Complainant

Respondent

Anonymised Parties

IT Support Administrator

An Education organisation

Representatives

 IBEC

Act

Complaint 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-00020918-001

01/08/2018

The Complainant claims that he was dismissed by his employer on the grounds of a transfer of the business to a third party.

The Respondent claims that as there was no legal transfer of any description in place here and the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003) do not apply in this matter.

The Complainant claims that his employer, ‘Company X’, had provided IT services on contract for over 8 years at the Respondent. He claims that he was based at the Respondent’s premises over the past four years. He claims that the contract Company X had with the Respondent expired on 31 December 2017 and he was told that it was because the Respondent had not tendered for a renewal of the contract, his job was gone but that he should keep an eye on the tender website.

The Complainant said that his employer Company X was a small consultancy business and he was employed to provide the complete suite of services to the Respondent. He was not engaged in any of the other work within Company X. He presented a detailed account of his daily work responsibilities and how he was always available to assist the college community.

The Complainant said that he was in communication with the head of the Respondent, who said that he was not aware that the Complainant was being made redundant and there were still talks ongoing in the restructuring of the IT Services and he would be in touch over the coming few weeks. The Complainant said he has not heard from him since. The services he provided are now provided "in house" or by another contractor, and he feels he was unfairly treated.

In cross examination the Complainant acknowledged that he did receive his redundancy from Company X on the termination of his contract. He claims that to the best of his knowledge Company X was not operational any longer. The Respondent in cross examination put it to the Complainant that Company X was still in operation and its website was still active and fully engaged to which he said he was not sure. The Complainant said that he was the only person providing the IT services to the Respondent. The Complainant also said that none of his or Company X’s assets or tools transferred to the Respondent.

The Respondent said that the Complainant was directly employed by ‘Company X’. The Complainant had via public procurement competition a contract for Company X to provide it with an in-house Computer Support and Maintenance service. Company X had employed the Complainant to provide that service and for the period January 2015 through to June 2018 he was based in the Respondent’s facility providing IT support. The contract was for a three-year period initially and a further 6-month extension period was granted thereafter.

The Respondent said that the Complainant was never an employee of the Respondent and he never transferred from Company X to it. There was no legal transfer of any description in place and therefore the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003) does not apply in this matter.

The Respondent said that on a reconfiguration of its own internal services, and with the use of other Contract solutions, it was able to provide for itself, the service that Company X was tendered to supply at no additional cost or additional recruitment required.  Following the natural ending of the contract with Company X in June 2018 the Complainant ceased working on the Respondent’s premises. Therefore, with effect from 1 July 2018 the contract with Company X ended.

The Respondent said the Complainant’s employer Company X remains active and in operation.

The Respondent said that there was no legal transfer or merger as a result of the change in the contractor’s arrangement and as no legal transfer took place, accordingly the regulations do not apply.  

The Respondent referred to the relevant caselaw, in particular ECJ decision in Süzen v Zehnacker Gebäudereinigung GmbH Krankenhausservice [1997] IRLR 255 in relation to a change in service providers and the existence of an “entity”, and what constitutes as a transfer of a right to carry on a business. The Respondent also cited the decision in Cannon V Noonan Cleaning Limited and CPS Cleaning Services Limited [RP324/UD200/MN591/97] in relation to a change in contractors did not in itself establish a transfer. The decision in Cavan Industrial Cleaning Services Limited [TU29-TU36/2013] setting out the criteria for a legitimate transfer of undertaking.

The Respondent said that as no employees or assets transferred from Company X to the Respondent, as there was no merger between the parties and as Company X remains in business still post 1 July 2018, this is not a case of a transfer of undertaking under the cited regulations.  

The Law

The Regulations, in relevant part, provide as follows

2(1) “transferee” means any natural or legal person who, by reason of a transfer within the meaning of these Regulations, becomes the employer in respect of the undertaking, business or part of the undertaking or business;

“transferor” means any natural or legal person who, by reason of a transfer within the meaning of these Regulations, ceases to be the employer in respect of the undertaking business or part of the undertaking or business;

3.(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.

(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.

Rights and obligations.

4.(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.

(2) Following a transfer, the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement.

Dismissals and termination of employment.

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 Regulations essentially provide protections for workers in the event of a legal transfer taking place as between one employer and another employer. Those protections extend to the contract of employment and against dismissal where the transfer is, of itself, the reason for the dismissal. The provisions of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 only apply in circumstances where there has been a 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 or a merger.

I note that Company X and the Respondent were in contact that the current service arrangement was coming to an end and a 6-month extension was afforded to allow for the service to be provided while the Respondent made final arrangements with its own resources and existing contracts to provide the IT services from 1 July 2018.        

I note that the new arrangement was not as simple as replacing one service provider with a new service provider. The internal structures within the Respondent had changed and there was a ‘mixed’ arrangement in place due to the change in the overall structures of the broader organisation and its already existing IT systems.

In the decision of the European Court of Justice (ECJ) in Ayse Süzen v Zehnacker Gebauderinigung Gmbh Krankenhasservice [1997] I.R.L.R 255 the question referred to the Court was whether the Directive applied to a situation where an organisation, which had entrusted the cleaning of its premises to a first undertaking, terminated that contract and entered into a new contract with a second undertaking for similar works without any significant transfer of tangible or intangible assets from one undertaking to the other, was subject to the Transfer of Undertakings Regulations 2003.

The ECJ held that owing to the fact that no transfer of tangible assets had taken place and the transferee did not take over a major part of the workforce, there was no ‘transfer’ of an undertaking. 

The transfer of the contract was seen to represent, not the undertaking as a whole, but one of the assets of the transferor. I have taken note that in reaching its conclusions the ECJ decided;

 1) For the Directive to be applicable the transfer must relate to a stable economic entity whose activity is not limited to performing one specific works contract.

 2) The fact that the service provided by the old and new holders of a contract is similar does not necessarily support the position that an economic entity has been transferred.

This means that an entity cannot be reduced just to the activity carried on by it. Its ‘identity’ also comes from other factors, such as its workforce, its management and staff, its buildings, the way in which the work is organised, its operating methods and the operational resources available to it.

The decision of the ECJ in the Süzen Case was followed by the Employment Appeals Tribunal in the case of Mary Cannon v Noonan Cleaning Limited and CPS Limited [1998] E.L.R 153 ,where it was held “It appears that where the new contractor refuses to take on a major part of the workforce in circumstances of a second generation transfer where a Third Party is responsible for the transfer, the Directive does not apply, i.e. there is no transfer of an undertaking.”

In the case before me there was no transfer of workers or assets. I find that the facts that the mere loss of a service contract to a competitor cannot by itself indicate the existence of a transfer within the meaning of the Directive. In this case ‘the transferor’ did not, on losing the contract, cease to exist.

I find that having considered the evidence before me at the hearing that a transfer of undertakings did not take place within the meaning of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003.  

I find no Transfer of Undertakings took place and therefore the complaint is not well founded.

Transfer of Undertakings - no transfer - complaint is not well founded