ADJ-00008300

Complainant

Respondent

Parties

A Technician

A Property Services Co.

Act

Complaint/Dispute 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-00011012-001

27/04/2017

This complaint was made under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (hereafter ‘the Regulations’). A Division of a company was transferred to another in January 2017. There is no collective agreement in place but the Complainant's trade union negotiates on behalf of its members in the Respondent Company. The Complainant commenced employment with the Respondent, a property services company, in July 2003, as a technician and on the date the transfer took place was earning €3,108.72 per month. A Complaint Form was received by the WRC on 27^th April 2017.

The Complainant was represented by his trade union and a detailed written submission was provided. The Complainant alleges that the Respondent breached Section 8 of the Regulations, regarding Information and Consultation.

The Complainant submitted that he was in work on 18^th January 2017 and received an email at approximately 07.30 a.m. asking him to come to the office of his employer, the Respondent, for 1.30 p.m. on the same day. The Complainant attended a meeting, with colleagues, at 1.30 p.m. with the company's managing director and was told that his employment had been taken over by another company and that if he objected he would be out of a job.

The employees were handed a letter, confirming that the entity had been acquired by another business and would be fully integrated to that businesses activities with immediate effect. The letter was dated 17^th January 2017 and was signed by the Respondent's managing director.

The Complainant submits that there was no consultation with him or his colleagues, or their representatives as there should have been in accordance with Regulation 8 of the 2003 Regulations.

The Complainant referenced a Labour Court Case, TUD/176 to support his claim. The Determination in TUD/176 states, inter alia;  

" …in so far as the Respondent has attempted to comply with its obligations to the Complainant under Regulation 8, it has done so in a very minimalistic and token fashion.   Regulation 8 provides for information and (where applicable) a consultation process with employees' representatives as opposed to any form of direct communication with individual employees on a one-to-one basis. No collective information or consultation process took place in this case. The Respondent did not inform the Complainant of the identity of the Transferee and, therefore, did not fulfil its obligation to inform the Complainant of "the legal implications of the transfer for them" as it is required to do under Regulation 8(1)(c).   Furthermore it did not inform the Complainant or her representatives about any measures envisaged by the Transferee as required by Regulation 8(1)(d). It follows that the Respondent failed to engage in any consultation process regarding such measures, if any."

In TUD/176 the Labour Court directed the Respondent to pay the equivalent of 4 weeks' remuneration in compensation (i.e. €823.48) to the Complainant for breach of an entitlement.

The Complainant contends that regulation 8(1), 8(2) and 8(4) have been breached. Further the Complainant believes that the parties to a transfer have a positive obligation to notify, inform and consult with employees and their representatives before a transfer takes effect, given the importance to the employee of a change in their employer. The Complainant is of the view that the transferor, the Respondent, must have been aware that the transfer was imminent and failed to notify, inform and consult with their employees. The Complainant also suggests that the Respondent must have been aware that the transferee was acquiring the Respondent Company in the UK and Ireland and failed to notify their employees. The Complainant's union also contend that they are covered legitimately an employee representative as defined in Section 2 of the Regulations.

In concluding the Complainant argued that confidentiality clauses cannot negate rights.

The Complainant believes four weeks' pay be awarded for the alleged breaches outlined above or in the alternative apply the principles in Van Colson and award compensation that is just and equitable in the circumstances to provide real deterrent against future infraction by the Respondent.

The Complainant was represented and a detailed written submission was provided. The Respondent refutes the allegations made by the Complainant.

The Respondent submitted that in October 2016 discussions began with another business entity, (the transferee), about the sale of a Division of the Respondent's company to the transferee.

The potential transfer was deemed to be volatile and sensitive and so discussions and negotiations were carried out with the utmost secrecy and confidentiality in order to protect the interests of the parties, share-holders and creditors. As the transferee is a publicly listed company the Respondent could not legally share any information with employees and non-disclosure documents had to be signed by all parties involved.

The Respondent stated that on 17^th January at 11.00 p.m. after months of lengthy, confidential discussion and negotiations, the transferee acquired the Respondent's Division "effective immediately".  

The following day the Respondent invited the effected employees, including the Complainant, to a meeting to discuss the situation. The Complainant and his colleagues were issued with a letter and a Questions & Answers sheet relating to the transfer.   As of 18^th January 2017, 10 employees transferred from the Respondent to the transferee.

The Respondent that it has acted in line with section 8(2) of the Regulations in that it was not reasonably practicable to consult with the effected employees 30 days in advance of the transfer occurring. This was due to the confidential nature of the transfer. Respondent management were bound by non-disclosure agreements to protect the acquisition by ensuring commercial confidentiality was not breached.

In their submission the Respondent refers to Meenan's Irish Employment Law 2014/2015, which includes a line on the advising of employees at the last moment regarding a proposed transfer. Meenan writes, "This is not necessarily the employers' fault, because during delicate negotiations it may be imprudent for persons other than those negotiating the deal to be aware of it".

The Respondent also contends that the obligation is on both the transferor and the transferee prior to the transfer in respect of any measures envisaged in relation to employees. No such measures were envisaged. According to the Respondent nothing changed for the Complainant and his colleagues on foot of the transfer, no detriment was suffered. The Respondent submits that the transferee undertook to accept and honour the Complainant's terms and conditions of employment as part of the transfer.

The Respondent also referenced Donovan in Employment Law 2016 – Nutshells Thomson Reuters which states;

"There will be situations where it is not practicable, reasonably or otherwise, to comply with art 8 (sic) because the transfer will only occur after the expiration of the 30 days or with no time, good or otherwise, before the transfer is carried out. In these circumstances there is a technical breach and the adjudication body should simply direct that the regulation be complied with but make no award for compensation".

The Respondent believes that they were left with no alternative but to waive the 30 day consultation, which, they say, is only a guideline set out by the regulations, due to confidentiality reasons and the risk of the acquisition falling through.

In concluding the Respondent stated that it is regularly involved in transfers of undertaking and normally consults with its employees but in this case that was not possible.   The Respondent also re-iterated that the Complainant did not suffer any detriment as a result of the transfer.

I have considered this matter carefully.

Section 8 of the Regulations, Information and Consultation, states:

"8.         (1)     The transferor and transferee concerned in a transfer shall inform their respective employees' representatives affected by the transfer of -

(a)     the date or proposed date of the transfer;

(b)     the reasons for the transfer;

(c)     the legal implications of the transfer for the employees and a summary of any relevant economic and social implications of the transfer for them

and

(d)     any measures envisaged in relation to the employees.

(2)     The transferor shall give the information in paragraph (1) to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer is carried out and, in any event, in good time before the transfer is carried out.

(3)     The transferee shall give the information in paragraph (1) to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer is carried out and, in any event, in good time before the employees are directly affected by the transfer as regards their conditions of work and employment.

(4)     Where the transferor or the transferee envisages any measures in relation to employees, he or she shall consult the representatives of the employees, where reasonably practicable, not later than 30 days before the transfer is carried out and, in any event, in good time before the transfer is carried out, in relation to any such measures with a view to reaching an agreement.

(5)     Where there are no employees' representatives in the undertaking or business of the transferor or, as the case may be, in the undertaking or business of the transferee, the transferor or the transferee, as may be appropriate, shall put in place a procedure whereby the employees may choose from among their number a person or persons to represent them (including by means of an election) for the purposes of this Regulation.

(6)     Where, notwithstanding paragraph (5), there are still no representatives of the employees in an undertaking or business concerned (through no fault of the employees), each of the employees concerned must be informed in writing, where reasonably practicable, not later than 30 days before the transfer and, in any event, in good time before the transfer, of the following:

(a)     the date or proposed date of the transfer;

(b)     the reasons for the transfer;

(c)     the legal implications of the transfer for the employee and a summary of any relevant economic and social implications for that employee;

and

(d)     any measures envisaged in relation to the employees.

(7)     The obligations specified in this Regulation shall apply irrespective of whether the decision resulting in the transfer is taken by the employer or an undertaking controlling the employer and the fact that the information concerned was not provided to the employer by the undertaking controlling the employer shall not release the employer from those obligations".

The parties agree that a Transfer of Undertakings did take place.   The parties also agree that there was no consultation with employees or their representatives before the transfer took place. The Respondent argues that this lack of consultation was justifiable for business reasons. The Complainant argues that such consultation id required under the Regulations and if the Respondent has failed to adhere to the Regulations that he should be awarded compensation for this breach.

Section 8 of the Regulations includes the phrase, "where reasonably practicable", three times in relation to the dissemination of information to employees.   The insertion of this phrase must indicate that the drafters believed there are times when the requirement to inform and consult can be over-ridden by other considerations. The question to be answered in this instance therefore, is whether it was it impractical for the Respondent not to inform and consult the employees as obliged under section 8 of the Regulations.

The Complainant has cited the Labour Court determination in TUD/176 to support his claim, however the transfer of undertakings which occurred in that instance was very different to the transfer which is in question in this case; in TUD/176 the transfer took place following a competitive tendering process, in this case the transfer was concluded following a confidential negotiation process. Also in this instance there were no changes to the terms and conditions of employment of the employees.

The Respondent stressed the importance of confidentiality across the deal, which included a transfer of the UK business. If the negotiations were public knowledge then the deal may have been jeopardised.

Meenan and Donovan are of the view that there are times when it is not practical for the parties negotiating the transfer to open up details of the transfer until the deal has been closed. In the circumstances outlined above, I believe it was not unreasonable for the Respondent to wait until the deal was done before opening up the transfer to the Complainant, his colleagues, or his union.

I find that there was a technical breach of Section 8 of S.I. 313 of 2003. Therefore the complaint is well founded and I require this to be brought to the attention of management of the Respondent Company.  

However, having regard to Section 10(5)(c), of the S.I., as it is a technical breach of the Regulations, I do not believe compensation is appropriate.

Reasonable, practical, information, consultation.