tu36/2014

EMPLOYMENT APPEALS TRIBUNAL

APPEAL OF:                                                                                          CASE NO.

Sinead McNamara                                                                                   TU36/2014

against the recommendation of the Rights Commissioner in the case of:

Michael Brady

-v-

Sinead McNamara

under

PROTECTION OF EMPLOYEES ON TRANSFER OF UNDERTAKINGS REGULATIONS 2003

I certify that the Tribunal

(Division of Tribunal)

Chairman:       Ms D. Donovan B.L.

Members:       Mr. P. Casey

                        Ms P. Doyle

heard this appeal at Cork on 26th August 2014

Representation:

Appellant:       Mr Terence O'Sullivan, Terence J O'Sullivan,

                        Solicitors, 6 Lapps Quay, Cork

Respondent: In Person

This is an appeal by the Respondent against a decision of the Rights Commissioner, dated 23^rd May 2014 which held that there was a relevant transfer for the purposes of European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003 – Statutory Instrument 131/2003, that the Respondent had breached regulation 8 and that the Claimant had been made redundant for economic, technical or organisational reasons in accordance with regulation 2 and was entitled to his redundancy payments.

The Tribunal decided, in agreement with the Parties, to determine as a preliminary issue whether the European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003 – Statutory Instrument 131/2003 applied to the Respondent and if so whether there was a relevant transfer.   Following a determination by the Tribunal on the preliminary issue the Tribunal would then, if appropriate, proceed to hear the appeal and also determine whether there was a breach of regulation 8.

The Respondent’s position in essence is as follows:-

(1)  That the post of Cork County Sheriff being held by a natural person (entity) cannot therefore be an economic entity.

(2)  That the post of Cork County Sheriff is a public administrative authority carrying out a public administrative function and accordingly is entitled to the exemption provided for in Regulation 3(5) of the European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003.

Determination on the Preliminary Issue:

The Tribunal having carefully considered the evidence and submissions of the parties determines as follows:-

(1)  That the Respondent is an economic entity for the purposes of the European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003 – Statutory Instrument 131/2003.

(2)  That there was a relevant transfer for the purposes of European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003.

Regarding the determination that the Respondent is an economic entity for the purposes of Regulation 3(5) of the European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003, the Tribunal so finds for the following reasons:-

1. That as regards staff recruited to the Office of Sheriff, the Sheriff is an employer for the purposes of the European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003 as “employer” in Article 2 of the said Regulations is defined as “the person who under a contract of employment ….. is liable to pay the wages of the individual concerned in respect of the work or service concerned.”

2. The Office of Sheriff is not precluded from being an economic entity by reason of the office being held by a natural entity as all economic entities will necessarily also be a natural or legal entity.

3. For the purposes of European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003 it matters not whether the transferor or transferee is a natural or legal entity or whether they are a private or public body.

4. The European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003 applies to public and private undertakings engaged in economic activities whether or not they are operating for gain.

5. That the functions of the employees of the Respondent and their functions for the former County Sheriff are in the main enforcement of judgements.   The County Sheriff also arranges for the tendering for sale of goods, including vehicles, seized.   The role of returning officer at elections is a function to be performed by the County Sheriff rather than the employees of the County Sheriff and accordingly is not a duty of the employment relationship between the Respondent, her predecessor in title, and the employees.   It is clear from section 12(3)(g) of the Court Officers Act, 1945 that only the Sheriff or a person appointed by the relevant Minister can carry out the role of returning officer at elections.   The Tribunal finds that the requirement to carry out this function for the State when the need arises, which will be occasionally and not on a regular basis, does not bring the Office of Sheriff as employer outside the ambit of the TUPE Regulations 2003.   See section 12(3)(g) which provides as follows:-

“where the duty of acting as returning officer for the county or county borough is for the time being imposed, by virtue of this section on the sheriff and a vacancy occurs in the office of sheriff or the sheriff is absent or incapacitated, the Minister for Local Government and Public Health may, if he so thinks proper, appoint a person to perform the duties of returning officer for the county or county borough during such vacancy, absence or incapacity.”

6. That the statutory proofs put forward by the Respondent in support of the assertion that the Respondent is an administrative authority deal in the main with the relationship between the Respondent, qua County Sheriff, and the State rather than the relationship between the Respondent, qua employer, and her employees.

7. Statute has conferred the power on Sheriffs such as the Respondent to enforce such judgements as are passed to the Sheriff by the courts or the Revenue Commissioners.   All such judgements as are passed to Sheriffs are judgements intended to result in the recovery of money or monies worth with gain to the Office of Sheriff.   To that extent the Respondent is in the nature of a debt collection agency for the State albeit that such debt collection has to be carried out in accordance with the provisions of the Enforcement of Court Orders 1926 (as amended) and as regards Revenue warrants in accordance with the Taxes Consolidated Acts 1997 and the Code of Practice for Sheriffs November 2005.   Accordingly the functions of the Office of Sheriff constitute economic activity.

8. The Tribunal accepts that the functions of the Respondent are administrative functions in so far as enforcement of judgements are an executive function (see Deaton v Attorney General [1973] IR 50) and accordingly is a public administrative function.   The enforcement of judgements are not, however, an administration of justice (see Kennedy v Hearne [1988] ILRM 52 at p.531). The fact that functions are administrative functions does not necessarily preclude such functions constituting economic activity nor preclude the Respondent from constituting an economic entity.   Article 3(2) of the European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003 defines an “economic entity” as meaning “an organised grouping of resources which has the objective of pursuing an economic activity whether or not that activity is for profit or gain or whether it is central or ancillary to another economic OR administrative entity”.   The Tribunal finds that the activity of the Respondent in enforcing judgements passed to her is economic activity that is central and at the least ancillary to an administrative entity.

9. As to whether the Office of Sheriff, or indeed any employer, is an economic entity falls to be determined by reference to the definition of “economic entity” in Article 3(2) of the European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003 and as interpreted by the ECJ. See, for example, joined cases Sanchez Hildago and Others v Asociation de Servicious Aser and Socieded Cooperative Minerva (C-173/1996) and Horst Ziemann Sicherheit GmbH and Horst Bohn Sicherheitsdienst (C247/1996) where the ECJ at paragraph 34 of the judgement said “the term ‘economic entity’ refers to an organised grouping of persons and of assets enabling an economic activity which pursues a specific objective to be exercised". At paragraph 32 of the judgement the ECJ has made it clear that “in certain labour-intensive sectors, a group of workers engaged in a joint activity on a permanent basis may constitute an economic entity”.   The Tribunal finds that the Respondent and her staff are such an organised grouping of persons and of assets enabling an economic activity which pursues the specific objective of debt collection for the State.

1. Regarding the exemption provided in Regulation 3(5), there is no statutory definition of what constitutes a public administrative authority, but in Adult Learning Inspectorate & Ors v Beloff  (UKEAT/0238/07/RN) the UK Employment Appeals Tribunal agreed that the reference is to "a public body whose functions involve the exercise of public authority…" Case law has evolved which suggests that the scope of Regulation 3(5) excludes from the legislation's application only a relatively limited range of situations involving the transfer of entities pursuing non-economic objectives within the public sector.   This reflects the approach taken in the case of Henke v Gemeinde Schierke, Verwaltungsgemeinschaft Brocken: C-298/94 [1996] IRLR 701 (ECJ) which established that the reorganisation of the structure of public administration, or the transfer of purely administrative functions, does not constitute a transfer of an undertaking within the meaning of the Acquired Rights Directive and that activities of an economic nature were required in order for there to be a relevant transfer. In the instant case the Tribunal finds that there are such activities of an economic nature viz. debt collection.

1. In Henke (Case C-298/94), the ECJ said “the fact that the service or contract in question has been contracted out or awarded by a public body cannot exclude application of Directive 77/178 if neither of the activities the subject matter of the contract “involves the exercise of public authority”.   In the instant case the Tribunal finds that the service contracted out is not the exercise of public authority but an economic activity viz. debt collection.

The subsequent decisions in Mayeur v Association Promotion de I'Information Messine: C-175/99 [2000] IRLR 783 (ECJ) and Collino v Telecom Italia SpA: C-343/98 [2000] IRLR 788 (ECJ) confirm the limited application of the Henke exception.

The Tribunal is of the opinion that the Regulation 3(5) exemption applies to and was intended to apply to situations where, for example, the housing functions of borough councils are transferred to county councils and where staff are either by legislation (Ministerial Order or otherwise) transferred on terms and conditions of employment similar to that heretofore enjoyed by them and that the exemption is not to apply and was not intended to apply to situations whereby the exemption would operate to deprive employees of the protection of the TUPE Regulations where no other protection existed as would apply in the instant case if the claimant were deprived of the benefit of the TUPE Regulations.  

With reference to the earlier Directive of 1980 Michael Forde in Employment Law, 2^nd edition, Published Round Hall Sweet & Maxwell (2001) at page 231 states that because “the Directive is couched in very general terms and hardly goes into any detail, thereby often leaving it unclear whether it applies to particular circumstances, or how it is to apply, courts have emphasised the need to give it a “purposive” construction, which is to protect workers being disadvantaged in several ways on account of the undertaking where they were employed being transferred to another owner.   He goes on to say that in particular, “the concept of a ‘relevant transfer’ …. will be widely construed”.

Regarding the determination that there was a relevant transfer for the purposes of European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003, the Tribunal so finds for the following reasons:-

1. In Spijkers v Gebroeders Benedik Abbatoir CV and Alfred Benedik en Zonen VA (C 24/1985) the ECJ held, at paragraph 15 of the judgement, that there is “a transfer of an undertaking, business or part of a business to another employer” where “the business in question retains it identify” and that in order “to establish whether or not such a transfer has taken place…. it is necessary to consider whether, having regard to all the facts characterizing the transaction, the business was disposed of as a going concern, as would be indicated inter alia by the fact that its operation was actually continued or resumed by the new employer, with the same or similar activities”.   The Tribunal finds in the instant case that the operation of the business of the former Sheriff for County Cork was either carried on or resumed by the Respondent with the same activities, some of the assets and in the main the same work force.

1. In Suzen v Zehnacker Gebaudereingigung GmbH Krankenhausservuce (Case C-13/95) the ECJ held that the Directive “does not apply to a situation in which a person who had entrusted the cleaning of his premises to a first undertaking terminates his contract with the latter and, for the performance of similar work, enters into a new contract with a second undertaking, if there is no concomitant transfer from one undertaking to the other of significant tangible or intangible assets or taking over by the new employer of a major part of the workforce, in terms of their numbers and skills, assigned by his predecessor to the performance of the contract.”      The Tribunal accepts the fact that the work or contract of the former County Sheriff for Cork transferred to the Respondent does not in and of itself necessarily mean that there has been a relevant transfer.   The holding by the ECJ in Suzen has been consistently applied by the EAT.   However, in the instant case more than the work or contract of the former County Sheriff for Cork transferred;   many of employees transferred, tangible assets such as computers transferred and the building would have transferred but for the unsuitability of its location for the Respondent.   Accordingly, the Tribunal finds in the instant case that there was such a concomitant transfer of assets and the majority of the workers from the former Sheriff for County Cork to the Respondent enabling an economic activity which pursues a specific objective (the enforcement of debt) to be exercised.

1. In Sánchez Hildago and Others (Joined Cases C-173/96 and C-247/96) the ECJ reaffirmed the holdings in particular in Rygaard, Spijkers and Suzen and said it is for the national courts in light of the criteria set out in the judgement to determine whether a transfer has occurred in cases before them and that the national court must consider:-      

• Is there an economic entity – in other words an organised grouping of persons and assets enabling an economic activity which pursues a specific objective to be exercised.   In the instant case, the Tribunal answers this in the affirmative.

• The mere fact that the service successively provided by the old and the new undertaking to which the service is contracted out or the contract is awarded is similar does not justify the conclusion that a transfer of such an entity has occurred.   In the instant case, the Tribunal finds that there was more than the mere fact that a similar service was contracted out.  

• Is it a stable economic entity.   In the instant case, the Tribunal answers this in the affirmative.

• While the entity must be sufficiently structured and autonomous, it will not necessarily have significant assets, material or immaterial.   Indeed, these assets are often reduced to their most basic where the activity is essentially based on manpower.   Thus, an organised grouping of wage earners who are specificially and permanently assigned to a common task may, in the absence of other factors, amount to an economic entity.   In the instant case the Tribunal finds that the employees of the transferor taken over by the Respondent could, in the absence of other factors, amount to an economic entity but in any event the Tribunal finds, as already noted above, that there are other relevant factors such as the transfer of assets.

• Is the entity capable of maintaining its identify after it has been transferred.   Where a group of workers engaged in a joint activity on a permanent basis may constitute an economic entity, it must be recognised that such an entity is capable of maintaining its after identify after it has been transferred where the new employer does not merely pursue the activity in question but also takes over a major part, in terms of their numbers and skills, of the employees specifically assigned by his predecessor to that task.   In those circumstances, the new employer takes over a body of assets enabling him/her to carry on the activities or certain activities of the transferor undertaking on a regular basis.   In the instant case the Tribunal finds that the entity was capable of and did retain its identity.

1. There was a transfer of an economic entity which retained its identify for the purpose of Regulation 3 because the Respondent and her predecessor in title had the same jurisdictions and powers which would lead to insignificant or no differences in their respective cultures and approach to their work.   (See       Law Society v Secretary of State for Justice & Anor [2010] EWHC 352 [QB]) Although there was a new person running the operation, the economic entity retained its identify in so far as it has the same name, it carries out the same work, has taken over a majority of the work force of the former entity and some of the assets

1. The undertaking was transferred as a going concern in so far as the work in progress by the former County Sheriff for County Cork was handed back to the State to be continued by his successor in title albeit that expired summons or warrants may need renewing.

Accordingly, the Tribunal will proceed to hear the substantive appeal.

Sealed with the Seal of the

Employment Appeals Tribunal

This   ________________________

(Sgd.) ________________________

     (CHAIRMAN)