ADJ-00001185

ADJUDICATION OFFICER DECISION/RECOMMENDATION

Adjudication Reference: ADJ-00001185

Parties:23.06.2016

Parties:6.12.16

Complaint(s):

Date of Adjudication Hearing: 23/05/2016

Workplace Relations Commission Adjudication Officer: Emer O'Shea

Procedure:

In accordance with Section 41(4) of the Workplace Relations Act, 2015 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).

In the course of the second hearing , the respondent stated that she was withdrawing from the hearing as she was not satisfied that she would receive a fair hearing.She stated that their position had been outlined by their representative at the first hearing ; that owing to a cash flow crisis they could not afford to have their solicitor in attendance at the second hearing.She made a written submission prior to departing from the hearing and made a further submission which was received by the WRC on the 17^th.December2016.

Complainant’s Submission and Presentation:

The claimant was employed as a Store Assistant with the respondent from the 9^th.April 2013 to the 16^th.Oct. 2015.He submitted the respondent was in breach of the Act for failing to pay him redundancy on termination of his employment.

The claimant was employed at the respondent’s premises at the address contained in the complaint form.The premises is owned by the father (hereafter referred to as Mr.M)of the director shareholder of the respondent .In early 2015, the claimant and his 3 colleagues were advised that the respondent intended to relocate the business to premises in Carrick-on-Shannon and first heard of this development by customers of the respondent company.In August 2015, the claimants became aware that the move to Carrick on Shannon would take place in October 2015.

The claimants were given notice of redundancy on the 1^st.Sept. 2015 – they were advised that the respondent would cease trading on Sat.31^st.Oct 2015.The letter advised that as the owner of the premises Mr.M did not wish to purchase the company as a going concern , it was necessary to commence the voluntary liquidation of the company.It was submitted that the claimants were advised that the Company would not be relocating and that staff should scale back on ordering stock for the business.

One of the claimants ( Mr.G) approached Mr.PM about setting up a new business in light of the impending redundancy and they approached Mr.M about renting the premises at the respondent’s address .Mr.M indicated that he would be willing to lease the premises as he did not intend to resume trading. Mr.G and Mr.PM intended to set up an Agricultural Store and Engineering/Manufacturing Workshop , the latter being Mr.PM,s area of expertise. Mr.G and Mr.PM approached AIB for finance – they were advised that they would be required to incorporate a company before their business plan would be considered and they set up a business – hereafter referred to as Company A- which was incorporated on the 14^th.Oct. 2015.On the 13^th.Oct. the claimants were advised that the respondent would cease trading on the 16th.Oct.- they were issued with their P45’s on the 17^th.Oct.2015 and they met with the respondent on the21st.Oct. to complete the RP50 forms.

On the 29^th.Oct.Ms.M ( daughter of Mr.M and Director of the respondent company) advised the claimants that the redundancies were being investigated owing to an email that she had sent to the Dept. of Social Protection – On the 2^nd.Nov. 2015, the claimants were advised that the Dept. would not be processing the redundancy payments.On the 30^th.Oct. the claimants were advised by the respondent that the respondent was proceeding with the restructuring of the business , that they would be relocating to Carrick on Shannon and the company would be in a position to offer re-employment to all employees commencing on the 18^th.Jan.2016.

The respondent held a creditors meeting on the 6^th.Nov. and informed the suppliers that if they supplied any goods to Company A they would not get money owed to them by the respondent. She advised the meeting that Mr.G – a colleague of the claimant’s- had deceived her.

The claimant’s representative set out a detailed account of the service provided by Company A– which it was submitted commenced trading on the 7^th.Dec.2015.It was advanced that unlike the respondent’s business , Company A were now offering a repair and manufacturing service.It was submitted that when Company A took possession of the premises it was vacant save for fixtures and fittings owned by Mr.M and that all files , IT and equipment owned by the respondent had been removed.It was submitted that the respondent now has its registered office in Carrick on Shannon where it continues to operate with its main focus n the sale of motor vehicle parts and accessories.It was submitted that in the alternative, the business was transferred to another company , -hereafter referred to as Company B which was incorporated on the 19^th.Jan2016.Ms.M and her husband own 100% of the shares- the company is classified as being engaged in the retail trade of motor vehicle parts and accessories and commenced trading on the 21^st.March 2016.It was submitted that the claimant’s colleagues were accused by the respondent on the 18^th.Feb.2016 of hatching a conspiracy with Mr.M to deprive the respondent of their business. They were advised that a complaint had been made to the Gardai. It was submitted that the claimants had no contact with Mr.M save for the negotiation of a lease for the premises and a nearby workshop by Mr.AG.

The claimant’s representative vehemently refuted the respondents assertion that the claimant’s colleagues employment transferred to Mr.M under TUPE.It was submitted that the claimants had no dealings whatsoever with Mr.M save Mr.G who contacted him about leasing the premises .It was asserted that Mr.M had no involvement with Company A save that he is the landlord of the premises.

Direct evidence was given by the claimant of his efforts to obtain alternative employment when he learned of the impending closure of the business – he was successful in obtaining employment in Roscommon and had a start date of the 2^nd.Nov. 2016.When he was approached by Mr.G regarding alternative employment on the 26^th.October 2016 , Mr.G advised that there would be work for him in Carrick on Shannon on the 18^th.January – while the claimant’s account of the exchanges between the claimant and Mr.G was disputed by Mr.G and Mr.AMcP, ultimately the claimant declined the approaches by Mr.G.The claimant was adamant that he had his own job and he wanted to get away from the respondent company.

It was submitted that the respondent’s primary defence for the redundancy claim was that the claimant’s employment transferred to Mr.M or Company A pursuant to TUPE.It was advanced that if the respondent can establish that an economic entity which retained its identity was transferred to Mr.M or Company A , a TUPE defence arises in favour of the respondent.

The respondent’s reliance on Spjiikers was challenged with respect to assets – both fixed and intangible. While it was acknowledged that the claimant’s colleagues were now employed by Company A , the claimants did not transfer to Mr.M or Company A as at the time Mr.M took possession of the premises , the claimants were no longer employed by the respondent. It was submitted that while the claimants received notice of termination of their employment on the 1^st.Sept.2015 , this was not a TUPE notice and it was clearly deemed to be notice of termination for the purpose of redundancy.it was reiterated that the claimants were made redundant on the 16^th.Oct.2015 and that this was supported by their P45’s and the RP50s issued.The notice of the 1^st.Sept of termination on the 16^th.Oct. provided the requisite statutory notice .It was submitted that the respondent had ceased carrying on the business on the 16^th.Oct.2015 and Mr.M took possession of the premises on the 19^th.Oct.2015. It was submitted that the respondent’s customers did not transfer to Mr.M - who did not trade on taking possession of the building or Company A who did not commence trading for 2 months after that. It was submitted that the business previously conducted by the respondent and now conducted by Company A were not identical as previously highlighted. It was argued that on the date of the alleged transfer , the respondent had permanently ceased trading , no longer had any employees as they had ben dismissed by way of redundancy and the respondent was about to commence the liquidation process. It was advanced that the 2 month period between the cessation of the respondents business and the commencement of Company A supported the contention that TUPE did not occur. It was contended that the respondent’s business was not transferred and could not have been in circumstances where the respondent continues to operate the business from a different location. It was argued that if a transfer did occur , it took place between the respondent and Company B. It was submitted that what occurred was a transfer of assets – the transfer of the business premises held by the respondent on a license in respect of which the respondent paid no rent and could not have had an expectation of security of tenure.It was contended that there was no property and data on the premises when Company A took possession of the property “ The property was empty save for fittings and fixtures owned by Mr.M .In the alternative , any data or property that may have been on the premises when Mr.M took possession thereof (in respect of which Company A has no knowledge and has no use of or benefit) was not transferred from the respondent as the respondent has indicated that it intends to take Circuit Court proceedings to recover possession of same”.

With respect to intangible assets, it was submitted that no intangible assets transferred to Mr.M or Company A and they did not benefit from the respondent’s commercial goodwill and customer base.It was advanced that the respondent actively informed customers and suppliers that Company A was not associated with the respondent’s business.

It was submitted that Company A did not commence trading until 2 months after Mr.M took possession of the premises – and during this period the respondent was actively marketing the relocation of their business to Carrick on Shannon – it was from customers the claimants first became aware that the business was relocating.

With respect to the degree of similarity, it was submitted that while the respondent’s principle object is the sale of motor vehicle parts and accessories , Company A is also engaged in the sales of parts – mainly agricultural but also provides a repair and manufacturing service which is a service never offered by the respondent.It was advanced that consequently , the business conducted by the respondent and Company A are not identical.

It was argued that the instant case could be distinguished from the authorities invoked by the respondent as they involved the temporary closure of a business while at the date of the alleged transfer , the respondent had ceased trading permanently , was commencing the liquidation process and no longer had employees. It was submitted that a 2 month period during which activities were suspended is significant and supports the contention that a TUPE transfer did not occur.

While 3 of the former employees of the respondent are now employed by Company A it is submitted that they did not transfer to either to Mr.M or Company A as at the time Mr.M took possession of the business , the 3 employees were no longer employed by the respondent. Mr.M took possession of the premises on the 19^th.Oct. and it was submitted that accordingly this must be the date on which any alleged transfer took place. On that date each of the claimants had been dismissed by reason of redundancy as the respondent had ceased to carry on the business for the purposes of which the claimants were employed.

It was submitted that the period from the 17^th.Oct. to the 29^th.Oct. did not and could not constitute a contractually permissible period of layoff. No notice of a period of layoff as per Section 11 of the Act was issued to the claimant. It was submitted that it was clear from the issuing of the P45 and the submission of the RP90 to the Dept. of Social Protection the respondent did not believe the cessation to be temporary. Industrial YarnsLtd.vGreene [1984]ILRM 15 was invoked in support of this position.

It was submitted that the offer of renewal/re-engagement did not take effect within 4 weeks of the date of dismissal – the offer would have involved a 2.5 month period of lay off to facilitate relocation to alternative premises- it was advanced that very few employees could afford such a lengthy period of lay off. It was submitted that it was not unreasonable for the claimant to refuse an offer involving a period of 2.5-4.5 months of layoff without any income. The claimant invoked the provisions of Section 12 “ whereby an employee who has been laid off or kept on short term for 4 or more consecutive weeks , may give notice to his/her employer in writing of his/her intention to claim a redundancy payment by way of an RP9.If an employer is not in a positon by way of a counter offer to provide a period of 13 weeks work uninterrupted by layoff or short time, within 4 weeks of receipt of the RP9 , the employee is entitled to a redundancy payment”. The claimant could have served an RP9 on receipt of the offer of re-engagement but the respondent would not have been in a position to offer 13 weeks of uninterrupted employment within 4 weeks of receipt of the RP9 and consequently , the claimant was entitled to redundancy.

In their evidence the claimants were adamant that they were told on the 1^st.Sept that the business would be closing in October and on that basis they signed the RP50s.They were unaware that TUPE could apply to their circumstances. They were no longer employed by the respondent after their employment was terminated on the 17^th.Oct. as recorded in their P45’s.Their employment was terminated on a permanent basis and contended that the respondent believed that a redundancy situation existed. They all asserted that they would have been unable to survive without work on the basis suggested by the respondent and actively sought to obtain work on hearing of the liquidation of Ard Collum.

Respondent’s Submission and Presentation:

It was submitted that the respondent is a private company limited by shares having its registered office in County Leitrim and that it carries on the business of the sale of motor and ggri-vehicles parts and accessories – the Officers of the Company are Ms.M and her husband Mr.C G.

It was submitted that the respondent’s principle defence was that the claimant’s employment transferred either to Mr.M or to Company A pursuant to TUPE .As a result , it was advanced that the claimant was not made redundant by the respondent and accordingly the respondent had no liability for the claimant’s claim for redundancy payment.

It was submitted that in the alternative , if a transfer of undertaking did not occur, the period of time between the 17^th.Oct.2015 and the 28^th./29^th.Oct – the period of time before the claimants were offered redeployment to alternative premises , constituted a contractually permitted period of lay off. It was contended that thereafter , the claimants who refused redeployment would be disentitled to any redundancy payment pursuant to the provisions of Section 15.

The business operated by the respondent was originally started by Ms.M’s father Mr.M and the business was acquired from him in Spring 2012.It was submitted that the respondent operated from Mr.M’s premises on foot of an informal license arrangement.It was advanced that differences arose between Mr.M and his daughter Ms.M - detrimentally impacting on the respondents ability to continue trading. Mediation attempts ensued in Sept.2015 ,-at this time Mr.M indicated his intention to take over the business of the respondent – he issued a letter to his suppliers on the 1^st.Sept.stating that he would be commencing business in his own right from his premises from the 1^st.Nov.2015.It was submitted that this take over fell within the application of TUPE.It was submitted that the ECJ held in Case 324/86(Daddy’s Dance Hall) that the predecessor Directive was held to apply in circumstances where a lease was forfeited and a new entity took over the running of the business following this forfeiture.

It was submitted that as a result of the foregoing the respondent informed the claimants on the 1^st.Sept.2015 that Mr.M did not wish to take over the business as a going concern , but wished to continue trading the business himself. The respondent indicated that it would cease trading on the 31^st.Oct.2015 and that the voluntary liquidation of the company would commence thereafter. It was submitted that the notice of the 1^st.Sept.2015 to the claimants from Ms.M and her husband Mr.EG met the requirements of TUPE Reg 8 – having been served 30 days in advance of the cessation date, containing the reasons , the proposed date and the implications for the claimants.

On the 13^th.Oct. 2015, Mr.M’s solicitors revoked the license over the premises and sought immediate vacation of the premises.It was submitted that the respondent effectively suspended active trading from the 17^th.Oct. and paid all the claimants to the 31^st.Oct.2015.It was submitted that “ in error and/or due to a lack of awareness as to what was intended by Mr.M and/or Company A on o about the 21^st.day of October 2015 , the respondent prepared an RP50 form for the claimant.

On the 17^th.Oct. Mr.M changed the locks at the premises and excluded the respondent.

It was submitted that unbeknown to the respondent Mr.AG ( one of the claimants)and Mr.PM incorporated Company A on the 14^th.Oct 2015.

The respondent’s representative submitted that “ the coincidence in time between the foregoing events is highly material to the determination of the above entitled claim and, indeed, to the consolidated claim as the forementioned Mr.G had reached the stage of executing documentation required to incorporate Company A after having received the TUPE notice and 9 days prior to the aforementioned Mr.M excluding the respondent from the business.”

It was submitted that Mr.M and /or Company A commenced trading immediately in October 2015 (via telephone orders)and commenced actively trading from the premises at the beginning of Dec 2015.While it was submitted by the claimant’s representative that 3 of the 4 claimants – who now work for Company A only obtained this employment subsequent to being made redundant – it was contended that the foregoing chronology of events contests this interpretation.It was argued that while one of the 4 claimants declined to work for the transferee , this did not negate the transfer or entitle said claimant to redundancy.

It was advanced that if the respondent is correct in their assertion that a TUPE transfer occurred , any accrued redundancy entitlements pass to Mr.M or Company A - it was submitted that the transferor is discharged of all obligations arising under the contract of employment .It was submitted that the instant case was similar to EAT RP395/2006;RP396/2006 – the claimants had worked for the respondent’s husband in a pub from April 1999; following the death of her husband the respondent became the employer. On the 10^th.March 2006, the claimants completed the purchase of the pub and the license transferred to them. The claimants argued that following the sale of the business, they had ceased to be employees and were entitled to redundancy. The EAT held that there was a transfer of an undertaking to the claimants as transferees but the transferees continued to work in the pub and by implication remained employees. There was no right to redundancy as no dismissal had occurred because of the operation of the Regulations.

It was submitted that in applying Spjikers , it is evident that a transfer of undertaking took place –

The respondent was suddenly excluded from the premises on the 18^th.Oct. – the same premises from which Mr.M and or Company A operate;

The respondent was unable to remove property and data;

3 of the 4 claimants now work for Mr.M and or Company A

and the forementioned benefited from the respondent’s commercial goodwill.

It was submitted that on the basis of the chronology of events already outlined , the employment relationship existed at the time of the transfer of the business.

It was submitted that the ECJ held in Case C-101-87[1988]ECR 3057 that the mere fact of a temporary interruption of trading did not preclude the fact that a relevant transfer had taken place. It was submitted that in Landsorganisationen I Danmark for Tjenerforbundet I Danmark v .NyMolle Kro Case, the ECJ determined that the temporary closure of a seasonal business did not necessarily mean that a relevant transfer had not occurred.

It was advanced that based on the foregoing authorities , that any temporary interval period before the claimants resumed work , does not operate to prevent a transfer of undertaking having occurred. It was submitted that where an employee refuses to take up employment with the transferee,such employee is not entitled to a redundancy payment from the transferor.I t was submitted that the key authority on this was SymantecLimited v. Leddy [2009]2IR1 when Edwards J held that where an employee whose job is transferred over to the transferee refuses to transfer , there is no entitlement to redundancy against the transferor.

It was submitted that if it was determined that a TUPE transfer did not occur, the period of time between the 17^th.October and the 29^th.October 2015 – before the claimants were offered redeployment to an alternative premises , constituted a contractually permitted period of layoff and any employee who refused reemployment would be disentitled to any statutory redundancy payment.

It was submitted that in the instant case , the respondent decided following the actions of Mr.M and or Company A not to commence the process of voluntary liquidation , but to move to an alternative premises. The claimants were offered the opportunity to resume work on the 18^th.Jan2016.It was submitted that the claimant refused this offer in unreasonable circumstances – the same contractual terms were proposed ; the same work was proposed ; a nearby premises was proposed and less than a fortnight had elapsed between the respondent ceasing trading and offering redeployment on the 30^th.October - the claimants it was argued were disbarred from claiming redundancy pursuant to Section 15. It was advanced that it was clear that three of the claimants continued in employment and any hypothetical redundancy entitlement post transfer is moot and does not arise.

It was submitted that when Company A reopened for business on the 7^th.Dec. the claimant was present at the premises.and that there was never any sense that the business would not continue trading. It was advanced that the business was identical in very respect with the respondent’s business sand that TUPE could not be rewritten for the convenience of the claimants. Company A was incorporated the same day the respondent was served with an eviction notice. The respondent was adamant that she would not have signed the RP50’s had she known the claimant’s were taking over her business.It was submitted that the forms were completed in error.The claimants had been paid in lieu of notice.It was alleged that the claimants had lied and were involved in a conspiracy to take over the respondents business.It was alleged the claimants were publicly advertising the same business and the key customers were remaining with Company A .

It was advanced that while the claimants attempted to distance Mr.M - he was intrinsically involved in the entire process.

The respondents submitted they incorporated the new company on the 18^th.January when they realised they had lost everything.

Evidence was given by Mr.B of the correspondence issued by Mr.M to suppliers in the 1^st.Sept. asserting that the business was not going to close and of the creditors meeting that took place with the respondent on the 6^th.Nov. 2015.He disputed the contention made by the claimants that creditors were warned by the respondent not to supply goods to Company A..He advised that he had been informed byMr.M that Mr.G would be taking over the business in mid October.He indicated that he did not want to get involved in the internal dispute between the respective parties.

1. ^th.Sept. 2015 to set up new accounts for Company A and MrM. A booklet of documentation in support of the foregoing allegations was submitted by Ms.M but at this point in the hearing she declined from continuing to participate in the hearing.

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.

I have reviewed the evidence presented at the hearing and noted the direct evidence of the parties as well as the voluminous submissions.Much of the focus of the respondent’s submission related to their absolute conviction that the claimants colluded with Mr.M to take over the respondents business and orchestrate a redundancy situation. While I understand that this conflict will ultimately be settled through the Courts , the matter before the Commission is whether or not the claimants have an entitlement to redundancy under the Act.I have no jurisdiction with respect to the allegations of fraudulent activity made by the respondent against the claimants.

In considering the entirety of the submissions as well as the   evidence and authorities relied upon I have concluded that the respondent has attempted to retrospectively contrive a TUPE transfer to justify the withdrawal of their cooperation with the redundancy process.I cannot accept that the letter of the 1^st.Sept. in any way constituted a TUPE notice.It was clearly a declaration of intent to go into liquidation.Subsequent to this the respondent amicably processed the redundancy paper work for all 4 claimant’s.Ms.M openly admitted that the suspension of that process was triggered by her learning of the alleged fraudulent activity by the claimants and her father in depriving herself and her husband of their business. I cannot accept the respondent’s assertion that a TUPE transfer took place in circumstances where it is being asserted that the claimants and/or MR.M had fraudulently and surreptitiously taken over the respondent’s business – in this regard I am taking account of Regulation 3 and the application of the regulations to “ any transfer of an undertaking , business , or part of an undertaking or business from one employer to another employer as a result of a legal transfer ( including the assignment or forfeiture of a lease) or merger”.

The defence of an error as set out in the respondent’s submission is not credible given the respondents confirmation in the redundancy documentation that the reason for redundancy was “closure”.

I further find that the claimants were not served with notice of lay-off as required under their contract of employment and under Section 11 of the Act .I have concluded that the defence of lay off was retrospectively contrived in response to the discovery of the alleged take over of the business by the claimants and/or Mr.M.

I accept the claimant’s reliance on the provisions of Section 12 of the Act – the claimant’s could have served an RP9 on receipt of the offer of re-engagement ; on the basis of the evidence presented by the respondent , the respondent would not have been in a position to offer 13 weeks of uninterrupted employment within 4 weeks of receipt of the RP9.

With respect to the provisions of Section 15 , I cannot accept the respondent’s contention that the claimants were disentitled to redundancy on foot of their refusal to accept alternative employment – the respondent was not in a position to offer re-employment within 4 weeks of the   of dismissal; the offer provided for relocation and a 10.5 week period without pay –in the circumstances , I find that the claimants’ rejection of said offer was not unreasonable.

In light of the foregoing considerations , I uphold the complaint and require the respondent to pay the claimants their statutory redundancy entitlements within 42 days of the date of this decision.

Dated:   30/06/17