ADJUDICATION OFFICER DECISION

Adjudication Reference: ADJ-00017489

Parties:

Complaint:

Date of Adjudication Hearing: 08/02/2019

Workplace Relations Commission Adjudication Officer: Aideen Collard

Procedure:

The Complainant referred a complaint under Section 39 of the Redundancy Payments Act 1967 to the Workplace Relations Commission (WRC) on 10th October 2018. Following referral to me by the Director General, I inquired into this complaint. I gave the Parties an opportunity to be heard by me and to present any relevant evidence. The Complainant was initially unrepresented but was subsequently represented by Mr Jaidel Naidoo BL instructed by F. H. O’Reilly Solicitors whilst a Director (with some legal knowledge) and her father, Mr A, who ran the business appeared on behalf of the Respondent. The hearing was scheduled for 30th November 2018 but was adjourned to enable the Respondent to furnish documentation and for the Parties to obtain advice. Evidence was heard on the resumed hearing date of 8th February 2019. Post-hearing, further written submissions were received from both Parties and exchanged. The Parties’ respective positions are summarised hereunder followed by my findings & conclusions and decision. I have taken all of the evidence, submissions, supporting documentation and case-law / law presented into consideration.

Background:

The Complainant seeks a declaration of redundancy pursuant to Section 39 of the Redundancy Payments Act 1967, following the termination of her employment with the Respondent for the purposes of payment of her statutory redundancy entitlement from the Respondent and/or the Social Insurance Fund. The Respondent refutes her complaint and contends that she was not made redundant as she was on a period of lay-off and then subject to a transfer of undertakings.

Summary of Complainant’s Case:

The Complainant gave evidence outlining the factual background to this complaint supplementing written submissions made on her behalf. She confirmed that she was employed as a Retail Assistant in a Convenience Shop operated under franchise by the Respondent from 28th October 2008. She contended that she had been made to sign a backdated contract of employment 3-4 years previously. Her employment was terminated suddenly and without any notice on 17th November 2017, when Mr A (who ran the business) informed the Complainant that there was no money to continue operating the business and the shutters were pulled down on the premises. Although the Complainant’s hours had varied over her employment, at the time of the termination of her employment, she had been earning €10 per hour, working up to an average of 40 hours per week and earning circa €400 gross per week, confirmed with her payslips for October 2017 as furnished.

Following the closure of the Shop, the Complainant did not receive any further pay from the Respondent and nor had she received a P45. She said that she had considered herself to be redundant and had written to the Respondent seeking her statutory redundancy but had received no reply. She confirmed that a Manager employed by the Respondent at the time to manage its affairs including wages, Mr B, had furnished her with a letter dated 23rd November 2017 (and date stamped 27th November 2017 by the Respondent) directed to the Department of Social Protection stating: “(The Complainant) worked at (the Respondent’s Convenience Shop at its location) for the past nine years and due to a downturn in business the company is going into receivership and all staff are now redundant”. Mr B also provided the Complainant with a reference dated 27th November 2017 referring to her employment in the past tense, confirming that the shop was in receivership and recommending her to any future employer. This correspondence was furnished at the hearing. On 7th December 2018, the Complainant notified the Respondent that she was entitled to a redundancy payment but had not received an RP50 Form and requested a response within 14 days. By registered post on 10th December 2018, the Complainant posted a completed RP77 Form to the Respondent on the basis that the termination of her employment constituted redundancy but did not receive the completed Form back or statutory redundancy payment. Nor had the Respondent ever furnished her with Part B of RP50 Form as required in a redundancy situation.

The Complainant rejects the contention made on behalf of the Respondent that she was on lay-off for the period of eight months pending the purported transfer of the business to Mr C’s Company on 18th July 2018. She said that whilst Mr A had previously mentioned transferring the lease for the Shop and that the staff’s employment would be secure, at no stage before the termination of her employment on 17th November 2017, was she ever presented with notice of lay-off and/or a transfer of her employment to Mr C. She also rejected the contention that her employment transferred to Mr C in circumstances where there was no compliance with any of the statutory requirements. She was never consulted about any such transfer during the course of her employment with the Respondent or had her employment transferred within the relevant statutory time-limits. Whilst the Complainant acknowledged the exchange of emails with Mr A on 12th January 2018 confirming that she would be interested in a job with Mr C, this did not materialise until July-August 2018. She had been left in no doubt that the cessation of her employment on 17th November 2017 was permanent in nature, particularly when she did not hear any more about the proposed transfer of the lease. She accepts that when the Shop was finally due to reopen in July-August 2018, she was contacted to see if she would like to work for Mr C. However, whilst she attended at the Shop for two days to show Mr C the running of the business, she was no longer in a position to take up employment at that stage owing to personal circumstances. She further confirmed that nothing was agreed or signed with Mr C, she was never employed by him and nor did she receive any payment from him. She had also been friendly with Mr A and was upset by his refusal to either pay her statutory redundancy or complete the necessary paperwork to enable her to claim from the Social Insurance Fund. Accordingly, the Complainant had referred this complaint to the WRC on 10th October 2018.

In summary, Counsel on behalf of the Complainant submitted that her employment was terminated by reason of redundancy within the meaning of Section 7 of the Redundancy Payments Act 1967. Furthermore, there was no lay-off in circumstances where the Complainant had not received any notice of lay-off as required by Section 11 of the Act. Neither was the Complainant notified of any transfer of undertakings. Finally, it was submitted that the Respondent was not entitled to rely upon Section 9 of the Act on the basis of Mr C’s offer of re-employment in circumstances where the requisite time-limits and conditions were not met. The Complainant is therefore entitled to a statutory redundancy payment from the Respondent and seeks a declaration to that effect.

Summary of Respondent’s Case:

Mr A, the business owner at the material time of the Complainant’s employment gave evidence as supplemented with written submissions. He did not dispute the Complainant’s service or that the Shop had closed owing to financial difficulties. However, he maintained throughout that because he had intended on transferring the business to a Company owned by Mr C which was effected some eight months after the closure of the Shop, he not lawfully liable to pay his employees including the Complainant statutory redundancy. He confirmed that on 16th November 2017, he had advised the Complainant that the Shop was closing the following day and on 17th November 2017, the Shop ceased trading. This was following a number of weeks of reduced trading, stock depleting owing to persistent shoplifting, reduced opening hours due to lack of stock and supplier services withdrawn. He contended that before the closure, staff were aware of the Respondent’s financial difficulties and the Complainant had been advised that there were negotiations for the transfer of the lease of the Shop underway with Mr C and that all remaining staff would retain their positions when this was finalised. Mr C had given him an undertaking to take on all of his existing staff and a TUPE Agreement was included within the lease. In this respect, Mr A placed reliance upon the legal documentation relating to the lease for the Shop to Mr C’s Company with a closing date of 18th July 2018 as furnished. Paragraph 3.7 of the Law Society Special Conditions stated: “The Sale is by way of a transfer of a business.” and Paragraph 9 stated: “The Vendor and the Purchaser acknowledge that the transaction contemplated by this contract gives rise to a transfer for the purposes of the transfer regulations. Accordingly, the employees will transfer by operation of Law to the employment with the Purchaser with effect from the completion date in accordance with the transfer regulations.”

Following closure of the Shop, Mr A contended that the Complainant had contacted “another employee”, Mr B, to write the aforesaid letter for Social Welfare stating that owing to a downturn in business, the Respondent was going into receivership and all of the staff were now redundant. Mr A contended that this letter had been written without his knowledge or authority or that of any officer of the Respondent. He said that the first time he had sight of it had been at the WRC hearing. Mr B had tendered the Respondent his letter of resignation on 15th January 2018 as furnished, without any claim for redundancy as he did not want a position with the new owner. He maintained that the Respondent did not (nor ever intended) to go into receivership and repayment plans were put in place following the transfer of the lease to repay all of its creditors. Redundancy was never an option as all of the staff were to retain their jobs following the transfer and were therefore on a period of lay-off for the eight month period taken to finalise same. In this respect, he relied upon a contract of employment signed by the Complainant and the Respondent dated 22nd October 2008 containing a Lay-off and/or Short Time clause as follows: “The Company reserves the right to lay you off from work or reduce your working hours, where through circumstances beyond its control it is unable to maintain you in employment or maintain you in regular time employment. You will receive as much notice as is reasonably possible prior to such a lay-off or short time. You will not be paid during lay-off period. You will be paid for hours actually worked during periods of short time.” In support of the Respondent’s position, he furnished an email exchange with the Complainant on 12th January 2018 entitled ‘Return to Work’. Mr A had written: “I have tried to call you on a couple of occasions with no success. As you know the shop is being leased out in the next couple of weeks and need to confirm if you wish to keep your position. I am putting together a list of staff that wish to stay on.” The Complainant had responded: “Yes, I am still interested in the position… please keep in contact on this email many thanks.” Mr A replied: “I will pass that information on to the new owner and will be in touch.” He also submitted a letter from its Auditors dated 5th December 2018 confirming that the Respondent’s affairs were in order along with P60’s for the Complainant for 2015, 2016 and 2017. Mr A confirmed that the situation had been very difficult and he had gone to extensive efforts to repay his creditors whatever he could. Unfortunately, the transfer of the lease took much longer than intended owing to issues arising. Solicitors were engaged by the Respondent and Mr C’s Company to the lease and confirmation was requested from all staff to be reinstated with details of their terms and conditions. In June 2018, the Complainant was contacted by Mr C by phone on 12th June 2018 as confirmed in an email dated 15th June 2018 stating: “Dear All, As per our telephone conversations on 12/06/2018, I am hoping to shortly complete a deal with (Mr A) for the business (Convenience Shop). I will have jobs available for the remaining employees subject to completion of the deal. I am aware that some of you have indicated that your preference is to finish employment with (the Respondent) and I have passed this information onto Mr A.” Mr C had confirmed to Mr A that the Complainant had worked in the Shop for two days before advising him that she could not work due to a change in personal circumstances and he had to fill her position with a new staff member. Mr A confirmed that he lived in the flat directly above the Shop and that he and his son had observed the Complainant working there for the two days in question.

When questioned by Counsel for the Complainant, the Respondent was unable to identify a formal written notice of lay-off or transfer of undertakings but contended that he had indicated same to the staff during the Summer before the closure of the Convenience Shop in question. He accepted that he was not present on 17th November 2017 when the shutters were pulled down and the Shop was closed and confirmed that Mr B was present and dealing with all of the Respondent’s business affairs including wages and accounts at the time. He maintained that he had no recollection of the letter of 23rd November 2017 written to the Complainant and had not been consulted regarding same.

In post-hearing written submissions, it was submitted that whilst the Respondent accepted that the Complainant may have submitted a RP9 Form (giving notice of intention to apply for a redundancy lump sum payment in a lay-off or short time situation) prior to her re-instatement in July 2018, as the Respondent had no notice of same or of her intention to apply for redundancy, either verbally or by post or email, it was not afforded an opportunity to give counter-notice or discuss the matter. In this respect, reliance as placed upon Kilcawley Building and Civil Engineering (Sligo) Ltd t/a Kilcawley Construction -v- Andrew Muldowney RPD185 where the Labour Court had held that an employee who had retuned to work with his employer within a week of serving an RP9 Form was not entitled to statutory redundancy. The Respondent submitted that the Complainant was not entitled to a declaration of redundancy and/or she was not entitled to payment of statutory redundancy.

Findings and Conclusions:

It is necessary to consider the facts giving rise to this decision in light of the relevant statutory provisions. Section 39(15) of the Redundancy Payments Act 1967 essentially provides for the WRC’s jurisdiction to determine entitlement to statutory redundancy where an issue arises and in the instant case, whereby an employee wishes to appeal against an employer’s decision regarding same. Applicable to this case, Section 7(1) of the Act provides for the general right to redundancy payment as follows: “An employee, if he is dismissed by his employer by reason of redundancy or is laid off or kept on short-time for the minimum period, shall, subject to this Act, be entitled to the payment of moneys which shall be known (and are in this Act referred to) as redundancy payment provided- ( a) he has been employed for the requisite period, and (b) he was an employed contributor in employment which was insurable for all benefits under theSocial Welfare Acts, 1952 to 1966, immediately before the date of the termination of his employment, or had ceased to be ordinarily employed in employment which was so insurable in the period of four years ending on that date. (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…” The general right to a redundancy payment is qualified by other provisions including those relating to lay-off and short-time and re-employment. Section 11 of the Act provides the requirements for lay-off and short-time as follows: “Where an employee’s employment ceases by reason of his employer’s being unable to provide the work for which the employee was employed to do, and- (a) it is reasonable in the circumstances for that employer to believe that the cessation of employment will not be permanent, and (b) the employer gives notice to that effect to the employee prior to the cessation, that cessation of employment shall be regarded for the purposes of this Act as lay-off.” Sections 12 and 13 makes further provision for the requisite exchange of notices and time-limits.

Section 9 of the Redundancy Payments Act 1967 provides for the circumstances in which re-employment will not constitute a dismissal under the Act for the purposes of entitlement to redundancy payment and relevant to the circumstances in the instant case, Section 9(3) provides: “(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. (b) Where in accordance with this subsection an employee is re-engaged by the new employer, the service of that employee with the previous employer shall for the purposes of this Act be deemed to be service with the new employer.” Finally, the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 provides for an employee’s rights where there is a transfer of undertakings including an employee’s entitlement to be notified and consulted regarding same.

In the instant case, the Respondent refutes the Complainant’s entitlement to a redundancy payment, contending that she was not made redundant as she was on a period of lay-off and then subject to a transfer of undertakings. The first issue to determine is whether there was a lay-off situation such that the Complainant was subject to the notice requirements of Section 11 of the Redundancy Payments Act 1967. Applying the aforesaid law to the facts adduced, I am satisfied on the balance of probabilities that (1) the Respondent ceased trading from 17th November 2017 when the shutters of its Convenience Shop were pulled down owing to financial difficulties as this is a common case fact; (2) the Complainant was expressly informed in writing by letter dated 23rd November 2017, stamped by the Respondent on 27th November 2017 and furnished by Mr B, an employee of the Respondent that: “…due to a downturn in business the company is going into receivership and all staff are now redundant”. Whilst Mr A contends that he had no knowledge of this letter and that Mr B was not acting with the Respondent’s authority, there is no evidence that Mr B was anything other than a bone fide employee of the Respondent acting on its behalf and there is no basis for looking behind this letter and (3) there was no evidence that the Respondent had complied with the requirements of Section 11 of the Redundancy Payments Act 1967 and given notice of lay-off, either verbally or otherwise to the Complainant. I do not consider Mr A’s vague indications to his staff whether given verbally or in his email sent on 12th January 2018 that he intended transferring the lease to Mr C and/or hoped to complete a deal with Mr C to constitute notice of lay-off. Having considered the email communications between the Parties which made no reference whatsoever to there being a ‘lay-off’ situation, I am satisfied that this term was first used in defence of this complaint with reference to the provision for lay-off in the Complainant’s contract of employment. I also note the absence of any consultation or formal notice of any transfer of undertakings as required by the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003. The Labour Court decision relied upon by the Respondent is not of assistance in circumstances where the fact of lay-off was not in issue in that case. I am therefore satisfied that the Complainant’s employment was terminated within the meaning of Section 7(2)(1) of the Redundancy Payments Act 1967 and she was therefore entitled to a redundancy payment. For the sake of completeness, I am further satisfied that the Respondent is not relieved from its obligations to pay statutory redundancy by virtue of Mr C’s subsequent offer of employment to the Complainant following the transfer of the lease for the Shop to his Company some eight months later. This is owing to the fact that there was no evidence of compliance with the conditions required by Section 9 of the Act including immediate re-engagement and mutual written agreement.

Decision:

Section 39 of the Redundancy Payments Acts 1967-2012 requires that I make a decision in relation to this complaint in accordance with the relevant redress provisions under that Act. Based upon the aforesaid reasoning, I am satisfied that the Complainant was made redundant by the Respondent and is entitled to a declaration of redundancy and payment of her statutory redundancy under the Redundancy Payments Acts, calculated using the following dates of commencement and termination and gross weekly pay of €400. Subject to the Complainant having been in insurable employment under the Social Welfare Acts during the relevant period, this equates to approximately €7,648.

Date of commencement: 27th October 2008

Date of termination: 17th November 2017

Weekly gross pay: €400                                                    

Dated:      19th December 2019

Workplace Relations Commission Adjudication Officer: Aideen Collard

Key Words: Redundancy Payments Act 1967 - redundancy - lay-off - transfer of undertakings