Complainant

Respondent

Anonymised Parties

Sales Executive

Sole Trader/New Business

Representatives

Seán Ormonde & Co.    
Lars Asmussen BL

Aaron McKenna Aaron McKenna Solicitors
Patrick Marron BL

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-00029757-001

18/07/2019

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

CA-00029757-002

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-00029757-003

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-00029757-004

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-00029757-005

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-00029757-006

18/07/2019

The background to this claim relates to a company that has gone into voluntary liquidation. The complainant alleges that another economic entity, run by the respondents acquired assets, customers and employees of that company where she worked. Her employment was subsequently terminated by the liquidator by reason of redundancy and her employment did not transfer to the respondent’s business. Complaints are made under the Equality Acts; Unfair Dismissals Acts and the European Communities (Protection of Employees on Transfers of Undertakings) Regulations 2003 S.I. 131/2003. The respondents state that no transfer has occurred and the entity that began after the liquidation of the company arose out of necessity to earn a living, no economic transfer whatsoever has occurred. The respondent was made redundant as was the complainant. The new business is not a company and the trading name belongs to the two respondents’ husband and wife and is comparable to a sole trader as the second named respondent is not active in the business.

The complainant worked as a sales account executive, where she sold websites. 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 respondent began incrementally.

In a WhatsApp in late January 2018, the Director and shareholder in the company stated that they would be hiring the respondent for the Managing Director (MD) role. That the new MD ran a small business selling Apps to salons and that business would now transfer to the company. This would allow the company to sell websites and apps.

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 previously owned by the new MD in his previous company prior to joining. 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 respondent MD in his new business venture following the placing of her employer’s company into voluntary liquidation on or about May 2019.

On the 12th March 2018 the complainant informed her then employer of the fact of her maternity leave and the period of leave that she planned to take. She commenced her maternity leave in August 2018.

The complainant took issue regarding a meeting she had with the new MD about her replacement during maternity leave and to what role she would return to. In an exchange of emails’, the Director(shareholder) 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 states on the 20th July 2018:

“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.

All remaining employees were transferred on or about May 2019 to the respondents’ business other than the complainant.

The complainant maintains that she was treated less favourably than two other employees in the conditions of her employment relating to the functioning of the transfer itself in that the respondents 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 the respondents had dismissed the complainant and breached the Regulations.

The first named respondent 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, the second named respondent, who is not involved in the day to day running of the business.

The first respondent (respondent) joined the complainant’s company 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 respondent proposed that the complainant’s company rebrand to be called anonymised Group. This became the trading name for the company, no new 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 respondent were employed by the company until it went into liquidation. He 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.

The decision to rebrand the company was made 12 months before it went into liquidation. While the transfer is stated to have occurred at the same time as the rebranding occurred on about April 2018, as that Trading name continued to operate 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 respondent at the time.

Faced with unemployment and to secure an income for his family, the respondent 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 respondent hired a former employee of the liquidated company, who is a website developer. Both the respondent and the former employee work from their respective homes. At this time the rebranded name used by the liquidated company was registered by the respondent 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 respondents.

The respondents 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 respondents 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 both complainant and respondent 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 respondent was as surprised as the complainant when he was informed that he was being made redundant.

The evidence to support the transfer relates to the company rebranding and in turn that name being used by the respondents in their subsequent business activities. However, the facts show that the trading name used by the respondents in their new venture was opportunistic as it was never registered to the company. 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 respondent(owner) fulfils a sales executive role and the other employer is the web designer. They did not transfer from the 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 respondents’ 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 respondents 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 do not arise from the transfer and 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 company for about 12 months prior to being placed into voluntary liquidation. That fact does not provide a very compelling ground to support the case that a transfer has occurred having regard to what in fact 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 respondents’ new venture commencing trading. Based on all the facts presented; the claims made against the respondents under the Regulations are not well founded as I determine that at no time has a transfer of undertakings occurred and that the respondents are strangers to the complaints made against them as they are a stranger to any employment relationship between the liquidated company and the complainant. 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 respondents I determine that the complainant was not unfairly dismissed or discriminated against based on gender or her family status.

CA-00029757-001: Unfair Dismissal

I determine that the complainant was not unfairly dismissed by the respondents as the respondents are strangers to any employment relationship with the complainant or alleged transfer of undertakings with anonymised employing company limited which is now in liquidation, the employee’s previous employer. The complainant was made redundant when their employer appointed a liquidator to the business as the business was insolvent. There was no unfair selection for redundancy as all employees were made redundant on or about the same time when the liquidator was appointed.

CA-00029757-002: Discrimination/Equality: (please note that the complaint of discriminatory dismissal was withdrawn)-the complainant states that she was discriminated against by reason of her Gender and Family Status with regard to her conditions of employment. 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 the respondents are strangers to any employment relationship with the complainant or with her former employer anonymised company limited which is now in liquidation and no sufficient prima facie case has been made based on facts that are required to ground the presumption of discrimination against the respondents.

CA-00029757-003: Transfer of Undertaking-my previous employer (Transferor) did not ensure that my terms and conditions transferred to my new employer (Tranferee). The complaint is not well founded as no transfer of undertakings has taken place. The respondents are strangers to any employment relationship with the complainant or transfer of undertaking with her former employer.

CA-00029757-004: Transfer of Undertaking-I was dismissed by my previous employer (Transferor) on the grounds of the transfer of the business/undertaking. The complaint is not well founded as no transfer from the transferor to the transferee took place. The respondents are strangers to any employment relationship with the complainant or transfer of undertaking with her former employer

CA-00029757-005: 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. The respondents are strangers to any employment relationship with the complainant or transfer of undertaking with her former employer.

CA-00029757-006: 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. The respondents are strangers to any employment relationship with the complainant or transfer of undertaking with her former employer.

Transfer of Undertakings-Unfair Dismissal-Discrimination