitted to the tribunal for its determination.

    33.  There is no doubt that the ECJ's ruling went further than was strictly necessary for a determination of the question whether the transfer of the undertaking took place on a single date or over a period. It went out its way to make it plain, in its answer in para 1 to the questions on which a preliminary ruling had been sought, that that date was a particular point of time which could not be postponed to another date at the will of the transferor or transferee. And it went further still when it ruled in para 2, drawing on its previous case law, that contracts of employment existing on the date of the transfer between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over on that date from the transferor to the transferee regardless of what has been agreed between the parties in that respect.

    34.  I take this to be a clear indication that, notwithstanding the court's ruling that the transfer took place on a particular point of time and not over a period, it was open to the national court to hold that the respondents' continuity of employment was not broken when they accepted employment with Newtec in 1993. This feature of the decision makes it necessary to examine the court's reasoning more closely.

    35.  The reasoning on which the first sentence of the ruling in paragraph 1 was based appears in paras 26 to 36 of the ECJ's judgment. In para 26 the court referred to what it has repeatedly held to be the purpose of the Directive in, for example, d'Urso v Ercole Marelli Elettromeccanica Generale SpA (Case C-362/89) [1992] ECR I-4105, para 9. It is intended to safeguard the rights of workers in the event of a change of employer by making it possible for them to continue to work for the new employer on the same conditions as those agreed with the transferor. Its purpose is to ensure, as far as possible, that the contract of employment continues unchanged with the transferee, in order to prevent the workers concerned from being placed in a less favourable position solely as a result of the transfer. Accordingly article 3(1) of the Directive covers the transferor's rights and obligations arising from a contract of employment existing on the date of the transfer and entered into with employees who, in order to carry out their duties, were assigned to the undertaking transferred: para 28. In para 29 the court said that the protection of article 3(1) covers workers assigned to the unit affected by the transfer whose contract of employment or employment relationship is in force on the "date of a transfer", and not those who have ceased to be employed by the transferor on that date or those who were engaged by the transferee after that date.

    36.  In para 30 the court added this observation, the effect of which was to emphasise the close link that exists between establishing the date of the transfer and the protection of workers whose contracts of employment were in force at that date:

"Both the choice of the word 'date' and reasons of legal certainty indicate that, in the mind of the Community legislature, the workers entitled to benefit from the protection established by article 3(1) of Directive 77/187 must be identified at a particular point in the transfer process and not in relation to the length of time over which that process extends."

    The court concluded this part of its discussion in para 36 with these words:

"In those circumstances, the term 'date of a transfer' in article 3(1) of Directive 77/187 must be understood as referring to the date on which responsibility as employer for carrying on the business of the unit in question moves from the transferor to the transferee."

    37.  The court then turned its attention to the issue which it saw as lying at the heart of the reference. This was the subject of the second sentence of its ruling in paragraph 1 and of its ruling in paragraph 2. It introduced this part of the discussion with these observations in paras 37 and 38:

"37 As the court has already held, implementation of the rights conferred on employees by article 3(1) of Directive 77/187 may not be made subject to the consent of either the transferor or the transferee nor to the consent of the employees' representatives or the employees themselves, with the sole reservation, as regards the workers themselves, that, following a decision freely taken by them, they are at liberty, after the transfer, not to continue the employment relationship with the new employer (see Case 105/84 Danmols Inventar [1985] ECR 2639, para 16 and d'Urso, cited above, paragraph 11).

38 It follows that, with that sole reservation, contracts of employment or employment relationships existing on the date of the transfer referred to in article 3(1) of Directive 77/187 between the transferor and workers assigned to the undertaking transferred are automatically transferred from the transferor to the transferee by the mere fact of the transfer of the undertaking (see d'Urso, cited above, para 20, and Case C-305/94 Rotsart de Hertaing [1997] IRLR 127, para 18)."

    38.  In para 40 the court referred, in support of that interpretation, to the second subparagraph of article 3(1) which gives Member States the option of providing that, after the date of the transfer, the transferor is to be liable, alongside the transferee, for the obligations arising from a contract of employment or employment relationship. It said that this rule implies that in any event those obligations are transferred to the transferee on the date of the transfer. In para 42 it added that to allow the transferor or transferee the possibility of choosing the date from which the contract of employment or employment relationship is transferred would amount to allowing employers to derogate, at least temporarily, from the provisions of the Directive. As those provisions are mandatory, it is not possible to derogate from them in a manner unfavourable to employees.

    39.  The court concluded this part of the discussion with these observations in para 43:

"For the same reasons as those stated in paragraphs 40 to 42 of this judgment, it must be held that, for the purposes of article 3(1) of Directive 77/187, contracts of employment or employment relationships existing on the date of the transfer referred to by that provision between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over, on that date, from the transferor to the transferee, regardless of what has been agreed between the parties to the transfer process in that respect."

    40.  The court's judgment shows that the respondents' original position, that the continuity of employment which they sought was preserved because the transfer took place over a period of time, was based on a misunderstanding of the effect of article 3(1) of the Directive. But it also shows that there were two aspects to that misunderstanding. The first relates to the date of the transfer. The second relates to the question whether that date can be postponed at the will of the transferor or the transferee. The respondents' argument had assumed that it was not possible for their contracts of employment to be transferred to the transferee during the period of their secondment. The court's ruling that contracts of employment existing on the date of the transfer between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over from the transferor to the transferee on the date of the transfer casts an entirely different light on this argument.

    41.  The question then is whether the respondents should be permitted to argue that the effect of the ruling by the ECJ is that the continuity of their employment was not broken when they resigned from the civil service and accepted an offer of employment by Newtec, notwithstanding the fact that this took place after the date of the transfer. In effect, the question is whether your Lordships should decline to give effect to the ECJ's judgment because the ruling which it has given has raised a point that was not previously argued. I would hold that the answer to this question is to be found by applying the principles described in Amministrazione delle Finanze dello Stato v Simmenthal SpA (No 2) (Case 106/77) [1978] 3 CMLR 263. It is necessary also to have regard to article 10 EC, which provides that Member States shall take all appropriate measures to ensure fulfilment of the obligations arising out of the Treaty and abstain from any measure which could jeopardise the attainment of those obligations.

    42.  In the Simmenthal case the court said that direct applicability of a provision of Community law means that rules of Community law must be fully and uniformly applied in all the Member States as from the date of their entry into force and for so long as they continue in force: para 14. Referring to the structure of article 177 of the EC Treaty (now article 234 EC) which provides for the making of a reference to the court for a preliminary ruling, it said that the effectiveness of that provision would be impaired if the national court were prevented from forthwith applying Community law in its entirety in accordance with the decision or the case law of the court and that it followed that every national court must, in a case within its jurisdiction, apply Community law in its entirety and protect rights which the latter confers on individuals: paras 19 and 20.

    43.  In the light of that guidance I would reject Celtec's contention that it is not open to the respondents to argue at this stage that, for the purposes of article 3(1) of the Directive, their contracts of employment must be deemed to have been handed over to Newtec on the date of the transfer. In my opinion it is the duty of the national court to give them that opportunity, in view of the ECJ's ruling that contracts of employment existing on the date of the transfer between the transferor and workers assigned to the undertaking transferred are deemed to be handed over from the transferor to the transferee on the date of the transfer.

    44.  There remains however the question whether Celtec's argument that the respondents' contracts of employment were not transferred to Newtec on the date of the transfer because they freely decided to remain in the civil service can be determined by the House on the information that is available. This question is best divided into two parts. It is first necessary to identify the precise extent of the sole reservation from the general rule that contracts of employment are automatically transferred from the transferor to the transferee on the date of the transfer. It is then necessary to decide whether the question whether the reservation applies to this case can be answered on the existing material or must be remitted to the employment tribunal for its determination.

    45.  The ECJ dealt with the consent issue in para 37 of its judgment: see para 28 above. The basic proposition which is set out in that paragraph is that implementation of the rights conferred on employees by article 3(1) of the Directive may not be made subject to the consent of either the transferor or the transferee nor to the consent of the employees' representatives or the employees themselves. From this it follows that the fact that it was agreed between the DoE and the TECs that the staff who understood the government policy that the contracts were designed to deliver would be provided to the TECs on secondment initially for a period of three year is irrelevant to the question whether the respondents' employment contracts are to be deemed to have been handed over to Newtec on the date of the transfer. So too is the fact that it was agreed between the DoE and those who volunteered for secondment that they would continue to be employed by the civil service during the period of their secondment. But the basic proposition is subject to the sole reservation as regards the workers themselves referred to in para 37, that they are at liberty after the transfer, following a decision freely taken by them, not to continue the employment relationship with the transferee. Are the respondents' cases caught by that reservation?

    46.  Celtec's argument is that the reservation applies to the respondents' cases because they freely decided to remain civil servants after the date of the transfer by volunteering for secondment to Newtec. It is not in doubt that they volunteered for secondment on the terms that were offered to them. They were to continue to be civil servants employed by the DoE, and they were to retain their normal pay and terms and conditions of employment during the period of their secondment. But is this the kind of arrangement that the ECJ had in mind when expressing what it described as "the sole reservation" in para 37? Mr Millar QC for the respondents submitted that it applied only to cases where the workers objected to taking up employment with the transferee in circumstances where taking up that employment was an option that was available.

    47.  To answer this question it is necessary to examine the two cases to which reference is made at the end of para 37 of the ECJ's judgment. These are Foreningen af Arbejdsledere i Danmark v A/S Danmols Inventar, in liquidation (Case 105/84) [1985] ECR 2639, sometimes referred to as the Mikkelsen case after the name of the person whose action against the defendant company led to the making of the reference, and d'Urso v Ercole Marelli Elettromeccanica Generale SpA (Case C-362/89) [1991] ECR I-4105.