RPD1710

Background to the Appeal

The Complainant was employed as a bar worker in a licensed premises, the Jerpoint Inn, in Thomastown, Co. Kilkenny. She had worked in the business in that capacity since 2002. The proprietor of the business, the Respondent Mr. Brian Cahill, who was a sole trader, ceased operating the business with effect from 22^ndJuly 2016, following the completion of a lease-purchase agreement of three years duration between the Respondent and a third party partnership, the partners of which were identified to the Court as a Mr. Hugh Rhatigan and a Mr Eamonn Concannon (hereinafter, ‘the third party partnership’).

The Complainant continued to work in the business in the same capacity after 22^ndJuly 2016 under the new proprietors. However, the new proprietors confirmed to her that they did not regard her as having transferred to their employment with continuous service. She was informed by the new proprietors, contrary to what she states she was given to understand by the Respondent just prior to the transfer of the business, that her employment was to continue with the new proprietors on the basis of a “clean slate” start date of 22^ndJuly 2016.

The Complainant continued to work in the business on the terms outlined by the new proprietors. The Court was told that having failed in her efforts to clarify and satisfactorily resolve the matter of her continuous service with the Respondent, she subsequently lodged a complaint with the Workplace Relations Commission under the Acts in the belief that her employment with the Respondent had, in the circumstances, terminated by reason of redundancy with effect from 22^ndJuly 2016.

Relying on the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (“the Regulations”), the Respondent contends that, pursuant to the Regulation 3 of the Regulations, the business transferred on 22^ndJuly 2016 to the new proprietors. Accordingly, it is the Respondent’s case that the Complainant’s continuous employment transferred by right on no less favourable terms and conditions of employment on the date of transfer. The Respondent further contends that both the Complainant and the new proprietors were made aware of the Complainant’s rights and entitlements to so transfer and that same was understood and accepted. The Respondent effectively argued that he was a stranger to the proceedings before the Court and submitted that any action that the Complainant may have is against the new proprietors.

Preliminary Issue

Counsel for the Respondent, Mr. James Burke, B.L., submitted that the Complainant had presented her complaint under the Acts to the Workplace Relations Commission outside the 6-month limitation period stipulated in Section 41(6) of the Workplace Relations Act, 2015. The complaint was submitted to the Workplace Relations Commission on 3^rdApril 2017, in circumstances where she alleges that a termination of employment occurred on 22^ndJuly 2016. In such circumstance, a complaint would be required to be made no later than 21^stJanuary 2017. Counsel further contended that no circumstances amounting to reasonable cause had been advanced by the Complainant such that an extension of the time period could be granted pursuant to Section 41(8) of the Workplace Relations Act, 2015. Accordingly, Counsel submitted that the Court should not entertain the complaint.

Solicitor for the Complainant, Mr. Matthew Kearney of W.A. Smithwick & Son Solicitors, contended that any delay in lodging the complaint with the Workplace Relations Commission was entirely due to the conduct of the Respondent in failing to properly engage with the Complainant, failing to clarify her employment status post the transfer and creating confusion for the Complainant. Mr. Kearney contended that the Complainant gave the Respondent every opportunity over a period of time to clarify the position for her and, accordingly, she should not be denied an extension of the limitation period in the face of such behaviour by the Respondent.

It is apparent to the Court that both Counsel for the Respondent and the Solicitor for the Complainant are of a mistaken view regarding the applicable law concerning the time-limit on claims for a redundancy payment. The limitation period contained within Section 41(6) of the Workplace Relations Act, 2015 apply to the enactments set out in Part 1 or 2 of Schedule 5 of the 2015 Act. The Redundancy Payments Act 1967-2014, is not contained in that Schedule. The applicable time-limit for the purposes of the instant case is set out in Section 24 of the Redundancy Payments Act, 1967-2014. The Section states:

• 24.—Notwithstanding any other provision of this Act, an employee shall not be entitled to a lump sum unless before the end of the period of [52 weeks] beginning on the date of dismissal or the date of termination of employment—
  
  (a)the payment has been agreed and paid, or(b)the employee has made a claim for the payment by notice in writing given to the employer, or(c) a question as to the right of the employee to the payment, or as to the amount of the payment, has been referred to the [Director General] under section 39.

Accordingly, the applicable limitation period is 52 weeks from the date of termination of employment. That period would therefore expire on 21^stJuly 2017. In circumstances where the complaint received by the Workplace Relations Commission on 3^rdApril 2017, it is clear that the complaint is within the stipulated limitation period.

Counsel’s submission on this issue is, accordingly, rejected and the Court will proceed to determine the complaint.

Evidence of the Parties

Evidence of the Complainant

In support of the claim that her employment was terminated on 22^ndJuly 2016 by reason of redundancy, Ms. Helen Greene’s evidence to the Court is, in summary, the following:

• 
  •She is employed as a bar worker serving food and drinks to customers. She worked 4 days per week 10am-5pm and receive a gross weekly wage of €384.00. She still works at the public house in the same capacity for the new owners;

  •She originally commenced employment in 2002 under a previous owner of the business before the Respondent took over in 2005;

  •The first she heard of the sale of the business was from a customer whom she met at a social event on a Saturday evening towards the end of June 2016. She was told by that customer that the business was being taken over by a named partnership who also ran other public houses;

  •The next time she saw the Respondent, which was the following Tuesday, she raised the matter of the sale of the business with him. She said he made little of it and commented that it was just rumours;

  •In and around 28^thJune, the Respondent spoke with her at work about a sale. He said nothing would happen until after his week’s holidays which he was commencing a few days later;

  •Both the partners of the third party partnership came to see her in the public house on 13^thJuly. They told her that they were taking over the business from 22^ndJuly. They said they hoped she would stay on and that they would maintain her working hours as they were;

  •On the evening of Thursday 21^stJuly, the Respondent spoke to her as she was leaving work. He told her that the third party partnership was taking over the business from tomorrow. She asked him about her holidays and her service. He told her that her holidays and service would carry on with the third party partnership. She had a wedding on 22^ndJuly, on the day that they took over, so she was not present in work on that day;

  •On the following Tuesday, one of the partners of the third party partnership spoke with her and told her that there was no way that he was going to recognise her previous service with the business. He told her that he had made that clear to the Respondent during the negotiations for the sale. He said he had told the Respondent that as far as he was concerned he was starting with a “clean slate”;

  •She said she rang the Respondent to discuss the matter and he assured her that her service and holidays were transferring. He said he would get legal advice on the matter. He forwarded an email purporting to be such advice to her on 29^thAugust 2016;

  •She said she reverted back to the member of the third party partnership and told him what the Respondent had said, however, the position did not change. She said matters went round in circle like that;

  •She later consulted a solicitor and sought to claim a redundancy payment from the Respondent in the belief that her employment had terminated on 22^ndJuly and she had started afresh with the third party partnership;

  •In answer to questions from the Court, she said that she is still working the same hours and on the same pay under the new owners. She said that, other than the third party partnership now being involved, everything has continued as was under the Respondent and nothing had changed.

In support of his case that a transfer of an undertaking had taken place on 22^ndJuly 2016, thereby entitling the Complainant to continued employment on no less favourable terms and conditions of employment and consequently defeating any claim for a redundancy payment, the Respondent’s evidence was as follows:

• 
  •The Respondent said that the Complainant was working in the business in 2005 when he took over. He leased the business to a third party previously between 2009-2011 during which time the Complainant transferred to that lessee. The Complainant transferred back to his employment when that lease expired;

  •He said he had put the business on the market two years previous to when he eventually leased it again in 2016. He said that he lived in Cavan and the commute to Thomastown was affecting his family life;

  •He said he was contacted by the third party partnership in late June 2016 and an interest in taking over the business was expressed;

  •He said he told the Complainant in an around the beginning of July about the approach from the third party partnership. He said that there was nothing in writing yet and that he would let her know what was happening after he came back from his holidays;

  •He said he had a meeting with the third party partnership on 12^thor 13^thof July. He said he told the third party partnership at that meeting that the Complainant was part of the business and that she was there when he took over in 2005. He told them her hours of work and her other terms and conditions. He said that the third party partnership said that that was fine.

  •He said that he told the Complainant what was happening whilst at work, during a quiet moment;

  •He said that he was aware that one of the third party partnership partners had been in contact with the Complainant;

  •In answer to a question from the Court, he said that he at no stage had a meeting between himself and the Complainant and the third party partnership;

  •He said that, aside from himself, the Complainant was the main staff member and he described her as full-time. He said that there were some part-time staff who worked a few hours per week;

  •With regard to the transfer transaction he told the Court the following:

  • oThe transfer was by way of a 3-year lease to the third party partnership with an option to buy the business and the premises outright;

    oThe sale price received (which was to be paid to him as a monthly figure over the life of the lease) was an overall amount encompassing payment for: use of the premises; goodwill; all stock; all furniture & equipment and fixtures & fittings; the 7-day publican’s license; cash-register coinage;

    oAll necessary suppliers’ accounts, including ESB, Water etc., were transferred over to the third party partnership;

    oWith the exception of the freehold on the premises, which the Respondent was retaining, he said everything was transferring “lock, stock and barrel”.

The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 state, at relevant part, as follows:

• 3. (1) These Regulations shall apply 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.

  (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 grouping of resources which has the objective of pursuing an economic activity whether or not that activity is for profit or whether it is central or ancillary to another economic or administrative entity.

Discussion & Decision

The issues for the Court to resolve in this case can be stated as follows:

• 
  1.Did a transfer of an undertaking within which the Complainant worked occur on 22^ndJuly 2016 when the Respondent ceased operating the business and leased it to the new proprietors?

  2.If the answer is yes, then by operation of law the Complainant’s employment transferred on no less favourable terms and conditions of employment on the date of transfer. In those circumstances a termination of employment does not arise and consequently a statutory redundancy payment is not applicable;

  3.If the answer is no, then in order to determine whether or not the Complainant is entitled to a statutory redundancy payment contended by her, the Court must determine whether or not the circumstances which prevailed in and around 22^ndJuly 2016 amounted to a termination of the Complainant’s employment with the Respondent by reason of redundancy, pursuant to the Acts.

In order to answer the question of whether or not a transfer of an undertaking occurred on 22^ndJuly 2016, and having regard to the relevant Regulations as set out above, the Court must be satisfied that the assignment of the lease in this case amounted to the transfer of an organised grouping of resources which has retained its identity and which has the objective of pursuing an economic activity.

Arising from the considerable body of law developed by the Court of Justice of the European Union since it was first called upon to interpret the provisions of the original so-called ‘Acquired Rights Directive’ (Directive 77/187), from which the Regulations arise, there are now well-established tests for determining the question of whether or not a transfer of an undertaking took place.

The aim of Directive 2001/23 (and by extension, that of the Regulations) is to safeguard the rights and entitlements of employees arising from their employment relationship when the business or part of the business in which they are employed transfers from one employer to another employer. The Court of Justice has consistently stated that the decisive criterion for establishing the existence of a transfer within the meaning of the Directive is whether the entity in question retains its identity, as indicated by the fact that its operation is actually continued or resumed. Nevertheless, it is widely accepted that the Court of Justice judgment in Case 24/85SpijkersvGebroeders Benedik Abbatoir CVremains a cornerstone of that jurisprudence.

InSpijkersthe Court of Justice set out what it considered to be the decisive criteria for establishing whether the Directive applied:

• “In order to establish whether or not such a transfer has taken place in a case such as that before the national court, it is necessary to consider whether, having regard to all the facts characterising the transaction, the business was disposed of as a going concern, as would be indicated inter alia by the fact that its operation was actually continuing or resumed by the new employer, with the same or similar activities”

• “To decide whether these conditions are fulfilled it is necessary to take account of all factual circumstances of the transaction in question including the type of undertaking or business in question, the transfer or otherwise of tangible assets such as buildings and stocks, the value of intangible assets at the date of transfer, whether the majority of the staff are taken over by the new employer, the transfer or otherwise of the circle of customers and the degree of similarity between activities before and after the transfer, and the duration of any interruption in those activities. It should remain clear however, that each of these factors is only part of the overall assessment which is required and therefore they cannot be examined independently of each other”.

• 
  1.Significant tangible assets transferred in the form of:
  • a.All stock;

    b.All furniture & equipment, fixtures & fittings;

    c.The 7-day publican’s license;

    d.The use of the premises.

  2.The Complainant herself, as the only substantially full-time staff member aside from the Respondent, transferred on the same rate of pay and under the same working hours.

  3.All necessary supplier accounts transferred.

  4.The customer base and brand name of the business of the business was purchased, in the form of goodwill, by the third party partnership.

  5.There was no period of interruption or closure of the business/licensed premises.

  6.The activities before and after the transfer mirror one another.

Accordingly, the Court is fully satisfied that there was transfer of an undertaking on 22^ndJuly 2016 upon the assignment of the lease thereby entitling the Complainant, pursuant to Regulation 4(1) of the Regulations, to transfer to the employment of the third party partnership on no less favourable terms and condition of employment as compared to that which applied when in the employment of the Respondent.

For the avoidance of any doubt, as a matter of law, the Complainant is entitled to have her full continuous service from 2002 recognised by the third party partnership.

Conclusion

On the basis of the foregoing, by operation of law, the Complainant’s employment transferred on no less favourable terms and conditions of employment on 22^ndJuly 2016 to the new owners. In those circumstances a termination of employment does not arise and consequently the Complainant has no entitlement to a statutory redundancy payment.

The appeal, therefore, succeeds and the Adjudication Officer’s decision is overturned accordingly.

The Court so determines.

Signed on behalf of the Labour Court



Brendan Hayes
CO'R______________________
13th October 2017Deputy Chairman



NOTE

Enquiries concerning this Determination should be addressed to Clodagh O'Reilly, Court Secretary.