Complainant

Respondent

Anonymised Parties

Inboard Transport co-ordinator

Food production and distribution company

Representatives

Sherwin O'Riordan Solicitors

IBEC

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-00014056-001

20/09/2017

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-00014056-003

20/09/2017

Preliminary matter.

The respondent sought an adjournment on the grounds that he had not received the details of the complaints -reference numbers CA-00014056-001 and CA 00014056-003, that had been scheduled for today’s hearing.

The detail outlined within the Complaint form outlined a separate complaint against the second named respondent and is referred to within the ‘Specific Complaint’ as claim numberCA-00014056-002.

It was decided to proceed with the hearing as no prejudice would be visited upon the respondent by so doing and the respondent could make a supplementary response on legal points within 2 weeks. IBEC represented both the respondent (the transferor) and the second respondent, the transferee. Representatives of both companies attended the hearing. One written submission was tendered on behalf of both respondents.

Background

The complainant was contracted from a recruitment agency to work as a customs’ clearance operator with the first respondent around the 21 September 2014. He was subsequently offered the position of Inbound Logistics Coordinator in the customs’ clearance unit in the transport department and signed a contract of employment with the first named respondent on 16/11/15. His salary is €3500 per month. He works a 39-hour week.

He was called to a meeting with the HR department on 8/3/17 and was notified of his intended redundancy, effected on 31 March.

In early 2017, the first named respondent outsourced the custom clearance section of its business to the second named- respondent, a reefer logistics and shipping company.

The complainant submitted his complaints to the WRC on 20/9/17.

CA-00014056-001

The complainant worked as a customs clearance operator from the 21 September 2014 with the first named respondent’s company, the transferor. He accepted a permanent contract with the first named respondent on 16 November 2015 working as an Inbound Logistics Coordinator in the customs clearance unit of the transport department.

He had his annual performance appraisal on 7 February with the Inbound Logistics Manager and the Assistant Transport Manager. His overall performance was recorded as being good. His mentoring and coaching skills were praised as were the benefits flowing to the company due to his contacts within the industry. In this appraisal report, submitted to the hearing, the complainant indicated that staff losses reduced the workforce by 2 in the customs clearance department during the period December 2016 – mid- January 2017.

On 7 March his colleague, Mr. V, an agency worker engaged on the same customs clearance function as the complainant since December 2016, informed the complainant that he met the transport manager who informed him that his contract had expired and that this was his last day with the respondent.

The complainant gave evidence of a meeting on 8/3/17. In advance he was told it was a restructuring meeting. A HR executive and the Assistant Transport Manager informed him at this meeting that his position was being made redundant as management had decided to outsource the customs clearance function. There was no mention of alternative roles. The business was going well. He was asked if he wanted to go home and reflect on it. The complainant was to receive 3 months’ notice; he would work one month of this 3-month period up until the 8 April 2017 and receive payment in lieu for the other 2 months. A letter of 13 March from the Group HR Generalist records the fact that the customs clearance function is being outsourced. The Transport Manager said he wanted him to finish by 31 March.

Another colleague in the customs clearance unit, Ms. M, met the assistant transport manager and the HR executive on the 8 March. She told the complainant that she was offered the position of working with the second named respondent or she could leave if that was her preference. She chose to transfer to the second respondent for whom she still carries out the same role as that undertaken with the first respondent

Mr.V who left the first named respondent on the 8 March, commenced employment with the second named respondent within days of the 31 March. Mr V’s LinkedIn profile was submitted demonstrating that since March 2017 he has been and remains employed as Customs Manager and logistics Operative with the second respondent and exercises the same role and responsibilities as formerly undertaken by the complainant with the first respondent.

The complainant’s solicitor submits that Mr. V and Ms. S continue to carry out the same customs clearance functions with the second respondent, on the first respondent’s premises as those undertaken by them and the complainant with the first respondent. Ms. S and Mr V continue to use the first respondent’s software system (Thyme It), to assist in their daily duties and they use the first respondent’s office furniture and IT equipment. The complainant stated that the named suppliers remained the same.

The complainant’s representative points to the protections available to the complainant in Regulations 10 of the EC (Protection of Employees on Transfer of Undertakings) Regulations 2003. and to Regulation 3 which states

“(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

 3((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.

 (3)      These Regulations shall apply to public and private undertakings engaged in economic activities whether or not they are operating for gain.

The complainant’s representative relies on the case of Abler v Sodexo MM Catering GmbH AND Sanrest (Case 340/01) (2004). This case entailed the outsourcing of a catering function from within the hospital to the first named respondent after having terminated their contract with the second named respondent company. The first respondent refused to take on the stock and employees of the second respondent and disputed that a transfer had occurred. Sanrest dismissed the employees who took an action against the transferee. The Austrian court referred the applicability of the Directive in these circumstances to the ECJ. The ECJ  found that Article 1 of Directive77/187 the Directive did apply for the following reasons:

The first respondent took over the tangible assets of the hospital’s kitchen which contributed significantly to the performance of this activity. There was a takeover of customers. There is a closed group of customers- the hospital staff and patients – who remained the same pre- and post the transfer. The court found that a transfer had occurred.

The complainant’s solicitor likened the facts of the instant case to those found in Abler. The second respondent took over named customers of the first respondent to continue the customs clearance functions which are ancillary to the first respondent’s activities in general (following on Schmidt v Spar; Case C -392 (1994)). The second respondent took over the assets of the first respondent.

 Regulation 5 (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.

The complainant’s solicitor contends that the redundancy is a sham. He states that the transfer took place within days of the 31 March, the date on which the complainant left the employment of the respondent and argues that it was the transfer which resulted in the complainant’s dismissal.

In response to the respondent’s supplementary submission of the 23 January, the complainant’s solicitor points out that no documentary evidence of the date of the transfer was submitted.

CA-00014056-003

 Regulation 8 states

 (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.

 (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 complainant’s solicitor advises that the respondents failed to comply with the obligations to consult as set out in Regulation 8 (6), (7).

CA-00014056-001

The respondent group comprises a number of separate business units in growing, purchasing, sales and distribution of fresh food and flowers in Ireland and Europe.

The complainant commenced employment with the respondent in November 2015 as an Inbound Transport Co-ordinator, a position he held until he was made redundant. It is the respondent’s position that this redundancy arose out of the restructuring designed to better streamline the business.

In November 2016, a business review persuaded the respondent to align with a strategic partner, the second named respondent. This combination provided a global reach with a presence in Chile and Brazil. Part of this review included a plan to streamline processes in the customs clearance/transport inbound department. The decision to transfer the function arose out of the same streamlining process but the redundancy decision was not directly linked to the transfer of the function. The respondent rejects the claim that there was a transfer of Undertakings at that time.

The respondent relies on Section 5(2) of the Regulations which state that

“Nothing in this regulation shall be construed as prohibiting dismissals for economic, technical or organisational reasons which entail changes in the workforce”.

It is the respondent’s position that this redundancy falls within this category.

The complainant worked in that department alongside an Import Executive. It was decided to make one of these roles redundant. The selection for redundancy was carried out on a length of service basis as per company policy which is last in first out. As the individual who occupied the Import Executive position had a greater length of service than that of the complainant, the complainant was selected. The complainant was informed on 08.03.17 that his employment was being terminated by way of redundancy. At no stage from that point up until he exited the business on the 31.03.17 did he raise an internal grievance with how the process was being handled. The claimant’s employment was terminated on 31st March 2017. The first respondent’s general manager in evidence advised that it was not a summary dismissal. The complainant was afforded an opportunity to get an alternative job. The transfer of his function to the second respondent took place on the 26/6/17.

The complainant was given an option to work one month of his 3-month notice period or be paid in lieu of his entire notice period. He confirmed that he wished to work the month up to 08.04.17. However, he exited the business on the 31.03.17 and was paid in lieu of his notice period up to 08.06. 2017.The remaining executive role was transferred to the second respondent on 26th June 2017 in line with the Transfer of Undertakings Regulations.

Once the redundancy consultation process got under way, the former agency worker, Mr. V, was no longer engaged with the first respondent but was subsequently engaged by the transferee to analyse the elements of Ocean and Air business. He was doing different work to that previously done by the complainant.

The respondent submitted a job description for the new role being performed by Mr. V with the second respondent. There was no documented detailed job description for the complainant’s role with the first respondent. The respondent submitted details of what that role involved and stated that a comparison of the two roles supports their view that they are significantly different roles. The respondent disputes the complainant’s contention that the former agency worker now has the same role and responsibilities with the second respondent. While there was an overlap between the roles they were not identical. The volume of items to be cleared and dispatched is significantly higher with the second respondent.

The second respondent’s general manager gave evidence and advised that theirs’s was a global business and that they needed someone to manage the Ocean business. He advised as an example that they might need a person to manage the shipping of meat to Hong Kong. They would arrange a truck to go to, say, Waterford, load the meat and ship it from Dublin to Hong Kong. They interviewed Mr V. He met the shareholders. The second respondent, the transferee, employed him in mid- March.

Respondent said sometimes suppliers change.

In conclusion, the Company asks that the adjudicator to find in favour of the Company and dismiss the complaint.

CA-00014056-003.

The respondents reject the claim that they were bound by TUPE. The complainant was made redundant in accordance with Regulation 5 (2) and they were therefore not obliged to consult him in accordance with Regulation 8.

CA-00014056-001

The complainant submitted 2 complaints, CA-00014056-001, and CA 00014056-003 against this respondent to the WRC on 20/9/17.

CA-00014056-001.  

The essential question for determination is whether the Claimant was entitled to the protections contained in the Regulations and had the right to transfer. The protection sought by the complainant is that found in Regulation 5. (1)- European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003. It states, “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.”

Regulation 3. (1) applies to “any transfer of an undertaking, business or part of a business from one employer to another as a result of a legal transfer or merger” Regulation 3(2) defines a “Transfer” as the “transfer of an economic entity which retains its identity”. A transfer of undertakings occurs when a business, or part of a business, is taken over by another employer as a result of a merger or transfer. The previous economic activity of the undertaking/business must be carried on by the new employer. It must be transferred as a “going concern”. The persons to be transferred are those employees who are wholly or mainly engaged in the business or function which is transferring.   In the instant case, the first respondent, the transferor, contracted out the customs clearance service/transport inbound section of their business to the second respondent, the transferee to provide a similar service where the transferee uses the furniture, IT equipment, software, contacts, two of the 3 staff members of the transferred department and the know- how of the staff of the first respondent. With one or two exceptions, it was not disputed that the transferee trades with the same set of named customers. In applying Regulation 3(1) to the facts at play in this complaint, the outsourcing of the customs clearance/ transport inbound department to the second respondent constitutes a transfer; it is part of a business, is a going concern and it retains its identity. Once transferred it would not be a direct replica but would be analogous to its former function performing similar activities. The respondent accepts that a transfer occurred. They maintain that it occurred on 26/6/17. The complainant maintains that it occurred within a few days of 31/3/17, the date on which he left the company.

The Court of Justice of the European Union in Case C-340/01 Carlito Abler and Others v Sodexho held as follows:“ it is clear from the wording of Article 1 of Directive 77/187 that it is applicable whenever, in the context of contractual relations, there is a change in the legal or natural person who is responsible for carrying on the business and who by virtue of that fact incurs the obligations of an employer vis-à-vis the employees of the undertaking, regardless of whether or not ownership of the tangible assets is transferred “

Applicability of Regulation 5(2) to decision to make the complainant redundant

But while the respondent accepts that a transfer occurred, they state that Regulation 5(1) does not apply because the redundancy is protected by clause 5(2) of the Regulations and that this, thus, disentitles the complainant to the protection of Regulation 5(1). Clause 5(2) which provides that “Nothing in this Regulation shall be construed as prohibiting dismissals for economic, technical or organisational reasons which entail changes in workforce”

is advanced as the reason to exclude the benefits inherent Regulation 5(1).

The first respondent contends that the transfer is neither wholly or mainly the basis for their decision to make the complainant redundant. It is submitted that it is separate in time and from the transfer, and connected instead to the decision to streamline the customs clearance/transport inbound function and to absorb it into a more strategic role. Yet the respondent’s letter of 13 March puts no such daylight between the outsourcing of the function in which the complainant was engaged and his redundancy, stating “…. I am writing to confirm that we are terminating your employment with…, due to a restructuring that has arisen, by way (of) redundancy owing to the function that you currently undertake being outsourced”.   In addition, discussions had been underway since November 2016 on an alignment between the first and second respondent.

In order to consider the merits of the proposition that it was streamlining which drove the complainant’s redundancy and not the transfer, it is necessary to consider the alternative reason advanced for the redundancy.

The defence of Economic, Technical and Organisational grounds.

It was accepted that the company was doing well. It was a going concern. No evidence of economic goals being endangered by the complainant’s continued employment with the transferor or with the transferee post -transfer were provided to the adjudicator.

The technical reasons alluded to but not developed were the skills required to manage the similar but slightly expanded function with the transferee post- transfer.

The organisational reasons advanced referred to streamlining and the soon- to- be transferred service having to have a more extensive geographical reach and a higher volume of items to be cleared but little detail was supplied as to why the complainant’s redundancy was a vital prerequisite for achieving this goal. The respondent accepted that there was an overlap between the activities pre- and post-transfer. The evidence submitted does not contend that the transferred function developed into something unrelated and different. A more strategic role, perhaps, but the respondent gave no reasons as to why the complainant could not have bridged whatever gap emerged between the function which he exercised with the first respondent and the function to be performed with the second respondent. An examination of the two job descriptions which the respondent submitted did reveal that an export function and an enhanced managerial role attached to the transferred position to which Mr V was appointed and to which the complainant was not. The complainant’s job description demonstrated that he had exercised managerial and leadership functions in his role with the transferor. The complainant was not evaluated in terms of how he might bridge whatever gaps existed between the pre- transfer and post- transfer function. The second respondent, the transferee, referred to the former agency worker, Mr. V, being interviewed in March 2017 and demonstrating the ability to meet what was advanced as a more extensive set of obligations. There was no interview offered to the complainant nor any other alternative position offered. Their evidence was that discussions on a streamlining of the business had been ongoing since November 2016. The former agency worker who was engaged by the second respondent to carry on the service previously done by the first respondent describes himself as Customs Manager and Logistics Operations on LinkedIn since March 2017 indicating that he is fulfilling the same or similar role, previously occupied by the complainant with the transferor and undercutting the respondent ‘s argument that the position was redundant. The General manager was anxious for the complainant to leave by the end of March. Mr V. was engaged by the respondent in mid- March. No documentary evidence was supplied by the respondent attesting to the exact date of the transfer.

   It is accepted that each case is decided on its own facts. Based on the evidence, I do not find that the function or service pre- and post-transfer was so different nor requiring a skillset beyond the reach of the complainant as to meet the criteria for a successful ETO defence. Neither were the grounds advanced of sufficient weight to exclude the complainant from consideration nor warrant the complainant’s dismissal. The example given by the respondent in explaining the movement of goods from say, Waterford to South America, or the increase in the volume of goods to be moved in and out of the respondent’s business does not persuade me of an unbridgeable gap between the pre- and post-transfer functions. The differences did not make the post – transfer entity into a different operation.

The issue of redundancy based on economic, technical and organisational reasons prior to transfer was considered by the EAT in the case of Kevin Carroll v SR Technics Ireland Ltd., UD 1419/2010. This involved the outsourcing of the maintenance department to the transferee. Some employees were transferred, the complainant was not. The respondent argued that the Regulations allowed them to reduce their workforce prior to the transfer as they were overstaffed and that Regulations 5(2) protected their decision. They specified the particular qualifications and competencies which they required for the transferred maintenance department. The tribunal decided that the respondent was entitled to reduce the workforce should organizational, technical or economic reasons dictate that this should be so but post -transfer. In that case the claimant was made redundant on the same day that the other employees transferred. The EAT upheld his complaint and he was reinstated. In the instant case, the other import executive was advised that she could transfer on the same date that the complainant was notified of his impending redundancy.

The evidence presented does not demonstrate that the redundancy was due to an ETO. There was a scarcity of the detail necessary to uphold a defence based on Regulation 5(2).

Kimber and O ’Doherty in an article entitled “Transfer of Undertakings – Perspectives from Litigation”, IELJ 2008, cite the EAT case of Ryan v Slattery, RP327/2006 in support of the argument that a transfer of undertakings “is not a redundancy situation in and of itself.” In that case the complainant sought redundancy from the transferor- a publican with whom she was employed and who was selling his business. He advised that that was a matter for the transferee. The EAT did not find that the actions of the transferor in selling his business and even where the complainant claimed that she was not offered a job by the transferee was grounds to warrant a redundancy. While the facts of this case differ- the complainant in that case was advancing the transfer as the basis for her entitlement to redundancy and the complainant in the instant case was impugning the transfer as the reason to legitimise the redundancy, the essential point that a transfer of itself cannot legitimise a redundancy was accepted.

On the basis of the evidence I accept that the transfer was the operative reason for the redundancy It would seem illogical to allow that same impugned redundancy to deny the complainant the protection of Regulation 5(1). I do not find that the second respondent, the transferee, can rely on Regulation 5(2) as a defence to a breach of Regulation 5(1). I find that the complainant was deprived of the protection of Regulation 5(1)

Where does responsibility lie when a breach of the regulations occurs?

Irish case law.

In Gray v ISPCA, David Prendiville and Dublin Corporation, UD 5509/84 the questions of who is responsible for not applying/ effecting the transfer was addressed. The tribunal was satisfied that a transfer occurred between the ISPCA and Mr Prenderville when the ISPCA, the incumbent provider of the dog warden service for Dublin Corporation, failed to retain the contract in a tender process, and it passed to Mr Prenderville who required the employees to apply for a position in the service. They declined. Mr Prenderville employed 3 new dog wardens. The EAT determined that under the Unfair Dismissals Act 1977-93 and the European Communities (Safeguarding of Employees’ Rights on Transfer of Undertakings) Regulations 1980, the complainants had been unfairly dismissed by Mr. Prendiville the transferee. The remedy of reinstatement was awarded.

In Morris v Smart Brothers Ltd, UD68/1993, the transferor dismissed some of the employees in the transferring business by way of redundancy. It was determined that there was no liability on the part of the transferor.

The transferee takes over the contracts of employment of all employees in that part of the business that is to be transferred, who are employed immediately before the transfer takes place or who would have been employed had they not been unfairly dismissed by reason of the transfer. Kimber and O ’Doherty in an article entitled “Transfer of Undertakings – Perspectives from Litigation”, IELJ 2008, 5(2), 56-62 state “It is important to remember that by virtue of art.3(1) of Directive 2001/23/EC, as of the date of transfer, the transferor's rights and obligations are automatically transferred by operation of law to the transferee. Thus, post-transfer, the employee must seek their remedy against the transferee and the transferor escapes liability. The Directive itself permits Member States to make transferor and transferee jointly and severally liable. Irish implementing regulations, however, have not done this.”

I find on the basis of the evidence and the law that the complainant was dismissed because of the impending transfer and on the balance of probabilities would have been maintained in the employment were it not for the outsourcing of the function in which he was engaged. I find that liability rests with the transferee and not the transferor.

I do not uphold the complaint against this respondent.

CA-00014056-003.

The question of upon whom responsibility should rest in the case of an alleged breach of Regulation 8 is dealt with in the Labour Court determination- J Donoghue Beverages Ltd. V Elizabeth Collins, TUD183/2018 which concerned the failure to consult the complainant. The court stated that “Regulation 8 implies a term into the Complainant’s contract of employment that entitles her to a period of information and consultation through her chosen/elected representatives prior to the occurrence of a transfer within the meaning of the Regulations; Regulation 4(1) provides that any remedy for the failure of her employer as transferor to fulfil its obligations under Regulation 8 can only be sought as against the Transferee.”

On the basis of the evidence, I find that the respondents did not consult the complainant as required by Regulation 8 in relation to the transfer. For the reasons cited above, I do not uphold the complaint against this respondent. Liability rests with the second respondent, the transferee.

CA-00014056-001.

CA-00014056-001. As per Sec 10(5) (a) of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003) I do not uphold the complaint against this respondent.

CA-00014056-003. As per Sec 10(5) (a) of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003, I do not uphold this complaint against this respondent.

TUPE; Redundancy prior to transfer; Dismissal for ETO reasons TUPE; Wiith whom does liability for breaches lie.