ADJUDICATION OFFICER DECISION

Adjudication Decision Reference: ADJ-00001926

Complaint(s)/Dispute(s) for Resolution:

Date of Adjudication Hearing: 24/10/2016

Workplace Relations Commission Adjudication Officer: Jim O'Connell

Procedure:

In accordance with Section 41(4) of the Workplace Relations Act, following the referral of the complaint(s)/dispute(s) to me by the Director General, I inquired into the complaint(s)/dispute(s) and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint(s)/dispute(s).

Background

The claimant was employed by the 1st Named on the 19th October 2010 as a general operative. He was paid €780 gross fortnightly. His place of work was Cognex Park, Units 2008-2014 Gateway Business Park, Block 2000, Mallow Road Cork. It was submitted on his behalf that claimant was dismissed on the 4th January 2016.

It was stated that the 1st named respondent lost the contract to the 2nd named respondent The claimant submitted that he was not advised or consulted by either the 1st or 2nd named respondents of the transfer.

The 1st Named was notified in December that the contract with the client would be terminated on the 4th January 2015. The 1st Named was advised that following some clarification that 2nd named had got the contract. On the 23rd December, 2015 the 1st Named sent all due diligence information that was required to the 2nd Named. This information related to the claimant solely as he was exclusively dedicated to this site whilst a part-time person was assigned to another location by the 1st named.

The 1st Named was advised that the 2nd named was closed for Christmas and would not be in a position to respond.

In January 2016 the 2nd named denied there was any arrangement that TUPE Regulations would apply in this case.

The 1st Named Respondent submitted;

The law in this area is largely governed by the relevant provisions of Directive 77/187/EEC and Statutory Instrument Number 131/2003 -European Communities (Protection of Employees on Transfer of Undertaking) Regulations 2003.

At the outset, it seems clear to The 1st Named Respondent that while the case law is diverse, varied and unwieldy it follows as a matter, of course, one overriding principle is very clear, namely that each case is more or less decided on its own unique facts. This case is no exception.

The pertinent relevant sections in S.I. 131 are as follows:

Regulation 3/

"(1) These Regulations shall apply to any transfer of undertaking, business,

or part of an undertaking or business from one employer as a result of a legal transfer (including the assignment or forfeiture of a lease) or merger.

(2)          Subject to this Regulation, in these Regulations - "transfer" means the transfer of an economic entity which retains its identity;

"economic entity" means an organised group of resources which has the objective of pursuing an economic activity whether or not that activity is for a profit or whether it is central or ancillary to another economic or administrative entity."

(3)          These Regulations shall apply to public and private undertakings engaged in economic activities whether or not they are operating for gain."

Regulation 4

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

(2)          Following a transfer, the transferee shall continue to observe the terms and conditions agreed under in any collective agreement on the same terms applicable to the transferor that agreement until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement

The 1st Named Respondent would contend that:-

-              the service involved was an "economic entity" and not a mere activity as it involved a service provided for a profit by a workers/ wage earner, in competition with other like services rendered, and as such comes within the definition as outlined in S.I. 131.

-              The identity was retained in that he would continue to carry out the same work for the same customer/client i.e. in the same location and same customer/client.

-              That the words and phrases "economic entity" and "undertaking" and "business" are used interchangeably.

-              That a workforce and/or goodwill could amount to intangible assets and by implication amount to a transfer of intangible assets.

-              That in a transfer involving a service or services, that in such transfers assets include intangible assets such as its workforce and goodwill, either solely or in addition to the transfer of tangible assets.

-              That the absence of a transfer of assets does not necessarily preclude the existence of a transfer of undertakings.

-              That the transfer would involve a change of employer.

The 1st named submitted case law to support their position

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THE 2ND NAMED RESPONDENT; submitted the following to support their position;

We refer to our submission dated 4 march 2016 and to the line of cases, commencing with the Ayse Suzen decision, in which the Court made clear that “an entity cannot be reduced to the activity entrusted to it.” This decision has been consistently followed by the Irish courts and by the EAT.

In the present case, nothing transferred, no assets, tangible or intangible and no employees.  

The objective of the regulations is to protect the rights of employees when an undertaking is transferred. No undertaking was transferred in this case, but the Applicant’s rights are not affected because The 1st Named Respondent, his employer since 2010, remains fully liable in respect of his rights.  

An Employee v An Employer and An Employer 1 – Employment Appeals Tribunal – Redundancy Payments Acts 1967 to 2014 – Minimum Notice and Terms of Employment Acts 1973 to 2005 – European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (SI 131/2003) – whether transfer of undertaking had taken place – retention of identity of economic entity.

At the initial hearing of the case, the claimant’s representative disputed that a transfer of an undertaking had taken place and the EAT considered the matter. Subsequently, the EAT directed that the Form T1A be amended to include the second respondent so that they could be a party to the proceedings to assist the EAT in establishing if a transfer of an undertaking took place.

The second respondent gave evidence that the contractor had not provided it with information regarding a transfer of undertaking and they had had no contact with the first respondent before they took over the contract on site.

Findings

The complaint was received on the 21st January 2016

I find from the evidence submitted that the 1st Named was advised in December 2015 that the contract was given to another company ON THE 4^TH January . The 1st Named on the 23rd December contacted the 2nd named to be advised that they were closed for Christmas.

Whether the change of service providers is covered by the TUPE regulations will depend on the particular facts of the situation and whether what is being transferred is an economic entity or mere activity.

The Spijkers criteria-set out above- will be the starting point in deciding this.

Firstly, it is worth remembering that TUPE covers the transfer of undertakings. To be a transfer of an undertaking it must relate to a stable economic entity whose activity is not limited to performing one specific works contract. Such a transfer would only come within the terms of TUPE if it included the transfer of a significant body of assets to the new contractor or a transfer of a ‘major part of the employees’ performing the function.

The mere loss of a service contract to a competitor cannot by itself indicate the transfer comes within the meaning of the TUPE directive. Because the original undertaking does not cease to exist and has merely lost an asset.

Each case will be judged on the particular circumstances but factors to be considered would be:

Whether assets or resources are taken over by the new contractor?

Whether employees have been taken over by the new contractor?

The Suzen Case

This case is critical in helping decide whether a change of service providers is covered by TUPE or not.

It made a number of key findings in its decision:

For the directive to be applicable there must be a transfer of a stable economic entity whose activity is not limited to performing one specific work contract the mere fact that the service provided by the old and new awardees of a contract is similar does not necessarily mean that an economic entity has been transferred the mere loss of a service contract to a competitor does not of itself indicate the existence of a transfer within TUPE.

The ECJ held that

“the directive is to be interpreted as meaning 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 works 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 European Court of Justice has held in the Suzen case that a contract for a service provided by an old contractor being transferred to a new contractor does not necessarily mean that an economic entity has been transferred.

The findings in the Suzen case have been generally applied in Ireland by the Employment Appeals Tribunal (EAT).

So, the following factors need to be considered to decide whether a transfer has taken place or not: have assets or resources been taken over? has there been a transfer of goodwill?

I find that no transfer of undertaking applies in this case, however, I find Leaving the law aside I find that the manner the 2nd named dealt with issue leaves a lot to be desired.

Decision:

Section 41(4) of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint(s)/dispute(s) in accordance with the relevant redress provisions under Schedule 6 of that Act.

[Section 8(1B) of the Unfair Dismissals Act, 1977 requires that I make a decision in relation to the unfair dismissal claim consisting of a grant of redress in accordance with section 7 of the 1977 Act

CA00002647-001 The claimant was dismissed by reason of redundancy and I find that he should be paid his redundancy along with notice entitlements in accordance with his service.

CA 00002069—002                            Complaint is not well founded and falls.

CA000 2069---005       complaint is not well founded and falls

Dated:   26/01/2017