Complainant

Respondent

Anonymised Parties

A Restaurant Worker

A Public House/ Restaurant

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977

CA-00021460-001

29/08/2018

Claim is for unfair dismissal arising out of what the Complainant alleges is a false redundancy following a transfer of undertaking.

This complaint is that a transfer of undertakings took place between P. Ltd, the former employer of the Complainant (the alleged transferor) and the Respondent (the alleged transferee) on a date unknown between 15 February and 30 March 2018. The complainant claims that she was employed by the transferor as a chef/kitchen worker from March 2014 and that her employment ended in the 1st of March 2018. She received notice of termination on the 15th of February 2018 and the pub/restaurant owned by the Respondent closed. It reopened on the 30th of March 2018 in time for the Easter business.

The Respondent company is owned by an individual who lives in Canada (hereafter referred to as “the owner.”) The owner is the main shareholder of several companies which run/manage various hospitality businesses in the North/West region, one of which is the Respondent (the transferor). Another one of which was the transferee. Pubs, restaurants and hotels are owned by companies of which the owner is the main shareholder. The Respondent business is a pub/restaurant in a small town.

“The owner” appointed a consultant in November 2017, in order to try to assess the feasibility of the pub business and to increase the productivity of these businesses. This consultant was the Respondent witness at the Adjudication hearing.

The Complainant gave evidence which was critical of the consultant’s attempts to re-energise the business between November 2017 and February 2018. The Complainant accepted that the business was in trouble however she claims that the attempts that were made by the consultant from November until February 2018 were ineffective.

In the Complainant’s opinion the consultant decided soon after his arrival in November 2017 that the business would be best improved if it was taken over by different staff and that that plan was really the only plan. She does not accept that the different options described at the Adjudication hearing (selling the premises, turning it into a cinema or a fast food restaurant) were ever realistic considerations for the consultant.

As the business was not performing, it would not have made good business sense to sell the premises at a time when the property market was low. Neither would it have made sense to put a large investment into reconstructing the premises, in order to change its use.

She further does not accept as credible the evidence of the Respondent that the decision to keep it going as a pub/restaurant but re-staff it was only taken after the business closed its doors in February 2018. She believes that this had been the plan all along. The suggestions that it be made into a cinema or a fast food venue was never a realistic option but instead are being used to support their proposition that no decisions were taken and everything was up was still up in the air when the business shut in February 2018 and that a transfer of undertaking did not occur because of the interruption of business that occurred between its closure in February 2017 and when it opened 6 weeks later.

She claims there was a transfer of undertaking and that the business did not change its identity from a pub restaurant after it re opened.

She claims that in January 2018, at time at which the Respondent witness says no decision had been taken as to the future of the business, she was told by a person her job would be replaced by that person. It so happened that this person did indeed take over her job when the business was re-opened in March 2018.

She claimed that the business remained the same and that just because the marketing strategy of the business changes does not mean that its identity as a pub/restaurant changes. She claims that the goodwill of the business transferred to the new business, she claimed that 3 of the old staff were re-engaged by the new company and they worked in the same positions as they had done before the transfer occurred.

Her belief was that the consultant advised “the owner” to change the staff, change the branding of the pub and by setting up a new company this will avoid a claim that the employment transferred from P. Ltd to the Respondent.

She said it is significant that the transferee company and the transferor company are both owned by “the owner.” This undermines any argument that the transfer arose in arms-length, unknown or unplanned-for fashion.

She submitted that the test for whether a transfer of undertakings has occurred or not is set out in the ECJ case of Spijkers v Gebroeders Benedik Abbatoir CV [1986 2 CMLR] and the questions to be considered are:

Has the entity retained its identity?

Have assets transferred (although it is not essential that they do)?

What has happened to the intangible assets such as goodwill and have they transferred?

Have some or all of the staff been taken over by the new employer?

Has the customer base transferred?

Are the activities carried on post transfer similar to those carried on pre-transfer?

Has there been an interruption in the operation of the undertaking, although this may be relevant is not fatal to the fact of a transfer?

Has the business activity and economic entity transferred?

She contended that the test in Spijkers is met; the identity of the pub/ restaurant was still the same after the transfer occurred and the fact that its marketing strategy changed or that there was an attempt to encourage a younger clientele does not alter its identity.

All the assets i.e. the equipment in the kitchen and bar transferred

The goodwill transferred and everyone still knew that the premises was still owned by “the owner” it just had a refurbishment.

Three of the old staff were brought back to work in the new business in the same jobs as they had before.

The clientele has changed but not wholly so.

The business activity remained the same.

The interruption between the premises shutting down and reopening, at 6 weeks, was insignificant and was only in order to allow the refurbishment take place.

The business activity and economic entity has remained the same. It’s still a pub/ restaurant.

As to the payment of redundancy to the Complainant, it is denied that this defeats a claim for dismissal where the transferee company has been wound up (ECJ case of Joao Filipe Ferreira da Silva e Brito and Others v. Estado Portugues; September 2015) and when the redundancy is a sham because the employee’s job is being performed by someone else.

However, it is accepted that a purported redundancy payment, which has been made to an employee should be set off as against the claim for loss in an unfair dismissal complaint.

The Respondents position is that no transfer of undertaking occurred.

They claim that that a consultant (the Respondent witness at the hearing) had been engaged by the owner of the Respondent in November 2017, in order to try to improve business and to assess the feasibility of the business. He assisted in the marketing of the business from November until February 2018 however his attempts to re-energise the business failed and his recommendation to the owner on 15 February 2018 after an unprofitable St. Valentines night was to shut the business down and decide what to do then.

The business shutdown in around the 15th of February 2018 and the staff were purportedly made redundant.

The Respondents claim that no transfer occurred in that when the business shut in mid-February 2018 there was no transferor company in existence. The Respondent was not incorporated until 15 March 2018. Therefore, there was no business transfer from a company law perspective. The transfer must occur at a point when there is a transferor and a transferee in existence.

The Respondent claims that when the Complainant received notice on 15 February 2018 that no decision had been taken in relation to what would happen to the business at that stage.

The Respondent claims that this decision was taken in the days running up to the incorporation of the Respondent company in 15 March 2018.

The Respondent witness (“the owner’s” consultant) gave evidence that he had a conversation in January 2017 with the man who he later appointed as the bar manager of the newly opened Respondent business. He understood that at that time this man was planning on taking up a job as bar manager in Letterkenny and he accepted that he informed this man “to make sure to have a chat with me before you head to Letterkenny.” This witness does not accept that this was evidence of an intention on his part in January 2018 to offer this man the position of bar manager in the future, as ultimately occurred. It was simply a chat and there was nothing significant about it. He denied that, at that stage that plan to refurbish the premises and open it under a different name had already been formed.

When the business shut down in February 2018 there was no plan for it to reopen. The decision as to what to do with the premises took time and all that was decided in February was to pay of the company debts, which were paid in full. This in itself, i.e. to end the relationship with their suppliers, is evidence that there was no intention to reopen the business at that time. The only intention of the consultant and “the owner” in February 2018 was that it was best to wind up the old company, pay off its debts and then decide how best to proceed.

The Respondent witness said that the business identity had changed completely. The bar was now a sports bar and its marketing strategy was focussed on a younger clientele. The menus were different. Only three staff of the old staff were re-employed. The equipment belonged to the landlord, ie “the owner” and therefore there was no transfer of assets between transferor and transferee.

As such the criteria in the Spijkers case is not met.

Considering all the evidence in this case and considering the ECJ authorities of Spijkers v Gebroeders Benedik Abbatoir CV [1986 2 CMLR] and Joao Filipe Ferreira da Silva e Brito and Others v. Estado Portugues, I am of the opinion that a transfer of undertaking did occur at a date unknown between the end of the Complainant’s employment on 15 February 2018 and 30 March 2018 when the business reopened.

The reasons that I am on this opinion is as follows:

On the balance of probabilities, I am more persuaded by the Complainant’s evidence that there was an intention to reopen the business (albeit under a different name and different brand) before the Respondent was incorporated on 15 March 2018. The transfer does not have to occur simultaneously with a company incorporation, it can happen afterwards or beforehand.

Given the consideration that was put into this decision and the fact that several options were being considered from November 2017 onwards I find it unlikely that a decision would have been made to close the business in mid-February 2018 with absolutely no idea or forward plan as to what would happen next.

As the main shareholder of both the transferee and transferor companies were the same person, ie   “the owner” I do not find it credible that, when the business shut down, there was no decision plan in place as to what to do with the business.

I accept that the transferee business was failing and was gravely in debt, I accept the evidence of the Respondent witness that he was engaged in November 2017 to try to save the business from a continued downward spiral or loss, I accept that discussions were had between this witness and “the owner” and that the options being considered were to sell, to reconstruct and open as a cinema, to open as a fast food outlet or to refurbish the pub/restaurant and re-staff it because the staff present were underperforming. These are all normal discussions to have in the face of a failing business.

However, what I do not accept to be credible is that having decided to shut the premises in February 2018, that of the various options available, a decision had not yet been taken.

Indeed, even if a concrete decision had not been taken or acted upon on 15 February 2017, this would not determine the matter in circumstances where the option to re-open as a bar/restaurant was still one of the live options on 15 February 2018, and very soon afterwards this option was put into effect.

It is significant that the Respondent witness had discussions with a possible new pub manager (who later became the new pub manager) in January 2018 to ensure he didn’t take up a position in Letterkenny before he had discussed it with him. This at least is evidence that the option to refurbish and re-staff was in this witness’ mind as early as January 2018.

I afford some weight to the conversation in January 2018 that the Complainant had with a third party who informed her that she would soon be taking over the Complainant’s job. This is direct evidence heard by the Complainant which supports the claim that what ultimately occurred was reported to her a month before the business closed and yet the Respondent’s evidence was that no decision had been taken at that stage, i.e. in January. This evidence undermines the Respondent’s position in that regard.

However, in some respects, the timing of when the decision was made to keep the pub/ restaurant business open is not relevant. The real issue is whether, or not, it was kept open and whether the business entity transferred from one company to another.

On the balance of probabilities, I consider the criteria in Spijkers case have been met in this case.

The business entity – that of a pub/ restaurant – retained its identity. The change of name marketing strategy and décor is not relevant to this test.

The assets transferred from P. Ltd to the Respondent. The fact that none of the assets (pub and restaurant equipment) are legally owned by these companies is irrelevant. The use of the assets, did transfer. As ultimately both companies were owned by the same individual, this makes a fiction of this argument.

The goodwill of the business in a small rural town transferred to the transferor.

Three staff members were re-employed.

The clientele may be have changed to a younger demographic, but this is not determinative and in any event, I am not convinced that in a small rural town the clientele has changed so utterly where retaining families as clients, is as important as obtaining a new young clientele.

The activities are the same both pre and post transfer

The business was interrupted but only for enough time to refurbish the premises and reopen under a different brand identity. A six-week break in this context is not sufficient to break the transfer.

This case could have been approached in a different way. There could have been economic or operational reasons why following the transfer, redundancies had to be made. However, I cannot consider this, as that argument has not been advanced by the Respondent.

For the reasons set out above I find that a transfer of undertaking did take place, that the jobs being performed by the Complainant and two other workers still existed and were performed by other people following the transfer and therefore I find that the purported redundancy was not a true redundancy and therefore the burden of proof, that the dismissal of the Complaint on 15 February 2018 was fair, has not been discharged by the Respondent

Her loss has been agreed at €6,540 to date, which includes an offset of the redundancy payment, however this sum is also calculated applying a discount of her social welfare payments which is prohibited under Section 7(2A) (a) of the 1993 Unfair Dismissals Act. Therefore, her full loss to date is €9968.00

I accept that the Complainant mitigated her loss by taking a post in a hotel owned by “the owner” at a decreased salary however this was the only job that she could obtain after considerable effort. In light of her probable losses into the future, albeit at a minimal level, I increase this award to €12,000.00

AWARD: €12,000.00