Complainant

Respondent

Anonymised Parties

A Janitor

A Contract Cleaning company

Representatives

Moran Ryan Solicitors

Warren Parkes Solicitors

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Regulation 10 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003)

CA-00007211-001

27/09/2016

The complainant began work with Company A in 2009. He transferred to Company B in 2012 by means of a transfer effected under the TUPE Regulations. There was a further change in ownership in 2014.

In 2016 his then employer lost the contract on which he was employed and the current complaint arises from subsequent events.

(Note; the words ‘transferor’ and ‘transferee’ are used for convenience of reference and do not indicate a conclusion on the existence of a transfer under the Regulations.)

On August 12th 2016 the complainant was advised that his then employer had lost the contract on which he had been employed.

He was told that he would transfer under the TUPE regulations to the transferee. Specifically a letter from his employer on August 11^th stated;

‘It is our understanding that the Transfer of Undertakings Regulations 1980-2003 applies’.

He attended work with the ‘transferee’ on August 22^nd but was told the following day that there would not be a transfer and that there had been a ‘misunderstanding’.

His own supervisor had told him that a transfer would be going ahead and there was further conflicting information given to him on August 25^th but despite an offer to confirm the proposed transfer no confirmation was forthcoming.

The complainant has also made a complaint against the transferor which attended this hearing. The transferor had given certain undertakings to the complainant (which the respondent says it had no authority to give).

The complainant says that, in the alternative to this complaint, he was made redundant by the transferor.

The respondent stated that ‘the transferor’ had been advised by its client on July 15^th 2016 that its contract would not be renewed and that the client would be seeking a new provider.

The current respondent received a list of the transferee’s employees only on August 12^th despite its efforts to secure the information earlier than this.

The respondent commenced the new cleaning contract on August 22^nd.

The position was complicated by the fact that there was not a full transfer of the previous contract held by the ‘transferor’. The ‘transferor’ had a contract to provide one hundred and twenty hours of cleaning services while the respondent was offered only seventy-five in its new contract.

The respondent had no position for the complainant in the context of the significantly reduced hours. However, it did offer him a position as a cleaner on November 15^th but at a reduced rate, and the proposal included an offer of compensation of €1,300 for loss of earnings.

The respondent notes the various commitments allegedly given by the ‘transferor’ but it was in no position to give such commitments unless an actual transfer under the TUPE regulations was taking place.

The respondent says that as there was no transfer of either tangible or intangible assets or of any employees and therefore a transfer within the meaning of the Regulations did not take place.

In the first instance it is necessary to establish if a transfer of undertakings took place such as would bring the complainant within the protection of the regulations.

The provisions of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 only apply in circumstances where there has been a 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 or a merger.

The facts of what happened here are set out in the respondent‘s submission and these were not in dispute.

There were a number of stages in the process.

The ‘transferor’ was advised on July 15^th 2016 by the client company that its contract was being terminated.

In due course, the ‘transferee’ (i.e. the current respondent) was awarded a contract, but not the same contract which the transferor had; there were significantly fewer hours involved (approximately one third fewer).

This has been described as a ’second generation’ transfer and the view has been expressed that;

‘only where there has been a transfer of assets or of a considerable proportion of the workforce that [this] scenario (a second generation transfer) will be likely to be caught by the Directive’

‘Employment Law in Ireland’   Cox, Corbett, Ryan,

The extension of such protection was seen as ‘too expansive’ and recent judgements of the Court of Justice of the European Union (or as the ECJ) have taken a more restrictive view.

In the decision of the European Court of Justice (ECJ) in Ayse Suzen v Zehnacker Gebauderinigung Gmbh Krankenhasservice [1997] I.R.L.R 255 the question referred to the Court was whether the Directive applied to a situation where an organisation, which had entrusted the cleaning of its premises to a first undertaking, terminated that contract and entered into a new contract with a second undertaking for similar works without any significant transfer of tangible or intangible assets from one undertaking to the other, was subject to the Transfer of Undertakings Regulations 2003.

The ECJ held that owing to the fact that no transfer of tangible assets had taken place and the transferee did not take over a major part of the workforce, there was no ‘transfer’ of an undertaking.

The transfer of the contract was seen to represent, not the undertaking as a whole, but one of the assets of the transferor.

In reaching its conclusions the ECJ decided;

1) For the Directive to be applicable the transfer must relate to a stable economic entity whose activity is not limited to performing one specific works contract.

2) The fact that the service provided by the old and new holders of a contract is similar does not necessarily support the position that an economic entity has been transferred.

This means that an entity cannot be reduced just to the activity carried on by it. Its ‘identity’ also comes from other factors, such as its workforce, its management and staff, its buildings, the way in which the work is organised, its operating methods and the operational resources available to it.

In this case there was no transfer of assets and/or employees and therefore it is not material that the respondent is providing the same service which the ‘transferor’ provided, admittedly on a smaller scale.

I find that the facts in this case indicate a ‘second generation contract’, and 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 this case ‘the transferor’ did not, on losing the contract, cease to exist.

The decision of the ECJ in the Suzen Case was followed by the Employment Appeals Tribunal in the case of Mary Cannon v Noonan Cleaning Limited and CPS Limited [1998] E.L.R 153.

In that case Noonan Cleaning held a contract for the cleaning of Balbriggan Garda Station. The cleaning contract was put out to tender and CPS obtained it.

CPS then refused to employ the staff who had been previously employed by Noonan Cleaning Limited and a case for unfair dismissal was taken against both parties. In applying the decision in the Suzen Case the EAT observed;

“It appears that where the new contractor refuses to take on a major part of the workforce in circumstances of a second generation transfer where a Third Party is responsible for the transfer, the Directive does not apply, i.e. there is no transfer of an undertaking.”

I find that having considered the evidence before the hearing that a transfer of undertakings did not take place.

The complaint against the transferor under the Regulations is dealt with separately in ADJ 6752.

For the reasons set out above I do not uphold complaint CA-00007211-001 and it is dismissed.

TUPE, whether a transfer has taken place.