EMPLOYMENT APPEALS TRIBUNAL
CASE NO.
TU67/12 – TU70/12
APPEAL OF:
Electric Skyline Limited - appellant
against the decision of the Rights Commissioner in the case of:
Paul Mullen - respondent no. 1
Stephen Burke - respondent no. 2
Eamon Carley - respondent no. 3
Kenneth Finnegan - respondent no. 4
under
PROTECTION OF EMPLOYEES ON TRANSFER OF UNDERTAKINGS REGULATIONS 2003
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms B. Glynn
Members: Mr. D. Morrison
Mr T. Gill
heard this appeal at Castlebar on 26th February 2015.
Representation:
Appellant: Mr. Stephen O’Sullivan BL, instructed by Ms. Theresa Ham, Kingsford, Solicitors, 150 Kingsford Cross, Strand Road, Portmarnock, Co Dublin
Respondent: Mr Paddy Kavanagh, TEEU, 83 Lower Yellow Road, Waterford
The decision of the Tribunal was as follows:-
Determination:
The background to this case is the transfer of the Public Lighting Contracts, which the ESB held with the local and cities authorities, to a third party as directed by the Commissioner for Energy Regulations in 2009.
Initially, company A, was awarded the Contract for a two year period , and approximately 100 staff consisting of mainly electricians and a small number of operatives, transferred to company A on existing terms and conditions, apart from pension rights.
In 2011, as the two year contract with company A was due for renewal, five local authorities, namely, Mayo, Galway, Leitrim, Roscommon and Sligo, decided to tender this work and the appellant was the successful candidate. The Tender document to be completed did not refer to TUPE, but it did contain certain requirements which were not contained in the earlier contract with company A. A transfer date of the 1st December 2011 was agreed upon. Information on the employees due to transfer had been sought by the appellant but, on the 17th November, the appellant informed the union that they were refusing to accept that the Transfer of Undertakings Regulations applied to them.
Of the thirteen men that were to transfer to the appellant company three were retained in different positions in company A and the remaining ten lost their jobs.
It is clear from the above that the nub of this case is whether the Transfer of Undertakings Regulations applied to the contract awarded to the appellant and to make a decision on this, the Tribunal must first look at, and examine the Act underpinning these regulations.
The full title of the Directive is “Council Directive Number 2001 / 23 / EC” of the 12th March 2001 (the acquired Rights Directives) the wording of which our Government adopted verbatim by way of Statutory Instrument on the 11th April 2003, and the Minister for Enterprise, Trade and Employment signed into law the “European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003.” The aim of the Directive was to reduce the differences then existing in Member States with regard to the protection of employees in situations where the ownership of the ‘undertaking’, in which they worked, changed to a new employer.
The Directive and Regulations are broadly drafted and in the absence of clear definitions, interpretation of what constitutes a ‘transfer of undertaking’ has proved difficult. The approach adopted by Courts and Tribunals has been to ensure that the social purpose of the directive is met. Rather than limiting themselves to the interpretation of the precise words and phrases used in the Directive, the Courts have adopted what is called the ‘purposive approach’ in that they have looked at the overriding objective of the Directive which is to protect workers in the business which is transferred, and in deciding whether there has been a transfer, all the circumstances have to be looked at. This approach was the approach adopted in Spijkers case (JMA Spijkers V Gebroeders Benedik Abbaatoir CV 1986 2 CMLR 296) and followed in the Courts herein, as evidenced by the decision of Blaney J in Bannon V EAT Drogheda Town Centre (1992) and the Employment Appeals Tribunal in the case of Morris V Smart Brothers Limited UD 688/93.
There are two requirements needed to trigger the implementation of the Act… there must be a ‘transfer’ and that transfer must be of an “economic entity” and while the term ‘transfer’ is understandable, unfortunately there is no definition given to the ‘term’ ‘economic entity’ in the Act. However it is clear from the approach adopted by the ECJ in many cases that the term “economic entity” is interchangeable with the term “undertaking”, which begs the question what constitutes an “economic entity” or “undertaking”, and we must look to case-law for guidance herein, with particular reference to the law pertaining to the contracting out of a service.
The wording of Article 1 states that the Directive will apply to “any transfer of an Undertaking, business or part of an undertaking or business to another employer, as a result of a legal transfer or merger”. Company A held a two year contract. When the contract was not renewed, Company A simply did not carry out the work thereafter. There was no transfer of assets of any kind.
There is also the matter that company A is a large company which has many activities so fourteen employees would not constitute a major part of their workforce, which, in some cases has been held to constitute a transfer of undertaking. Apart from the 14 employees which company A presumed would transfer, there was no asset transfer of any kind, despite that company A would clearly have had equipment and stock, which would be used exclusively for this work.
There is also the matter that the Tender Document provided by the Local Authorities did not refer to the legislation and indeed parts of the document which had to be completed, supported this, containing as it did, certain requirements and directions as to how the work was to be carried out, and some of these requirements, conflicted with the terms and conditions of the Contracts held by company A employees. The Tribunal also noted that when the appellant succeeded company A in obtaining other similar contracts in other counties, company A did not treat these situations as transfers of undertakings and no claims were made by them or their union in respect of same.
The case which dealt directly with the change of services providers and is the foundation on which all such similar cases followed is the Suzen Case. (Suzen V Zehnacker Gebaudereinigung Gmbh Krankenhausservice 1997 IRLR 255) This case clearly established that the mere loss of a service contract to a competitor cannot by itself indicate the existence of a transfer within the meaning of the Directive. In such circumstances, the economic entity previously entrusted does not, on losing a customer, cease fully to exist, and, a business, or part of a business belonging to it, cannot be considered to have been transferred to the new awardee.
This case also highlighted that the mere fact that the service provided by the old and new Awardee of a contract is similar, does not support the conclusion that an economic entity has transferred. It pointed out that an entity cannot be reduced to the activity entrusted to it. Its identity also emerges from other factors such as its workforce, its management staff, the way in which its work is organised, its operating methods or indeed the operational resources available to it. This case has been the back bone for the decision of the EAT in Cannon V Noonan Cleaning Limited and others,(RP 324/97, UD 200/97), Mary Shields and others V Noonan Cleaning ( UD 461/97, RP 180/97, MN 754/97), Maria Bruton V Nights Cleaning Services (UD 803/97, MN 2001/97),Collins V Excel Properties Services Limited (RP 27/98), AND Digan V Sheehan Security Corporation Limited (UD 35/2003).
The respondents herein argued that there has been a transfer of undertaking and referred to the 33,272 public lights as the tangible assets which they implied had transferred to the appellant company but this was not a transfer of these assets. These assets remain the property of the Local Authority. The respondents cited two cases in support of their case, namely, the English cases of Balfour Beatty Power Networks Ltd V Wilcox & Others (2006 EWCA Civ 1240) and the second case of Lighting (Contractors) Ltd V Associated Holdings Ltd. However, in the first instance, the case is distinguishable from the present facts in that it concerned a transfer of the majority of the workforce, whereas in this case only fourteen employers were involved and, in the latter case, the case evolved around a company refusing to honour its statement that TUPE would apply if it won the contract and this was clearly not the case herein.
Based on the evidence adduced and submissions submitted by both parties the Tribunal is satisfied that there was not a transfer of undertaking when the appellant company succeeded in their tender application to the local authorities for the work previously carried out by company A, and, accordingly, upsets the decision of the Rights Commissioner under the Protection of Employees on Transfer of Undertaking Regulations 2003.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)