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-00006789-001

05/09/2016

Complaint seeking adjudication by the Workplace Relations Commission under Section 11 of the Minimum Notice & Terms of Employment Act, 1973

CA-00006789-002

05/09/2016

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00006789-003

05/09/2016

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-00006789-004

05/09/2016

The Complainant alleges that she was employed by the respondent in April 2010. That she was engaged as General Manager of (BHHL) as an employee of (BHos) Limited.

DCM Hotels Limited was registered as a company on 24th October 2013. The Complainant was a Director of that company from the 25th October 2013. DCM Hotels transferred the undertaking of the management of the (BHH) from (BHos) Limited on or about the 29th October 2013. The Complainant remained employed as General Manager of the (BHH).

Pursuant to a court order on the 8th January 2016, DCM Hotel Limited transferred the undertaking to JB and JR because no purchaser had been agreed by that date.

The Complainant alleges that she was one of the employees transferred to the new manager of the hotel.   The Complainant remained on the same terms and conditions of employment and remained on the same holiday entitlements, remuneration, pension contributions and medical cover. She received medical insurance contributions of €1,100 per annum, pension contribution of €4,800 per annum and telephone expenses of €1,100 as part of her ongoing remuneration package. She remained an employee in the role of General Manager until she was removed by agents for (JB) and (JR) on 13th January 2016.

The Complainant alleges that she was unfairly dismissed from her employment. The Respondent alleges that she was not an employee of DCM Hotels Limited because she operated on a contract for service. The Complainant filed the complaint with the WRC on the 5th September 2016.

Introduction

The Complainant owns 100% of the issued share capital of a company called DCM Hotels Limited (“DCM”). The Complainant is also a director of this company. DCM used to operate the (BHH) in County Meath (“the Hotel”). The Complainant is also a 50% shareholder of another company called (TLRL). This company operates the (TLRL & Spa) Hotel in County Westmeath. The Complainant was a director of (TLRL) from its incorporation until she resigned in or around 28th May 2016.

The Complainant is claiming that she was an employee of DCM when it ceased running (BHH) and that as a consequence of this she should have transferred to the new operators of the Hotel pursuant to the TUPE Regulations. This is disputed by the Respondents. The Respondents claim that the Complainant was effectively working for herself. Separately, the Respondents maintain that even if the Complainant was an employee of DCM, it was never envisaged that she would transfer over to the new operator.   This was because, as far as the first to fourth named Respondents were concerned the Complainant was going to focus on her other business, the operation of (TLRL). The fifth named Respondent’s position is slightly different.   It only became involved in the operation of the Hotel in early 2016. When it acquired the business another entity was managing the Hotel.   The management function did not transfer to the fifth named Respondent although it kept on that manager for a period of time. Furthermore, prior to its acquisition of the business it was given a list of the employees of the Hotel (which had actually been prepared by DCM’s solicitor).   This list of employees was one of the factors that determined the price it paid for the Hotel and it is common case that the Complainant was not listed as an employee. Therefore, it is difficult to see how the fifth named Respondent could be required to take on the Complainant. These submissions will address these three issues.

Was the Complainant and employee for the purposes of the TUPE Regulations?

In its submissions the Complainant makes reference to the Supreme Court decision in Henry Denny & Sons (Ireland) Limited v Minister for Social Welfare. The Respondents accept that this is one of the leading judgements to be considered. However, it is respectfully submitted by the Respondents that the Complainant has misinterpreted the judgement. The Complainant quotes the following passage from that judgement: “Is the person who has engaged himself to perform these services performing them as a person in business on his own account? If the answer to that question is ‘yes’, then the contract is a contract for services. If the answer is ‘no’ then the contract is a contract of service.”

The Complainant’s submissions then suggest that this was “the fundamental test to be applied”. While the Respondents consider that the Complainant was clearly in business on her own account, they disagree that the judgement lays down a rigid test to be applied, with this assessment of the Henry Denny case. While the above quotation appears in the Henry Denny judgement Keane J. was actually quoting from the English judgement of Cooke J. in Market Investigations v The Minister of Social Security.

In The Minister for Agriculture v Barry Edwards J. makes clear that “it was not Keane J’s intention in Henry Denny to endorse Cooke J’s approach as being “the fundamental test”. Rather, the key principle to be gleaned from the Henry Denny judgement is that there is no fundamental or one size fits all test at all. Rather each case must be judged on its own facts.

This is clear from the actual judgement in the Henry Denny case. Keane J. actually pointed out that “each case must be determined in the light of its particular facts”. Having said that the Respondents accept that Keane J. did not set out some factors which a court or a tribunal would, in general, have regard to. This is clear from the following passage: “It is, accordingly, clear that, while each case must be determined in the light of its own particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as in independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive.   The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment, where he or she employs others to assist in the business or where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.”

In this case the Respondents submit that when one looks at the particular facts there will be little doubt but that the Complainant was in business for herself and ought not to be regarded as an employee.

However, before looking at the relevant facts there a number of other relevant legal authorities. In England the courts have also made clear that there is no one catch all test. Rather a court should have regard to all of the relevant facts. In Secretary of State v Bottrill Lord Woolf in the Court of Appeal made the following observations: “We do not find any justification for departing from the well-established position in the law of employment generally. That is whether or not an employer or an employee relationship exists can only be decided by having regard to all the relevant facts. If an individual has a controlling shareholding that is certainly a fact which is likely to be significant in all situations and in some case it may prove to be decisive. However, it is only one of the factors which are relevant and certainly it is not taken as determinative without considering all the relevant circumstances.”

According to Laffoy J. in Neenan Travel v The Minister for Social and Family Affairs there is little difference between the position in Bottril and the position in Henry Denny. In Neenan Travel Laffoy J stated that the above “passage reflects a similar approach to the approach adopted by the Supreme Court in the Henry Denny case”. One of the key facts in the case before Laffoy J was that Mr. Leech had a minority shareholding in the company and he was subject to the majority vote of the other shareholders.

This can be contrasted with the decision in Reddy v Hypertrust Limited.   In that case the Employment Appeals Tribunal held as follows: “Having considered all of the evidence and the submissions of both parties the Tribunal do not believe that the claimants were employees but rather directors and shareholders with such control over the respondent that [they] could not be considered employees.”

Some of the key factors taken into account in that decision were that between them the two Respondents owned all of the shares of the Company, they were both registered as class S1 for PRSI (self-employed); neither had a contract of employment; they “reported to themselves”; they were in receipt of profits from the pub; their “wages” were not their sole source of income and they had access to company funds.

As will be seen later all of these factors are present in this case.

The final legal principle which the Respondents consider to be relevant is the principle of mutuality. This principle was considered by Edwards J. in the Minister for Agriculture and Food v Barry and Others. In that case Edwards J. held as follows: “The requirement of mutuality of obligation is the requirement that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer. If such mutuality is not present then either there is no contract at all or whatever contract there is must be a contract for services or something else, but not a contract of service.”

The Application of these legal principles to the facts of this case

The Complainant owns all of the shares in DCM.   All of the employees in DCM had to report to the Complainant. In contrast she had to answer to no one (apart from herself). The Complainant took a financial risk with this business and made an investment in it. For example, as can be seen from DCM’s most recent accounts for the year ending 31 December 2015 the Complainant invested €39,952 into DCM.   It would be very unusual for an employee to make such an investment in its employer.

As well taking a risk with the venture the Complainant also stood to profit from it. In the most recent accounts DCM had built up shareholders’ funds of €108,044. This is essentially profits which had built up over the years. The Complainant is the only person entitled to this sum. The suggestion in the Complainant’s submissions that DCM profit was “not a direct benefit to her” is frankly disingenuous. The sum was built up through the efficiency of the Complainant’s work.   Once again it would be unusual for an employee to be entitled to all of the profits of a company.

Furthermore, these accounts show that the Complainant had arranged for DCM to loan (TLRL) €100,395. There is no group structure in place between DCM and this company.   The Complainant is the only link between the two companies. Therefore, this transaction clearly shows that the Complainant was in business for herself. There is no other justification for this transaction. DCM was not in the business of making loans. Clearly the Complainant had access to company funds and was free to use company money for her own purposes much like in the Hypertrust case.

In addition, the Complainant arranged for the customer mail list for (BHH) to be used to promote the business of (TLRL).   This is clearly something an employee would need permission to do. In her submissions the Complainant states that “(TLRL & Spa) was set up as a sister business to complement the business of (BHH).” As far as the Respondents are concerned this statement makes clear that the Complainant was not simply an employee of DCM. Rather the Complainant was in business for herself, running two hotels.

In her submission the Complainant has sought to justify this free advertisement on the basis that (TLRL) was not a competitor of the Hotel. For example, it is claimed that (TLRL) “does not cater for weddings”. However, this is not clear from its website where members of the public are invited to email enquiries in respect of the holding of weddings at (TLRL & Spa). In addition, in or about August 2015 the Complainant gave an interview about (TLRL) to the Westmeath Independent. In the course of that interview the Complainant stated as follows: “We want to maximise what was there before while also welcoming non-residents for dinner, Sunday lunch and afternoon tea. We will be doing weddings, conferences, the full range.”

In any event, even if the hotels are not in competition this does not explain the transaction. DCM gained nothing from the advertisement of another hotel. The only parties to gain were (TLRL) and the Complainant.

The balance of the Complainant’s purported explanation for this free advertisement conveniently ignores the fact that the Complainant is a 50% shareholder in (TLRL). Furthermore, it is clear that the Complainant worked for (TLRL) at a time when she claims to have been an employee of DCM. The Complainant did not need to obtain anyone’s permission for this arrangement. Logically the only person she could have sought permission from was herself.

Importantly, the Complainant does not appear to have a written contract of employment with DCM. Certainly no written contract has been produced by her. However, the Complainant has produced a copy of her P60 for the year ending 31 December 2015. It is clear from that document that because the Complainant owns 100% of the issued share capital of DCM, that she is classified as S1 for the purposes of PRSI. The S in this context stands for “self-employed.” In other words, for tax purposes, the Complainant is treated as self-employed.

Furthermore, on the facts of this case there is no mutuality between the Complainant and DCM. For example, DCM was under no obligation to provide the Complainant with work.

There are a number of other relevant facts which point to the fact that the Complainant was in business for herself. For example, she was to arrange for litigation to be instituted in the name of the Company without there being any formal Board approval for this step. In addition, the Complainant had the authority to swear affidavits in those proceedings on behalf of DCM.

Did the parties intend for the Complainant to transfer to the new operator of the Hotel?

The Complainant gave evidence in the course of the High Court proceedings taken by DCM. During her evidence the Complainant made clear that her two priorities were making sure that her employees kept their jobs and that all bookings made in the Hotel would be honoured (to protect her reputation). That evidence was the basis for the settlement that was ultimately agreed.

After the High Court proceedings were compromised the solicitors who acted for the Complainant (and DCM) corresponded with the solicitors for the Respondents on a number of occasions. One of the issues that arose after the proceedings settled was that the first and second named Respondents had not got a purchaser for the Hotel in December 2015 / January 2016. Therefore, there was some discussion between the parties about when the Complainant or DCM would vacate the property. By letter dated 21 December 2015 the Complainant’s solicitors wrote to the Respondents solicitors and stated, inter alia: “please be advised that the purchasers have been in contact with our client directly to discuss the transfer and the procedure in this regard. For the purchasers ease, our client has agreed to extend their trading past January 8th if all parties agreed to this. However, our client can only extend this until Monday January 18th 2016.”

It is clear from the foregoing that the Complainant could only continue to manage the Hotel for a short period of time. As far as the Respondents are concerned this was because the Complainant was keen to focus on her work with (TLRL). While this letter is headed “Our Client: DCM Hotels Limited” it is clear from the passage quoted above that the Purchasers had been talking to the Complainant and that the person who had agreed to the extension was the Complainant herself.

Subsequently by email dated 4 January 2016 the Complainant’s solicitor emailed the Respondent’s solicitor in the following terms: “Hi John, Cora has been on to me to see whether she needs to vacate on the 8th or 18th. Can you come back to me asap?” (emphasis added)

Once again it was respectfully submitted by the Respondents that this email correspondence makes clear that it was the Complainant herself who was anxious to know when she was required to vacate the Hotel.

Furthermore, on 6 January 2016 the Complainant’s solicitor once again contacted the Respondents’ solicitor by email with the subject heading “CD.” In the course of that email the Complainant’s solicitor states as follows: “I have spoken to my client and DCM Hotels Limited have agreed to stay in (BHH) until the 18th of January no later…My client will vacate the premises on Friday 8th January and I will require the necessary details of the incoming manager/entity who will run the Hotel.” (emphasis added)

It is clear from the face of this email that the Complainant’s solicitors want to know who would be managing the Hotel after 8 January 2016. This is completely inconsistent with the Complainant remaining on as manager. In her submissions the Complainant suggests that (BHos) had acted as manager of the Hotel property. This is incorrect. (BHos) Limited had operated the Hotel under a lease. Furthermore, the dispute between DCM and the first and second named Respondents, did not simply concern the liquor licence. Rather, DCM maintained a claim that it had entered into a lease with the first and second named Respondents in relation to the Hotel. Notwithstanding what is stated in the Complainants submission the ruled settlement agreement does not make use of the term “Manager”

The Complainant seeks to justify the use of the phrase “manager” in her submissions by virtue of the fact that previously there had been a management agreement between the parties. With respect, this submission does not stand up to scrutiny. As far as the Complainant was concerned the Hotel was being sold. Therefore, there would be no need for any management agreement with any third party.   Her solicitor specifically asked who would be managing the Hotel. If what the Complainant is saying was correct she would have simply stayed on as manager of the Hotel and there would be no need for the question at all. However, it is clear from this email that this was not envisaged by the parties.

Furthermore, contrary to the Complainant’s submission the Complainant did not manage the Hotel between 8th January 2016 and 13th January 2016. The Complainant was not actually present at the Hotel for much of this week.

The final relevant document is an attachment to a letter from the Complainant’s solicitor dated 21st December 2015. In that letter the Complainant’s solicitor sent the Respondent’s solicitor a list of DCM’s employees, the purpose of this list was to set out the names of the employees who were to transfer when the Hotel was being sold. It is common case that the Complainant was not on this list. The Complainant’s solicitor has sought to explain this on the basis of inadvertence.   However, in circumstances where very acrimonious High Court proceedings had been recently compromised between some of the parties and terms of Settlement had been made a rule of Court, it is simply inconceivable that the Complainant’s solicitor would leave out the very party who had been giving him instructions, who had sworn all of the affidavits and given evidence on behalf of DCM from the list if that person ought in fact to have been included. As far as the Respondents are concerned the reality was that it had been agreed between the parties that the Complainant was not transferring. Rather, the Complainant was going to go and focus on her new business, the operation of (TLRL). When the omission of the Complainant from this list is coupled with the email enquiring as to who the new manager would be, it is clear that both parties envisaged that the Complainant was not going to transfer.

When this matter was last before the WRC the various transfers which occurred were explained.   It is clear from this that (BIL) did not enter into the equation until early April 2016. In effect, (BIL) bought the Hotel from the Frist and Second Named Respondents’ former bankers. The price agreed by (BIL) was based on an assessment of the value of the Hotel to include its assets and liabilities.   One of the liabilities that (BIL) would have factored in was its obligations to employees. On that basis, (BIL) was provided with the list of employees which had been provided to the first and second Named Respondents by the Complainant’s solicitors. It is common case that the Complainant was not on the list. That list was one of the factors (BIL) had regard to in determining the price it paid for the property and the related assets.

Furthermore, by the time (BIL)purchased the Hotel the management function had been outsourced to a third party, AS, Mr. AS was managing the Hotel and being paid for this role. Although he continued to manage the Hotel for a short period of time after the sale of (BIL), this management function did not actually transfer to (BIL).   Therefore, it is impossible to see how (BIL) could have any liability to the Applicant.

Ancillary Matters

In her submission the Complainant tries to suggest that the issues surrounding the deposits and vouchers are irrelevant to the issue that has to be determined by the WRC.   The Respondents do not accept this.   Firstly, it is important to point out what the issue is. In the Court Order DCM agreed not to take any further bookings for the Hotel. In breach of this Court Order DCM continued to accept bookings for weddings which were to take place after DCM had ceased to operate the Hotel. In total, DCM accepted deposits of €21,576 after 31 October 2015 for weddings which were to take place after it was going to have vacated the Hotel. In addition, it sold vouchers to the value of €38,146 which once again, were not honoured before it vacated the Hotel.   That money was not handed over to any of the Respondents. In other words, the Respondents and in particular (BIL)is required to honour the various wedding bookings without the benefit of these deposits and to honour numerous vouchers without the benefit of the money received from the sales of these vouchers.

The Complainant seeks to argue that it is not a relevant matter for the WRC, however it would appear that the Complainant has misunderstood the reason why the Respondents are raising the issue. It is clear that the only person that could have authorised DCM to return this money was the Complainant. For her own personal reasons, the Complainant has chosen not to arrange for the return of this money. All that this refusal has done is increase the profits of DCM and as is set out above the Complainant is the only one entitled to the profits of DCM.

If the Complainant was a true employee there would be no reason why she would not have arranged for these deposits to have transferred. If she was a true employee she would have wanted to ensure that her "new employers” had the best possible opportunity of success at running the Hotel. The return of this money would have helped her “new employers”. However, the reality is that the Complainant was in business for herself. This money was in a bank account which she had control over and this money contributed to the profitability of her business. Therefore, she decided to effectively keep it for herself, because she was in business for herself.

From on or before April 2010, (BHH) was managed by (BHos) Limited. On 1st June 2010 the Complainant was engaged as General Manager of (BHH), as an employee of (BHos) Limited.

(BHos) Limited fell into rent arrears and by 6th August 2013, these had accrued to the sum of €275,500.

DCM Hotels Limited was registered as a company on 24th October 2013. The Complainant was a Director of that company from 25th October 2013. DCM Hotels Limited transferred the undertaking of the management of (BHH) from (BHos) Limited on or about the 29th of October 2013.

The Complainant remained employed as General Manager of the (BHH).

A dispute arose as to the terms upon which DCM Hotels Limited occupied the (BHH) – under a Management Agreement or under a lease. The matter was litigated before the High Court between DCM Hotels Limited as Plaintiff and “(JB) and (JR) trading as the Bourke-Reynolds Partnership” as Defendants, under the record number 2015/4671P.   This resulted in at settlement agreement which was ruled as an Order of Mr. Justice Gilligan of 13th October 2015.

That agreement included, inter alia:

(a)    On the 8th of January 2016 the Plaintiff will deliver up vacant possession of the (BHH) to the new owner who will assume full responsibility for:

                                 i.            All bookings made by the Plaintiff and

                               ii.            The employment of all staff in accordance with the obligations imposed by the TUPE Regulations.

(b)    In the event that no purchaser has agreed to purchase the (BHH) the Defendants or its nominee will assume such responsibilities as provided in (a) above.

Pursuant that the Order, on the 8th January 2016, DCM Hotels Limited transferred the undertaking to (JB)and (JR), because no purchaser had been agreed by that date.

By letter of 13th January 2016, from the Respondents’ solicitor. it was claimed that CD was “not an employee” pursuant to section 16 of the Social Welfare and Pension (Miscellaneous Provisions) Act 2013 Section 16 of the Social Welfare and Pensions (Miscellaneous Provisions) Act 2013 amends Part 2 of Schedule 1 to the Principal Act (the Social Welfare Consolidation Act 2005) by adding an additional category of Excepted Employment.

Within the 2005 Act, the said schedule is referred to by section 12(1)(a), where it defines “Excepted Employment” with the phrase “not being an employment specified in Part 2 of that Schedule, shall be an employed contributor for the purposes of this Act”. Thus, the employment listed in Part 2 of Schedule 1 still constitute employment, but are deemed excepted from contributions.

The TUPE Regulations themselves define an employee as:

“employee means a person of any age, who has entered into or works under (or, where the employment has ceased, entered into or worked under) a contract of employment and references, in relation to an employer, to an employee shall be construed as references to an employee employed by that employer; and for the purposes of these Regulations, a person holding office under or in the service of the State (including a civil servant within the meaning of the Civil Service Regulation Act 1956 (No. 46 of 1956) shall be deemed to be an employee employed by the State or Government, as the case may be, and an officer or servant of a harbour authority, [the Health Service Executive] or [a member of staff of an education and training board] shall be deemed to be an employee employed by the authority, [Executive] or [board], as the case may be;

Contract of employment is defined as:

“contract of employment” means –

(a)    A contract of service or apprenticeship and

(b)    Any other contract whereby an individual agrees with another person, who is carrying on the business of an employment agency within the meaning of the Employment Agency Act 1971 (No. 27 of 1971), and is acting in the course of that business, to do or perform personally any work or service for a third person (whether or not the third person is a party to the contract),

Whether the contract is express or implied and, if express, whether it is oral or in writing;

Henry Denny & Sons (Ireland) Ltd, v. Minister for Social Welfare [1998] 1 I.R. 34 remains the leading case on determining whether work is carried out under a contract of services (employment) or a contract for services (not an employment). The Supreme Court held that the fundamental test to be applied was: -

“Is the person who has engaged himself to perform these services performing them as a person in business on his own account? If the answer to that question is “yes”, then the contract is a contract for services. If the answer is “no” then the contract is a contract of service”.

Keane J. also stated: -

“No exhaustive list has been complied and perhaps no exhaustive list can be complied of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task”.

The key concept of company law arising from Salomon v Salomon [1897] AC22 remains:

A Company and the person who formed it are two separate bodies.

(JB)admitted in his affidavit of 19th June 2015 that

·         The Complainant was employed by (BHos) Limited (at paragraphs 5 and 6 of the affidavit)

·         DCM Hotels Limited transferred those employees (at paragraphs 9 of the affidavit)

It is submitted that DCM Hotels Limited continued to employ the Complainant until the TUPE of 8th January 2016. It is further submitted that after her unfair dismissal and removal from the premises of 13th January 2016, the Claimant had no means of determining which legal entity was carrying on the undertaking.

(JB)and (JR) caused a company called The (BHHL) to be incorporated on the 29th January 2016. By letter to the employees still on site, dated 31th January 2016 it is claimed that there was a transfer of the undertaking on the 8th January 2016 from DCM Hotels Limited to The (BHHL) effective 8th January 2016, however it is submitted that

(a)    You cannot backdate a transfer

(b)    The (BHHL) was not in existence on 8th January 2016 and was only incorporated on 29th January 2016, so Mr. JB and Mr. JR were the first transferees, pursuant to the Court order

(c)     Any transfer to that entity occurred on that 31 January 2016.

By a further letter to the employees still on site of 12th April 2016 it was stated that (BIL)had purchases (BHH) from Mr. JB and Mr. JR.   In that letter it is claimed that a further transfer of undertaking took place on 14th March 2016 from The (BHHL) to (BIL), but by April 2016, The (BHHL) did not exist (its name had been changed to (WYLL) on 31st March 2016).

It is submitted that the initial transfer of undertaking on 8th January 2016, pursuant to the Order of the Court, was between DCM Hotels Limited and “JB and JR”. Shortly thereafter, they caused the company called The (BHHL) to be incorporated and a further transfer of undertakings took place. Thereafter, the (BHHL) changed its name to (WYLL) and a further transfer of undertakings took place from that entity to (BIL).

The Complainant worked up until the 13th January 2016, on which date she was dismissed without notice. The initial WRC complaint was submitted against her last known employers on 24th February 2016.

Regulation 4 of the TUPE Regulations states, inter alia:

Rights and obligations

(1)    The transferor’s right and obligations arising from a contract of employment existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee.

Regulation 4 includes:

Dismissals and termination of employment

(1)    The transfer of an undertaking, business or part of an undertaking or business shall not in itself constitute grounds for dismissal by the transferor or the transferee and such a dismissal, the grounds for which are such a transfer, by a transferor or a transferee is prohibited.

It is submitted that the obligations of the employer at the date of dismissal were transferred to each subsequent transferee.

Further, it is submitted that pursuant to Regulation 4, that initial complaint against Mr. JB and Mr. JR of 24th February 2016 also should have transferred to each successive transferee.

If there was no valid transfer of undertaking after 8th January 2016, then Mr. JB and Mr. JR remain liable for the dismissal of the Complainant.

It is further submitted that if Mr. JB and Mr. JR concealed further transfers or concealed the existence of an existing complaint from the subsequent transferees, then they should remain partially liable – in a similar way to the finding in the UD1419/2010 case, where the transferor was found to be liable for wrongful redundancy even though the rights of the employees transferred to a subsequent transferee.

Complainant’s Submission 2

The Complainant -V- (JR), (JB) and the (BHHL) (WYLL) and (BIL)

On the 31st January 2017, certain matters were raised on behalf of the Respondents in the joined cases above:

1.       Use of the term “Manager” in a letter from BP

2.       Work for (TLRL & Spa)

3.       Employment status of the Complainant

4.       Failure to list the Complainant among the employees

5.       Deposits and vouches

Use of the term “Manager” in a letter from Agent of the Complainant

As stated in the original submission in this matter, a High Court action was taken to resolve a dispute as to the terms upon which DCM Hotels Limited occupied the (BHH) – under a Management Agreement or under a lease. It was common case that the hotel had been managed by a Manager under a Management Agreement entered between JR and JB as owners of (BHH) and (BHos) Limited as Manager of that property. The Complainant was employed by (BHos) Limited. After two years she was made a Director of that company but she never held any shares in that company.

The undertaking was transferred from (BHos) Limited to DCM Hotels Limited on 29th October 2013. DCM Hotels Limited honoured all wedding and future bookings made and continued to honour all vouches that had been sold prior to the transfer of undertaking.

The dispute before the High Court centred upon whether DCM Hotels Limited held occupancy of the hotel under a lease with obligations to renew the liquor licence, or under the Management Agreement, where the landlord would be required to deal with liquor licences. After a prolonged hearing, this matter was resolved, with the central issue now moot, as there were terms of the Complainant, DCM Hotels Limited to vacate possession of the property.

The correspondence from the DP’s Solicitors made use of the term “Manager” as it was a term of the ruled settlement agreement that the Complainant in the High Court proceedings (DCM Hotels Limited) was to vacate the premises. The legal interest in the property held by DCM Hotels Limited, who occupied the premises as a Manager (under the lease or Management Agreement) was terminated on 8th January 2016 by Order of the High Court. As the employees of that company were to be transferred, pursuant to the Transfer of Undertakings Regulations, the actual employees were to remain in situ, including the Complainant. The Complainant continued in her role as General Manager of the Hotel until she was ejected by security staff on Wednesday 13th January 2016.   Between 8th January 2016 and 13th January 2016, the Complainant continued to be an employee of the Respondents [of the High Court case (JB and JR], pursuant to clause 3(a)(ii) and 3(b) of the Order of the Court. During that time, she fulfilled her role as an employee but was not a Director of the company purported to be the Transferee ((BHHL)).

Work for (TLRL & Spa)

(TLRL & Spa) was set up as a sister business to complement the business at (BHH). Contrary to what was submitted by counsel for the respondents, that business was not a rival or competitor. TLRL and Spa does not cater for weddings. TLRL a& Spa offered an adult-only retreat, while (BHH) provided full hotel facilities to inter alia, family groups. The TLRL & Spa was established in April 2015 and opened to the public in September 2015. From launch, until after the Complainant ceased providing consultancy services there, (TLRL & Spa) was only open to the public from Thursday to Sunday each week.

(TLRL) was set up to run that business and registered as a company on 22nd July 2015.   The Complainant was hired as a consultant for a year with the aim of establishing the business, with the primary aim of hiring staff and preparing for the launch. She worked towards the launch of that business during her leave days from her employment in DCM Hotels Limited and she put in some extra hours before and after her work in (BHH). At no times was she working in competition to (BHH). The web page of (TLRL & Spa) referred to (BHH) as a sister hotel, and vice versa.

The Complainant worked on a consultancy basis for (TLRL & Spa), rather than as an employee. She did not receive medical insurance, pension contributions or telephone expenses from that consultancy.

Her one-year engagement with that business ended on 22nd July 2016.

Employment Status

Counsel for the Respondents submitted that the Revenue determination of the PRSI status indicated that the Complainant was self-employed and that pursuant to section 16 of the Social Welfare and Pensions (Miscellaneous Provisions) Act 2013, the Complainant could not be an employee of DCM Hotels Limited, because she is a proprietary director, holding more than 50% of the shares.

By letter dated 13th January 2016, from JOC & Co., it was claimed that the Complainant was “not an employee” pursuant to section 16 of the Social Welfare and Pensions (Miscellaneous Provisions) Act 2013. By reply from the Complainant’s Solicitors, this assertion was rejected, and it was highlighted that the provision impacted upon Revenue classification of PRSI exemptions, not on the employer-employee relationship for employment rights of the Complainant.

It has already been submitted that the Supreme Court case of Henry Denny & Sons (Ireland) Ltd. V. Minister of Social Welfare [1998] 1 I.R. 34 remains the leading case on determining whether work is carried out under a contract for service (employment) or a contract for services (not an employment). The Supreme Court held that the fundamental test to be applied was: -

“Is the person who has engaged himself to perform these services performing them as a person in business on his own account? If the answer to that question is “yes” then the contract is a contract for services.   If the answer is “no”, then the contract is a contract of service”.

Keane J. also stated:

“No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarding as the sold determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.

It has already been submitted that:

JB admitted in his affidavit of 19th June 2015 that:

·         The Complainant was employed by (BHos) Limited (at paragraphs 5 and 6 of the affidavit);

·         DCM Hotels Limited transferred those employees (at paragraph 9 of the affidavit)

The High Court has considered the impact of the Social Welfare status in determining the employer-employee relationship and has held that the determination of employment status by the Revenue Commissioners is not definitive as to the employment status for the purposes of employment statues.

In National Museum of Ireland v. Minister for Social Protection and Lorna Varnes [2016] IEHC 135, Ms. Deirdre Murphy J held:

The Organisation of Working Time Act 1997, the Protection of Employees (Fixed term Work) Act 2003 and the Social Welfare Consolidation Act have all provided for different statutory mechanisms to resolve what are in essence, different issues arising from an employer-employee relationship. Each of those Acts provides for an ultimate appeal to the High Court on a point of law. None of the Acts provides that the decision of one decision making body is binding on the other. The legislature in its wisdom has seen fit to set up different statutory schemes to deal with different employment issues. Undoubtedly it would be far more efficient to have one body charged with the resolution of all issues relating to employment status. This however is a matter for the legislature and not the courts and as matters stand, employees enjoy rights to seek redress simultaneously from the Rights Commissioner and the Department of Social Welfare depending on the nature of their complaint.

Similarly, in the Employment Appeals Tribunal case of Reddy & Reddy v. Hyper Trust Limited (EAT Determination of 23 January 2017) UD796/2015, MN388/2015 the Tribunal noted that there is no single determinative factor as to whether a person is an employee and that all relevant facts must be considered. In that case, the Tribunal was satisfied that the PRSI for the Claimants was paid under class S1 (self-employed) since 2008, but went on to consider a range of other factors to determine whether the claimants were employees, pursuant to the Unfair Dismissals Acts, 1977 – 2007 and the Minimum Notice and Terms of Employment Acts, 1973 – 2005.

It is submitted that in the case, the Tribunal considered a range of factors before coming to a reasoned decision on whether the Claimants were to be deemed employees on the facts of the case. Had the PRSI status been definitive, then there would have been no necessity to consider any other factor.

On 1 June 2010, the Complainant was engaged as General Manager of (BHH), as an employee of (BHos) Limited. She was not a proprietary director of that company as she held no share in it.

On transfer of the undertaking to DCM Hotels Limited on or about the 29th October 2013, the Complainant was one of the employees transferred to the new Manager of the hotel. The Complainant retained the same terms and conditions of employment and remained on the same holiday entitlements, remuneration, pension contributions and medial cover.

The Complainant received medical insurance contributions of €1,100 per annum, pension contributions of €4,800 per annum and telephone expenses of €1,100 as part of her ongoing remuneration package. She remained as an employee in the role of General Manager until she was removed by agents for JB and JR on 13th January 2016.

The Complainant did not live on the hotel property. She was on a fixed wage which did not fluctuate by virtue of her level of performance – any additional profit of her employer was not a direct benefit to her.   Similarly, the business ventures of DCM Hotels Limited did not place the Complainant at risk of legal liability or financial loss and any profits made were subject to the corporate tax regime. The Complainant did not act as guarantor for any business loans or overdrafts.

The Respondents claim that the Complainant did not remain active in her role of General Manger after the 8th January 2016. This is denied.

Please see the payroll reports made 6th January 2016 and 19th January 2016 in relation to the status at 5th January 2016 and 11th January 2016 in which the Complainant is listed as an employee.

Please see the series of three text messages between AS (acting as agent for JB and JR) and the Complainant, attached at Schedule F, which show that she remained in place as General Manager of the hotel after 8th January 2016. The third text show that on Monday 11th January at 14: 46, Mr. AS left the Complainant in charge of arranging repairs to a faulty boiler. It is submitted that this is not a task that would have been given to an ex-employee.   It is further submitted that this confirms that the Complainant remained in operational control of the hotel and that her presence on the hotel premises was not simply “in order of discuss further various logistical issues relating to the handover of the hotel”, as claimed in the Preliminary Defence submitted by (BIL) under cover of a letter of 7th October 2016.

The P60 from DCM Hotels Limited for 2015 (submitted in evidence by RG (BL) shows that the Complainant was on the payroll with Works no. 345.

By Order of the High Court, on 8th January 2016 JB and JR became liable for the staff of DCM Hotels Limited pursuant to the Transfer of Undertakings Regulations.   It is submitted that he settlement agreement which was ruled as an Order of the Court had no terms stating that the Complainant would be dismissed from her employment as part of the transfer.

The Complainant remained working as an employee until she was removed by security staff on 13th January 2016.

It is submitted that the Complainant acted as an employee at all times from her first engagement in 2010 and fulfilled her role as an employee until 13th January 2016, when she was dismissed by reason of the Transfer of Undertaking, in breach of the Regulations.

Failure to Include the Complainant in the list of employees sent to JOC & Company

It has been submitted by the Respondents that the Complainant was not included in the list of employees sent under cover of a letter dated 21 December 2015 to JOC & Company.

It is submitted that the Complainant’s name was omitted from this list by inadvertence.

Mr. JB and Mr. JR dealt with DCM Hotels Limited form the date of its incorporation in October 2013 to the date of transfer in January 2016. Prior to that, as landlords of the hotel, they dealt with the Complainant as General Manager of the hotel since 2010, when she was employed by (BHos) Limited.

There has been correspondence in relation to the employment status of the Complainant since the transfer, which includes the letter from (FHM) dated 17th October 2016, in which it is stated, inter alia, that:

The hotel continued to be managed on a day to day basis by the management team that transferred by TUPE to (BHHL).

It must be noted that this letter referred to the “the two TUPE letters issued on the 31st January 2016 and 12th April 2016….” In previous submissions, it has been submitted that the letter dated 31st January 2016 attempted to inform the employees of an alleged transfer which had already occurred on 8th January 2016. Accordingly, it is submitted that the reference to “the management team” in the (FHM) letter refer to those managers in place on 8th January 2016, including the General Manger of the hotel, the Complainant.

Deposits and Vouchers

The Respondents have raised claims in relation to allegations about deposits taken and vouchers issued by DCM Hotels Limited in the period between the Court Order in October 2015 and their possession of the hotel in January 2016. It is submitted that:

(a)    Such allegations are unfounded – the terms of settlement between DCM Hotels Limited and JB and JR have already been submitted and do not include any reference to deposits or vouchers;

(b)    Such allegations relate to issues which one or more of the Respondent’s may have with DCM Hotels Limited, not with the Complainant, an employee of that limited company;

(c)     Such allegations are an attempted to cloud the issues that are properly before the WRC – that an employee of DCM Hotels Limited was dismissed on 13th January 2016 as a result of a Transfer of Undertakings from that company to JB and JR on 8th January 2016.

Mr. JB and Mr. JR put (FHM) in place and purported to describe the transfer of 8th January 2016 as a transfer from DCM Hotels Limited to (BHHL), a company which was only incorporated on 29th January 2016. They then caused (BHHL) to undergo a name change to (WYLL) before a further transfer of undertakings in April 2016 to (BIL) Investments Limited.   It is submitted that the original complaint arising from the dismissal on 13th January 2016 carries through the chain of transfers as an obligation pursuant to section 4 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003.

Rights and obligations

(1)    The transferor’s rights and obligations arising from a contract of employment existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee.

Such that (BIL)are liable for that dismissal.

Based on both written and oral evidence presented at the hearings I find as follows:

(DCM) entered into a lease with (JB) and (JR) on the 25th October 2013.

The Complainant owns all of the shares in (DCM).   All of the employees in (DCM) had to report to the Complainant. In contrast, she had to answer to no one (apart from herself). The Complainant took a financial risk with this business and made an investment in it. It is clear from the evidence presented at the hearings that the Complainant was engaged on a Contract for Service when (DCM) entered into a lease with (JB) and (JR) on the 25th October 2013. She did not operate as an employee with (DCM) and therefore had no entitlements to transfer to (BIL).

Complaint 1 (reference number: CA-00006789-001)

Section 8 of the Unfair Dismissals Acts, 1977 – 2015 requires that I make a recommendation in relation to the unfair dismissal claim consisting of a grant of redress in accordance with the provisions of the 1977 Act.

Based on the evidence presented at the hearings, I find that the Complainant operated on a Contract for Service with (DCM) when she entered into a lease with (JB) and (JR) on the 25th October 2013. Therefore, I recommend that this complaint is not well-founded and therefore fails.

Complaint 2 (reference number: CA-00006789-002)

Section 11 of the Minimum Notice & Terms of Employment Act, 1973 requires that I make a decision consisting of a grant of redress in accordance with the provisions of the 1973 Act.

Based on the evidence presented at the hearings, I find that the Complainant operated on a Contract for Service with (DCM) when she entered into a lease with (JB) and (JR) on the 25th October 2013. Therefore, I find that this complaint is not well-founded and therefore fails.

Complaint 3 (reference number: CA-00006789-003)

Section 6 of the Payment of Wages Act, 1991 requires that I make a decision consisting of a grant of redress in relation to the provisions of the 1991 Act.

Based on the evidence presented at the hearings, I find that the Complainant operated on a Contract for Service with (DCM) when she entered into a lease with (JB) and (JR) on the 25th October 2013. Therefore, I find that this complaint is not well-founded and therefore fails

Complaint 4 (reference number: CA-00006789-004)

Regulation 10 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003) requires that I make a decision consisting of a grant of redress in relation to the provisions of the 2013 regulations.

Based on the evidence presented at the hearings I find that the Complainant operated on a Contract for Service with (DCM) when she entered into a lease with (JB) and (JR) on the 25th October 2013. Therefore, I find that this complaint is not well-founded and therefore fails