Complainant

Respondent

Anonymised Parties

A Diver

A Maratime Services Company

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00017407-001

13/02/2018

The Complainant commenced employment in August 2011, as a diver. The entity the Complainant joined at that time was acquired by the Respondent, a Maritime Service provider, in or about January 2013, under a Transfer of Undertaking.

The Complainant left the Respondent’s employment in May 2017 to take up a temporary Fixed Term Contract of Employment with the Client the Respondent was providing the diving services to. The Complainant resumed employment with the Respondent on 5 November 2017.

In or around the time of the Complainant’s return, the Respondent, for business reasons, decided he no longer wished to continue to service the diving contract he had with a Client. The Complainant and his two colleague divers agreed to take on the servicing of the contract and set up a limited company in order to do so.

In late October 2017, the Respondent formally advised the Client of the transitioning of the servicing of the contract from the Respondent’s company to that being set up by the Complainant and his two colleagues.

The Complainant’s employment with the Respondent ceased on 3 January 2108.

The Complainant’s claim, which is submitted under Section 39 of the Redundancy Payments Act, 1967, relates to his contention that he was made redundant by the Respondent and is, therefore, entitled to redundancy payment under the Act.

The Complainant stated, in evidence, that he had worked, as a diver, initially with a former business entity from 2011 and subsequently with the Respondent since 2013.

The Complainant stated that he took an agreed career break from 5 May 2017 until 31 October 2017.

According to the Complainant’s evidence, approximately three weeks after he returned to work with the Respondent, one of his colleagues received a text message informing his that the Respondent was leaving the company and that the new director had no interest in continuing the diver’s employment. The Complainant stated that this news came out of the blue and totally unannounced. The Complainant further stated that the Respondent discontinued his employment on 3 January 2018.

The Complainant further stated that the Respondent is now refusing to pay his redundancy citing the fact that he (the Complainant) broke his employment. However, the Complainant contests this on the basis that his time away from the Respondent’s employment in 2017 was an agreed six-month career break and that it was fully understood that he would be returning to his job with the Respondent.

In his oral evidence, the Complaint stated that the only way they could stay in employment was to set up the new company, with his colleagues. The Complainant confirmed that the new company was set up in January 2018 when their insurance cover was confirmed.

Background:

It was submitted that the Respondent is a small and experienced Maritime Service provider engaged mainly in the provision of survey and mapping services International, it was further stated that the Respondent has less than 10 employees.

According to the Respondent’s submission, the Complainant was employed, from about 2011, as a diver by a previous legal entity (Company A) It was further stated that the Complainant was employed to perform duties and services in relation to a contract that Company A had with a client. According to the evidence submitted, this contract related to the effective management and control of a noxious weed (African pond weed) in a local lake, which in the absence of control measures being taken could grow to unmanageable levels.

It was further submitted that the Respondent took over this contract from Company A on 1 January 2013. This resulted in the Complainant being retained as an employee of the Respondent pursuant to the transfer of undertaking legislation in recognition of the European Communities (Protection of Employees on Transfer of Undertaking) Regulations 2003.

The Respondent submitted that there was no issue in respect of the Complainant’s work performance and that they were, at all material times, satisfied that he was performing his duties diligently and professionally such that the Client’s contract was performed in full.

According to the Respondent’s submission, the Complainant left his employment on or about 19 May 2017 to take up a position with the Client, to whom the Respondent was providing the contracted services. The Respondent stated that the Complainant made this decision for his own reasons. In addition, the Respondent submits that it is expressly denied that this amounted to what the Complainant contends was “an agreed career break”. The Respondent stated that the Complainant left his employment of his own volition and not otherwise.

The Respondent further submitted that the Complainant sought employment with the Respondent some six months later on or about 5 November 2017. The Respondent stated that the Complainant was employed again, at that time, as a diver, in order to meet the demands of the Client contract.

According to the Respondent’s submission, in about October 2017, the Respondent took the view that the Client contract was not a matter he wished to continue. The Respondent stated that this took place in circumstances where other overseas commitments meant that the diving side of the Respondent’s business could be more effectively performed by the Complainant and his colleague divers who were actually carrying out the work.

The Respondent submitted that the Complainant and his two colleagues agreed to be set up as a company, in which they would be joint shareholders, and would engage directly with the Client to perform the contract. It was further submitted that the divers agreed to this arrangement and the Respondent provided assistance in setting up the new arrangement, which included, the provision of advice in respect of insurance, taxation, Health and Safety, invoicing and all other ancillary matters related to the work. In support of this, the Respondent provided correspondence, which issued to the Client, setting out the transitioning of the servicing contract to the Complainant and his colleagues, would operate same under their new business.

The Respondent’s position:

The Respondent submitted that the Complainant happily continued to be a diver employed by the company of which he was a shareholder and that he continued to perform the Client Contract. In this regard, it was further submitted that the Complainant had not suffered any loss and his employment is ongoing.

Consequently, the Respondent submits that, in the circumstances, no redundancy situation exists.

However, the Respondent stated that, if a purported redundancy situation did exist, which is denied, then the Complainant terminated his own employment in any event in about 19 May 2017. According to the Respondent this denies the complainant any right or entitlement to redundancy payment under the Acts where the minimum term of service required under the Acts is 104 weeks.

Consequently, the Respondent submits that and the Complainant is not entitled to the relief sought or to any relief.

The Complainant’s claim is that the termination of his employment with the Respondent was a dismissal by reason of redundancy. Therefore, in order to appropriately assess the Complainant’s claim it is necessary to consider the context in which the employment termination took place.

Having carefully reviewed all the evidence adduced in this case, I am satisfied that the relevant timeline for consideration of the context of the employment termination commences on 6 October 2017. On that date, the Respondent sent an email to one the Complainant’s colleagues, advising that he intended to take up a new position, which had been offered to him by an international company involved in subsea communications.

The email went on to state that the Respondent had discussed the situation with the two other directors of the company, who appeared, at that stage, to be happy to continue running the business. However, the Respondent did indicate that he had not discussed future plans with regard to the diving contract on which the Complainant and his two colleagues were working.

The evidence suggests that, over the following week or so discussions took place between the Respondent, the Complainant and his two colleagues. The evidence further suggests that the outcome of these discussions was that the three divers (i.e. the Complainant and his two colleagues) would take over the Client contract from the Respondent and would service it through a new company which they would set up for that purpose.

The above position is gleaned from an email sent by the Respondent, on 13 October 2017, to their insurers. In this correspondence, the Respondent states that the environmental diving side of the business was being split off into a separate entity, for which separate diving insurance was required. While the email does not make specific reference to the fact that the three divers would be setting up that separate entity, I am satisfied from the general evidence adduced, that this email is reflecting that reality.

Further evidence of the transferring of the environmental diving contract with the existing Client to the Complainant and his colleagues is contained in an email, dated 25 October 2017, in which the Respondent provides the Complainant and his colleagues with a copy of the Respondent’s Safety Statement.

On the following day, 26 October 2017 the Respondent provided the Complainant and his colleagues with a letter signed by the Respondent, which was addressed to the Client. This letter provides details of the transitioning of the environmental diving element of the Respondent’s business directly to the Complainant and his colleagues.

The level of documentary evidence covering the post-October 2017 period was rather limited. However, I am satisfied that the Complainant and his colleagues continued to provide the diving service to the Client and that, for a period of time, the Respondent facilitated them with the invoicing of and payment collection from the Client. The Complainant’s employment with the Respondent terminated on 3 January 2018.

The evidence also suggests that the Client subsequently put the diving contract out to tender. The Complainant and his two colleagues, under their new business name, tendered for the contract. A letter, submitted in evidence, dated 12 March 2018, confirms that the Complainant’s new business was successful in the tender.

Against the background of the above events, I proceeded to consider the Complainant’s claim for redundancy.

Section 7 (2) of the Redundancy Payments Act, 1967, defines “dismissal by reason of redundancy” as follows:

(2) For the purposes of subsection (1), an employee who is dismissed shall be taken to be dismissed by reason of redundancy if [for one or more reasons not related to the employee concerned] the dismissal is attributable wholly or mainly to—

(a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish.

It is clear from the evidence presented at the Hearing that the Respondent no longer wished to continue providing the environmental diving services, for which purpose the Complainant and his two colleagues were employed. Based on Subsection (2) of the Act, as quoted above, the circumstances would, therefore, initially suggest the existence of a prima facie redundancy situation.

However, before arriving at a definitive conclusion in this regard, it is necessary to consider the impact of Section 9(3)(a) of the Act which states as follows:

“(3) (a) An employee shall not be taken for the purposes of this Part as having been dismissed by his employer if—

(i) he is re-engaged by another employer (hereinafter referred to as the new employer) immediately on the termination of his previous employment,

(ii) the re-engagement takes place with the agreement of the employee, the previous employer and the new employer,

(iii) before the commencement of the period of employment with the new employer the employee receives a statement in writing on behalf of the previous employer and the new employer which—

(A) sets out the terms and conditions of the employee's contract of employment with the new employer,

(B) specifies that the employee's period of service with the previous employer will, for the purposes of this Act, be regarded by the new employer as service with the new employer,

(C) contains particulars of the service mentioned in clause (B), and

(D) the employee notifies in writing the new employer that the employee accepts the statement required by this subparagraph”.

In the case of the Complainant and his two colleagues, their employment simply moved from the Respondent to the new company, which they had set up in order to continue the servicing of the Client’s contract. This move was seamless, with no break in their work arrangements and no change in their work location. In fact, in his oral evidence, the Complainant clearly indicated that the setting up of the new company was the only way they could continue their employment.

Consequently, taking all of the above into consideration, I am of the view that the circumstances surrounding the transfer of the environmental diving contract from the Respondent to the new company, set up by the Complainant and his two colleagues, is consistent with subsection 3(a)(1) of the Act as set out above. In reality, the new company became the “other employer/new employer” as referred to in the subsection of the Act. The Complainant and his colleagues became and continue to be employees of that new employer. Therefore, I find that the Complainant cannot be considered to have been dismissed by reason of redundancy for the purpose of the Act.

I note the view, expressed by some of the divers, that the Respondent’s stated involvement, in the transitioning of the environmental diving contract with the Client to their new company and the assistance he provided to them in setting it up, was less than he (the Respondent) was contending. However, I am satisfied, from the evidence presented that, the Respondent did facilitate the transitioning and, in particular, I am of the view that his willingness to sign the letter of 26 October 2017, albeit that it may have been drafted by the Complainant and his colleagues, played a significant role in the Client’s acceptance of the new arrangement for the continuation of the contract.

The evidence presented also suggests that the Respondent further facilitated the transitioning of the contract to the Complainant and his colleagues when he agreed to facilitate invoicing/payment arrangement in relation to work done for the Client, for a period, while the new company put administrative structures in place to take on the servicing the contract in on a permanent basis.

It is clear to me that had the Respondent not facilitated the transitioning but merely terminated the contract with the Client, the Complainant and his colleagues would then have found themselves in a redundancy situation. In this regard, I note the contention that they were not provided with any option other than setting up as a business. However, having carefully considered all of the evidence, I am satisfied that, once he had decided that he was no longer interested in servicing the Client’s contract, there were, in effect, just two options available to the Respondent. These options were (a) terminate the contract with the Client and make the three employees working on that contract redundant or (b) facilitate the transitioning of the contract to the three employees to service directly to the Client.

In choosing and facilitating option (b), the Respondent provided the best outcome both for the three employees involved, as it guaranteed their continued employment, and for the Client, as it guaranteed no interruption to the provision of the service. This view is further confirmed by the fact that the Complainant and his colleagues, applying under the name of their new company, were in a position to successfully compete when the contract was subsequently put to tender by the Client.

Given the finding reached, that the Complainant cannot be considered as having been dismissed by reason of redundancy for the purpose of the Act, was no longer necessary to consider or issue a finding on the matter of the break in service which was contended by the Respondent and contested by the Complainant.

Consequently, taking all of the above into consideration, I find that the Complainant’s claim for redundancy is not well founded.

Having carefully considered all of the evidence adduced and based on the considerations/findings as detailed above, I find the Complainant’s claim is not well-founded and, therefore, his claim for redundancy is rejected.

Redundancy Payments Act