ADJ-00004613

Complainant

Respondent

Anonymised Parties

A Shop Worker

A Supermarket

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00006485-001

16/08/2016

There are multiple Adjudication References in this case – it was agreed that one case would stand as a reference for the other cases. Allied cases are ADJ 5468, 4611, 5464, 4842, 5469, 5765, 4613, 5824 and 4614.

One of the main background issues is a request by the Department of Social Protection for clarification of the Redundancy Liability of the Respondent. There has been no doubt raised by any parties as to the eligibility of the Complainant(s) for Redundancy.

The Complainant commenced employment on the 1^st November 2003 in the physical premises –the Supermarket in question. The Supermarket business was assumed in 2014 (4th June 2014) by the Respondent. (Called hereafter Operator No 2). The employees were informed that all rights and entitlements would transfer seamlessly from Operator No 1 to Operator No 2.

On the 31^st July 2016 the business closed and the Complainant was made redundant. The Respondent (Operator No 2) has offered Redundancy in relation to the period of 4^th June 2014 to 31^st July 2016, his period of operation of the shop, but will not acknowledge responsibility for the previous years of employment.

No Transfer Of Undertakings, a TUPE, took place in 2014. The Respondent entered into a “caretaker arrangement” with the former operator (Operator No1) of the Supermarket on the 4^th June 2014.   As such he is not liable for the service prior to the 4^th June 2014.

A Lease on the premises was not signed and the only legal commitment was the “Caretaker” Agreement.

It was not possible to execute a TUPE Agreement as the previous operators of the premises, Operator No1, did not satisfactorily engage with the Respondent’s Solicitors.   Operator No 1 surrendered the lease of the Shop to a third party in July 2016 and thereby ended the business as Operator No 2 could not legally continue in the premises. All employees were made redundant.

4:1     Key Question / Liability.

This is a claim under the Redundancy payments Act, 1967 –it is not taken under S.I. No 131/2003 the “TUPE” Regulations. It is not a claim to determine if a TUPE did or did not take place.

Accordingly the focus can only be on the Redundancy Payments Act, 1967.

The only question is to decide where does Liability for the Redundancy payments lie. Is Operator No2 - the Respondent in this case -   liable. ?

A major factor has to be the identity of the “Owner” of the Business at the relevant times and what, ,if any transfer of ownership or even control of the business took place between Operator   No1 and Operator No 2

4:2     The Redundancy Payments Act, 1967 as amended has to referenced in particular Section 2 “Definitions” of in this case “Employer”.

[ ‘ employer ’ means, in relation to an employee, the person with whom the employee has entered into or for whom the employee works under (or, where the employment has ceased, entered into or worked under) a contract of employment, subject to the qualification that the person who under a contract of employment referred to in paragraph ( b ) of the definition of ‘ contract of employment ’ is liable to pay the wages of the individual concerned in respect of the work or service concerned shall be deemed to be the individual ’ s employer; ]

and Lump Sum) Order 1974 (S.I. No. 82 of 1974); revoked (6.04.1979) by Redundancy Payments Act 1979 (7/1979), s. 4(4)(a), S.I. No. 95 of 1979.

And Section 20 - Change of ownership of business.

20 (1) This section shall have effect where—

( a) a change occurs (whether by virtue of a sale or other disposition or by operation of law) in the ownership of a business for the purposes of which a person is employed, or of a part of such a business, and

( b) in connection with that change the person by whom the employee is employed immediately before the change occurs (in this section referred to as the previous owner) terminates the employee’s contract of employment, whether by or without notice.

(2) If, by agreement with the employee, the person (in this section referred to as the new owner) who immediately after the change occurs is the owner of the business or of the part of the business in question as the case may be renews the employee’s contract of employment (with the substitution of the new owner for the previous owner) or re-engages him under a new contract of employment, section 9 (2) shall have effect as if the renewal or re-engagement had been a renewal or re-engagement by the previous owner (without any substitution of the new owner for the previous owner).

(3) If the new owner offers to renew the employee’s contract of employment (with the substitution of the new owner for the previous owner) or to re-engage him under a new contract of employment, but the employee refuses the offer, section 15 (1) or section 15 (2) (as may be appropriate) shall have effect, subject to subsection (4) of this section, in relation to that offer and refusal as it would have had effect in relation to the like offer made by the previous owner and a refusal of that offer by the employee.

(4) For the purposes of the operation, in accordance with subsection (3) of this section, of section 15 (1) or 15 (2) in relation to an offer made by the new owner,—

( a) the offer shall not be treated as one whereby the provisions of the contract as renewed, or of the new contract, as the case may be, would differ from the corresponding provisions of the contract as in force immediately before the dismissal by reason only that the new owner would be substituted for the previous owner as the employer, and

( b) no account shall be taken of that substitution in determining whether the refusal of the offer was unreasonable.

(5) Subsections (1) to (4) shall have effect (subject to the necessary modifications) in relation to a case where—

( a) the person by whom a business, or part of a business, is owned immediately before a change is one of the persons by whom (whether as partners, trustees or otherwise) it is owned immediately after the change, or

( b) the persons by whom a business, or part of a business, is owned immediately before a change (whether as partners, trustees or otherwise) include the person by whom, or include one or more of the persons by whom, it is owned immediately after the change,

as those provisions have effect where the previous owner and the new owner are wholly different persons.

F48 [ (5A) In a case mentioned in subsection (1) ( a ), the new owner shall be estopped from denying that an employee was in continuous employment (within the meaning of Schedule 3) unless, within 26 weeks of the change of ownership, he notifies the employee of his intention so to deny. ]

(6) Nothing in this section shall be construed as requiring any variation of a contract of employment by agreement between the parties to be treated as constituting a termination of the contract.

I will return to Section 20 (1) (a) below as the Ownership question is crucial.

4:3     Additional Background Legal/ Commercial Contract issues.

In the case in hand legal correspondence from Respondent‘s Solicitors, Firm X, of Portlaoise is also relevant.

This states (Solicitors’ Letter of the 17^th August 2016)

Re: Premises at X Street in Z Town

Dear Sirs

We refer to your enquiry regarding the above mentioned premises and business and advise as follows :

• No Contract was ever signed in respect of this business or the transfer of the business.
• Your occupancy of the premises was solely as a caretaker and not as transferee of the business.
• We can confirm that there was neither transfer of undertaking in this matter nor any agreement to transfer the undertaking of any kind. None such could have concluded in this case as contract terms could never be satisfactorily agreed.
• We are satisfied to therefore to confirm that there is no transfer of undertaking in this matter.

Firm X

Solicitors

Portlaoise

The only possible interpretation of this Legal correspondence is that the Respondent (Operator No 2) was not the legal owner of the business. The key argument here is that Operator No 1 invoked his rights in July 2016 and surrendered the lease of the premises thereby ending the business of Operator No 2.   Applying a Control Argument Operator No 2 did not have the destiny of the business in his own hands and was subject to Operator No1’s wishes to end the lease with the overall landlord.

In the Caretaker Agreement dated the 3^rd day of June 2014 – paragraph 3 it states

“And we hereby further acknowledge that we have undertaken and agree, and we do now hereby undertake and agree with the said XXX (Operator No 1) to take care of said premises and intoxicating liquor licence for it (to the extent that the company can) and to preserve same from trespass and injury, and to deliver up the possession thereof to the said Operator No 1, its Successors and Assigns, when required to do so.”      (Highlight by Adjudicator)

 Regarding the employees Operator No 1 wrote to all employees on the 4^th June 2014 informing them of “a Transfer which will not have any legal, financial or other implications for you.”   The letter also asked the employees to acknowledge that their contracts had transferred to Operator No2.

Crucially Operator No 2 was not consulted in advance in regard to the issue of this letter. He would never have agreed to it prior to a proper Agreement with Operator No 1 being put in place. In Oral evidence Operator No 2 maintained that it was his belief, in July 2014, that a TUPE would take place and all legal matters regarding the Lease would be sorted out.   Regrettably the Operators were unable to come to satisfactory Commercial terms and no TUPE was ever legally instigated or Lease transferred.

Regarding the Redundancies and the liability for same Section 20 (1) and (2) above have to be referenced.

Section 20(1) a) a change occurs (whether by virtue of a sale or other disposition or by operation of law) in the ownership of a business for the purposes of which a person is employed, or of a part of such a business, and

No Sale of the Business took place and no Commercial terms were ever agreed. The employees were in effect in a very “Limbo” situation during this period from July 2014 to July 2016.

In this context I could not find that a chain of liability against Operator No I had been broken to such an extent as to render Operator No 2 exclusively liable for the entire Redundancy payment back to the opening of the business many years previously and under the stewardship of Operator No 1.

Operator No 2 made the very valid point that if a TUPE had been agreed he would have, in keeping with normal Business and Commercial practice have sought an agreed indemnity or consideration in any Commercial Agreement for the accrued Redundancy Liabilities. This had not happened.

Accordingly I find as follows

1. The Complainants are without any doubt entitled to a Redundancy payment for the entire period of their service, in some cases dating back into the 1980’s.
2. Operator No 2, the Respondent in this case, is not liable for the Redundancy elements.
3. A sufficiently strong Commercial and causative chain has not been established as required by the Redundancy payments Act, 1967 (largely due to the failure of the negotiations during the period of 2014 to 2014) to render Operator No 2 -the Respondent - liable.
4. Operator No 2 has volunteered to accept Redundancy liability for the Period July 2014 to July 2106 and this is noted. It is my view that this offer of liability for the limited period does not allow an argument be made that the voluntary acceptance of the short term liability is in some way a de facto acceptance of the pre 2014 or indeed of any legal liability.

Act

Complaint/Dispute Reference No.

Summary decision

( ref Section 4 of this ADJ above)

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00006485-001

The Respondent in this case – AdJ 4613 is not liable for the Redundancy payments.