Complainant

Respondent

Anonymised Parties

Sales Executive

Web Design/Marketing and other related services

Representatives

Seán Ormonde Sean Ormonde & Co.
Lars Asmussen BL

The Secretary Forrest & Co. Liquidator

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-00029756-001

18/07/2019

Complaint seeking adjudication by the Workplace Relations Commission under section 77 of the Employment Equality Act, 1998

CA-00029756-002

18/07/2019

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-00029756-003

18/07/2019

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-00029756-004

18/07/2019

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-00029756-005

18/07/2019

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-00029756-006

18/07/2019

The complainant alleges that her previous employer, a company now liquidated agreed to transfer a part of their business constituting an economic activity to another business who it is alleged subsequently failed to observe her rights under transfer of undertakings legislation and/or her then employer failed to protect her rights under the Transfer of Undertakings Regulations. Her employment has now been terminated and she maintains complaints under the Transfer of Undertakings Regulations; the Unfair Dismissal Acts and the Equality Acts against the respondent her previous employer.

The complainant worked as a sales account executive, where she sold web services to a specific sector in the retail beauty salon market. She commenced her employment on the 3rd of May 2017 and states she was dismissed on the 1st May 2019.

The complainant argues that the transfer to the transferee began incrementally.

In a company WhatsApp in late January 2018, the Director and shareholder in the company stated that they would be hiring the now alleged transferee for the Managing Director (MD) role. The new MD ran a small business selling Apps to beauty salons and that business would now transfer to the respondent company. This would allow the company to sell website and app design services.

On or about the 15th April 2018 the complainant’s email address was changed and the company was rebranded to sell under a business trading name it is alleged was owned by the new MD in his previous company prior to joining the respondent. She believes that this is evidence that her employment relationship had changed, particularly when regard is had to the fact that this new trading name was subsequently adopted again by the transferee in his new business venture following the placing of her company into voluntary liquidation on or about May 2019.

On the 12th March 2018 the complainant informed the respondent that she would be applying for maternity leave and the period of leave she planned to take. She commenced her maternity leave in August 2018.

The complainant took issue about a meeting she had with the new MD relating to her replacement during maternity leave and to what role she would return to following her maternity leave. The complainant raised concerns with a director shareholder of the respondent company, where she felt the new MD was attempting to change her terms and conditions and hire someone else to do her job while she was out on maternity leave and move her to a different role when she returned. In an exchange of emails’, the director(shareholder) of the respondent states on 19th of July 2018:

“As an Account Manager, your role will be the same, to sell to new and manage the relationship with existing customers, the same as it is now, with the same terms.”

And the new MD also responds on the 20th July 2018 and addresses the concerns raised as follows:

“I was only trying to reassure you that you have a very important role to play in the future of (anonymised the new trading name of the respondents that continued post liquidation) and I’m looking forward to have you back after your maternity leave.”

The complainant maintains that this email is conclusive evidence that a transfer had taken place.

By email dated 23rd of April the director (owner) of the business notified the complainant by email that the company was being liquidated on the 1st May 2019 and of her dismissal by reason of redundancy.

All remaining employees (it is alleged) were transferred on or about May 2019 to the transferee business other than the complainant.

The complainant maintains that she was treated less favourably than the other employees in that the respondent used her absence on maternity leave to exclude her from the functioning of the transfer and this amounts to discrimination.

In accordance with law and fact her employment had been transferred to the new business and by not recognising and implementing her rights under the Transfer of Undertakings Regulations the respondent (previous employer) had unfairly dismissed her and breached the Regulations.

The alleged new employer and transferee has operated a website business from his home since May 2019 after being made redundant.

The business trades as [anonymised] a business name registered in June 2019 by himself and in partnership with his wife, who is not involved in the day to day running of the business.

The alleged transferee joined the respondent company (now in liquidation) in April 2018, 4 years after that company had commenced trading. He was employed as a General Manager, he had no shareholding in the company and was not a director. He was involved in the day to day operation of the business and had no financial involvement in the business.

Prior to joining the company, he owned a small business that sold Apps and that company was called anonymised Limited which in turn had a franchise from a UK based firm, called anonymised Apps.

In May 2018 the alleged transferee proposed that the respondent rebrand to be called anonymised Group. This became the trading name for the company, no new legal entity was formed, no transfer took place, the company entity as it existed for the last 4 years continued, what changed was a trading name and brand. It was not a new company.

The complainant and the alleged transferee were employed by the company until it went into liquidation. The transferee never had any proprietary interest in the company or acquired an asset or goodwill of that company. However, he did register a domain name anonymised some time before he commenced employment with the company in April 2018-which is different to the new branded trading name adopted by the company when he was General Manager.

The decision to rebrand the company was made 12 months before it went into liquidation. While the complainant states that the transfer occurred at the same time as the rebranding occurred on about April 2018, and that Trading name continued to be used post the liquidation.

In late April 2019 the directors and shareholders decided to wind up the company because it was insolvent. The company terminated all three remaining employees including the alleged transferee at the time.

Faced with unemployment and to secure an income for his family, the alleged transferee contacted former customers of the liquidated company to provide a website maintenance service. About 70 of the 120 customers agreed to use his service.

In June 2019, the alleged transferee hired a former employee of the liquidated company, who is a website developer. Both the alleged transferee and the former employee work from their respective homes. At this time the rebranded name used by the liquidated company was registered by the alleged transferee as it had not been registered by the liquidated company.

No legal transfer of any part of the business of the liquidated company was every planned, agreed to or implemented between the liquidated company and the alleged transferee.

The alleged transferee are strangers to any employment relationship between the complainant and the liquidated company.

The complainant references Article 9(1) of the Directive 2001/23/EC which states:

a)      This Directive shall apply to any transfer of an undertaking, business or part of an undertaking or business to another employer as a result of a legal transfer or merger.

b)      Subject to (a) and the following provisions of this Article, there is a transfer within the meaning of the Directive where there is a transfer of an economic entity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.

And relevant to the complaints made against the respondent Article 3(1) states:

“The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of transfer shall, by reason of such transfer, be transferred to the transferee.”

Regulation 3(2) of the Regulations defines ‘economic entity’ as:

“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.”

Gary Byrne in Employment Law 2nd Edition Bloomsbury at page 925 states:

“the Regs 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 legal/factual event like the assignment or forfeiture of a lease) or merger—provided it ‘retains its identity as the term ‘Transfer’ is defined as the ‘transfer of an economic entity which retains its identity’.

Spijkers v Gerbroeders Benedik Abbatoir CV Case C-24/85, [1986] ECR 1119 is citied by the complainant to support their case. It is one of the earliest cases of the ECJ to interpret the terms of the directive and continues to maintain a central importance in the law relating to the transfer of undertakings.

Like in Spijkers a key question relating to the matters in contention is- has a transfer taken place?

The Court in Spikers set out the following test when considering if a transfer has or has not occurred:

·         It is necessary to take account of all the factual circumstances of the transaction in question including the type of undertaking or business in question

·         the transfer or otherwise of tangible assets such as buildings and stocks,

·         the value of intangible assets at the date of transfer,

·         whether the majority of staff are taken over by the new employer,

·         the transfer or otherwise of the circle of customers and the degree of similarity between activities before and after the transfer

·         and the interruption in those activities

The facts on balance do not support the case that a transfer of undertaking has taken place.

The evidence to support the transfer relates to the liquidated company rebranding and in turn that name being used by the transferee in their subsequent business activities. However, the facts show that the trading name used by the alleged transferee in their new venture was opportunistic as it was never registered to the respondent. While the new business has attracted customers previously serviced by the liquidated company, inevitably when a business is insolvent and is liquidated (voluntarily) those customers now present as a business opportunity to a new business player. While two of the three employees remaining at the date of liquidation are engaged in the new venture, the alleged transferee (owner) fulfils a sales executive role and the other employee is the web designer. They did not transfer from the liquidated company either before or at liquidation. They both were made redundant. No part of the business had transferred prior to or at the date of liquidation or at the time of the alleged transferee commencing trading. The new business has gone on to attract its own customers who never traded with the liquidated entity.

The primary motive in setting up the business was to earn a living. The alleged transferee never had a proprietary interest in the liquidated business at any time.

The rebranding of the company a year prior to liquidation was simply that and it did not mark a transfer of economic activity to another entity-on the evidence that simply has not occurred. The new name and emails used as part of the rebranding were trading names; they did not signal or commence a chain of events that would lead to a transfer of an economic activity.

When the company failed as a business entity; a redundant employee began to trade in services that his prior employer had also provided, and he targeted customers of that failed entity. These facts do not constitute a transfer. They describe a response of a redundant employee to start again and to attempt to earn a living-.

It is true that there are shared characteristics between the old and the new venture; however, those characteristics are no different to those that competitors also share. The one unique characteristic relates to a trading name used by the new venture and the liquidated company for about 12 months. That fact does not provide a very compelling ground to support the case that a transfer has occurred having regard to what had occurred; a business in existence for 5 years became insolvent and ceased trading. Out of the ashes one employee who had been made redundant; decided to set up a new business and to trade alongside many others who also provide web services and Apps to small businesses. There are no business premises or office and the respondent works from home as does his sole employee.

I determine that no transfer of undertakings occurred between the liquidated company prior to, at the date of liquidation or prior to the alleged new transferee’s new venture commencing trading. Based on all the facts presented; the claims made against the respondent company (now in liquidation) under the Regulations are not well founded as I determine that at no time has a transfer of undertakings occurred. A business that was in existence for about 5 years became insolvent. A redundant employee decided to set up his own business after being made redundant and recruited another employee a web designer in his new venture. As no transfer of undertakings occurred between the liquidated entity and the alleged transferee the complaints as detailed relating to the Transfer of Undertaking Regulations are not well founded. The complainant was not unfairly dismissed arising from an alleged transfer of undertakings as none occurred. The complainant was not discriminated against relating to terms and conditions arising from the alleged transfer of undertakings as no transfer occurred. The complainant’s employment was terminated by reason of redundancy as were all employees at the same time arising from the liquidation.

CA-00029756-001: Unfair Dismissal

I determine that the complainant was not unfairly dismissed arising from a transfer of undertakings as no transfer of undertaking occurred; the termination of employment arose from the company being placed into liquidation and by reason of redundancy. There was no unfair selection for redundancy as all employees were made redundant arising from the company being placed into liquidation.

CA-00029756-002: Discrimination/Equality: (the complaint of discriminatory dismissal was withdrawn)-the complainant states that she was discriminated against by reason of Gender and Family Status with regard to her conditions of employment as the transfer was commenced and continued during her maternity leave and it is alleged two of the three remaining employees who are male transferred to the new economic entity on or about May 2019. Also prior to the transfer she was discriminated against by not receiving sales leads that she attributes to bias by the new General Manager/Managing Director. I determine that the complainant was not discriminated against under 6(2)(a) of the Act (the gender ground) or under 6(2)(c) (the family status ground) as no transfer of undertaking has occurred which is the main underpinning alleged event to the complaint which is she was discriminated against when two other employees who are male it is alleged transferred to the new entity which began when she was on maternity leave. The complainant has not made out a sufficient prima facie case based on facts that would give rise to the presumption of discrimination against the respondent. Any concerns that she raised regarding her future role or other matters with her employer about how she was being treated on the facts were addressed constructively and fairly. Prima facie they are not primary facts proven that would give rise to the inference and presumption of discrimination that would require the respondent to prove the contrary.

CA-00029756-003: Transfer of Undertaking-my previous employer (Transferor) did not ensure that my terms and conditions transferred to my new employer (Transferee). The complaint is not well founded as no transfer of undertakings has taken place.

CA-00029756-004: Transfer of Undertaking-I was dismissed by my previous employer (Transferor) on the grounds of the transfer of the business/undertaking. The complainant was not dismissed by her previous employer on the grounds of the transfer of the business/undertaking. The complainant was made redundant. The complainant was not unfairly dismissed. The complaint is not well founded

CA-00029756-005: Transfer of Undertaking-my current/ new employer (Transferee) did not observe the terms and conditions transferred from my previous employer (Transferor). The complaint is not well founded as no transfer of undertakings has taken place. There is no Transferee. The complainant’s employment was terminated by reason of redundancy.

CA-00029756-006: Transfer of Undertakings-my current/new employer (Transferee) did not ensure that my terms and conditions transferred from my previous employer. The complaint is not well founded as no transfer of undertaking has taken place. There is no Transferee. The complainant’s employment was terminated by reason of redundancy.

Transfer of Undertakings-Unfair Dismissal -Discrimination