Complainant

Respondent

Anonymised Parties

Contract Catering Staff

Respondent-A Caterer/Service Provider

Act

Complaint/Dispute 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-00032432-002

22/11/2019

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-00032432-003

22/11/2019

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-00032432-006

22/11/2019

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-00032432-007

22/11/2019

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-00032432-009

22/11/2019

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-00032432-011

22/11/2019

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-00032432-012

22/11/2019

Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977

CA-00032432-014

22/11/2019

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

CA-00032432-015

22/11/2019

This Decision is concerned in the first instance with complaints under the Transfer of Undertakings Regulations (generally described as TUPE) which sets out the obligation of a transferee to transfer, to consult and to inform where there is a transfer of undertakings from one employer to another. A decision is required as to whether there was a transfer of undertakings from the Respondent in other related cases, the previous service provider, to the Respondent in this case.

The Decision as to whether there was a transfer of undertakings will determine whether a dismissal occurred and if such a dismissal is found to have occurred and to have been unfair this in turn may  lead to consideration of the claim for redundancy.

All of the complaints arise from a change of contractor engaged to provide a catering service at a school, mainly school lunches. 

The four complainants in eight related complaints, the representatives of Respondents A and B together with the complainants’ representatives were present for the hearing of the complaints against both Respondents-by agreement of all representatives with the Adjudication Officer following a discussion prior to the commencement of the hearing.

ADJ-00025535;37;44;45;46;47;49;50 are all related to the same set of circumstances albeit with different respondents.

The Complainant was employed at a named school for another service provider who will be Respondent B in this text. She was employed as a catering assistant. She was employed for 14.75 hours per week during the school year on a weekly wage of €144.55. The Complainant was one of 5 employees of Respondent B employed at the school.

The Complainant contended that she and her colleagues were assured by the School Principal that if there was ever a change of contractor, they would transfer to the new contractor.

In July 2019, the Complainant received a letter from Respondent B, her former employer, asking for her details to be passed to the school for the purposes of TUPE ‘we are in a position to provide the client with details of your terms and conditions whilst in our employment to facilitate TUPE.

Complaint Transfer of Undertakings Regulations

In relation to this Respondent, it was submitted that they cannot say they were unaware of the previous employees. They had seen the tender issued by the school  which referred to obligations under  TUPE; one of the Complainants spoke to a person representing the Respondent before they engaged employees for the school contract and informed that named person of their assurances that they would be transferred to any new contractor; the Respondent had received CVs from all of the Complainants and knew that they had worked at the school for a number of years. They could not rely on the school as the decision maker as to the application of TUPE and opt out of TUPE on that basis-the school is not the decision maker as to the application or otherwise of TUPE. Respondent A failed to comply with the Transfer of Undertakings in failing to transfer the Complainant to their employment as a transfer of undertakings. There was a failure to consult and inform the Complainant.

This was a transfer of undertakings as defined under the Regulations.

In consideration of the question as to whether there was a transfer of undertakings from the previous service provider to the Respondent in this case, the tests set out in the ruling known as ‘ Spijkers’ (Spijkers vs Gebroe Benedik Abbatoir CV) were put to the complainant’s representative at the hearing and she was asked to set out how those elements applied in this case. The tests in the Spijkers case are commonly used in determining whether a transfer of undertakings has occurred and particularly arise where the change stems from a change of contractor providing a service.

The following is the response set out on behalf of the complainant in relation to each of the tests set in the Spijkers ruling:

1. Was the undertaking a stable undertaking, with ongoing life of its own?

Yes. There is an ongoing requirement for continuity of the service. The only change is in the use of different providers to deliver the service.

2. Has the entity retained its identity?

Yes. It is exactly the same as the previous service-providing a catering service to students, staff and visitors as required.

3. Have some or all of the staff been taken over by the new employer?

No. One person employed by Respondent A was employed by Respondent B.

4. Has the customer base transferred?

Yes. Students, staff and visitors.

5. Are the activities post-transfer similar to those carried out before the transfer?

Yes. A catering service for students, staff and visitors as required. All of the tasks to be performed by employees remained the same.

6. Has there been an interruption of the activity?

No. The only interruption was the break between the end of the school year 2018/2019 and 2019/2020. This is the natural and normal break which occurred every year previously as the service is not required during the summer school break.

7. Has there been a transfer of assets?

Yes. Respondent A and B had the use of a fully equipped kitchen on site which is a fixed asset essential to provide the service. Respondent A provided some small items of equipment, but the use of the school kitchen equipment passed from one contractor to the other.

Complaint Unfair Dismissals Act 1977

As a consequence of the failure of Respondent A to employ the Complainant on the school contract, she was in effect dismissed by the Respondent. The dismissal was without notice and unfair as it occurred for no good reason and in breach of the TUPE Regulations as set out.

Redress. Re-engagement at the school was sought by way of redress. Recognising that such a redress could lead to the displacement of others employed by the Respondent at the school, it was submitted on behalf of the Complainant that this could not be a consideration for the adjudication officer in arriving at a decision on the redress to apply in this case. The Complainant was unfairly dismissed, and the location of the work and the hours of work were particularly important to the Complainant.

Complaint Redundancy Payments Act 1967

A complaint was submitted for redundancy payments should this arise. However, the submission was that this was an unfair dismissal due to a failure to follow the obligations under the Transfer of Undertakings. Re-engagement and not redundancy is the appropriate redress sought by the Complainant.

Transfer of Undertakings Regulations

The Respondent denied that this was a transfer of undertakings. While they had seen the tender issued in June 2019, the Respondent did not tender for the contract when it was advertised. As the Respondent had completed the online expressions of interest to obtain the tender document, the school contacted the Respondent in the first week in August and asked them to feed the children at the school. They were informed by the school that the previous service provider had terminated the contract and there were no outstanding issues with the employees of the previous service provider-that there was no TUPE and no liability to those who were employed by the previous service provider-Respondent B as referenced in this case.  Respondent A commenced at the school on August 23rd having about ten days preparation for providing a service and initially serving sandwiches. Theirs was a verbal agreement to feed the children. No written terms of a contract were agreed with the school at the time, or since and the Respondent could withdraw from providing the service at any time. At no time was the Respondent informed by the school that they had any obligations to the employees. If they had been informed they were obliged to take on all of the commitments of the previous service provider, they would not have agreed to provide the service. The Respondent had no understanding before this case, that the termination of the contract by the previous service provider did not remove the passing of any liability under TUPE to the succeeding contractor.

Interviews took place in August and one of those employed by the previous service provider was employed by the Respondent.

Prior to September 4th which was after the service to the school had commence and new employees were engaged, the Respondent received no correspondence from the previous service provider. That employer had failed in their obligations to their employees and failed to inform or consult them as required under TUPE.

Referring to the Spijkers test, the Respondent accepted that in the main, the tests set out in Spijkers did apply to these circumstances, allowing for the fact that only one of the employees of the previous service provider was employed by Respondent A. The Respondent in this case disputed the existence of a stable undertaking with a life of its own-the first test set by Spijkers. There is no written contract between the Respondent in this case and the school. Respondent A can terminate the service at any time and may do so if there is an expectation they would be liable for the Complainant and others including a liability for redundancy into the future. The Respondent agreed to provide a service at short notice at the school and at first was able only to provide sandwiches. There is no stable undertaking in place under the current arrangement as required by application of the Spijkers test.

Complaint under Unfair Dismissals Act 1977.

In the event that it is decided that the employment of the Complainant transferred to the Respondent in this case, the preferred redress would be re-engagement, recognising this could have implications for existing employees of the Respondent at the school.

Complaint under Redundancy Payments Act 1969

In the event that it is decided that the employment of the Complainant transferred to the Respondent in this case, the preferred redress is re-engagement of the Complainant in which case a redundancy situation does not arise.

Once the facts in this case are set alongside the tests set out in Spijkers, based on the evidence provided at the hearing when the parties were provided with the opportunity to consider the application of these tests to the particular contract for service, so many of the features of the ECJ judgement apply in this case, that the most likely conclusion would be that this was a transfer of undertakings as between Resp. In addition to the analysis provided to each of the Spijkers tests, this is an economic entity with a trading base. That is to say, while the contractor pays a fee for the concession, thereafter the contract runs on a profit and loss basis depending on the number of meals or other goods sold to the customers and overheads including the number and terms and conditions of employees on the contract. While accepting that the contractor has a fixed or captive base within the school with some additional services for visitors and that it is not a restaurant or café with the ability to generate business outside of that base, nonetheless it differs from other contracts which come for review under the same Regulations where there is a fixed price for a service with no capacity to generate or indeed lose income as an economic entity. In those scenarios, case law tends to favour the incoming rather than the outgoing contractor which the latter frequently left with the problems and costs associated with terminating employment.

A question does arise from the responses to point three of the Spijkers tests, have some or all of the employees been taken over by the new employer? While one of the employees was taken on by the Respondent, this followed an interview process and cannot be readily used to adequately answer the test set by Spijkers. The conclusion on this point however, in this case the negative or at best incomplete answer to this test, cannot be reasonably extended to defeat the proportion and facts of the remaining tests which are met in this case as to do so would be to give a disproportionate weight to that one factor. And to give weight to a factor which the incoming contractor deliberately and consciously decided not to follow in this case, would be to allow that behaviour to undermine the entire purpose of the Regulations. This factor may be more crucial in other cases for example where there is a production facility, or in examining cases regarding changes in conditions of employment following a transfer. However in a case involving a change of contractor where costs and the reduction in costs are often the primary concern of the contracting body, and where the non-transfer of employees with more favourable conditions at higher costs would be a tangible benefit to  the incoming contractor and sometimes the contracting authority, to allow the decision not to transfer employees to be a positive test in favour of the incoming contractor such as to defeat the entire purpose of the EU Directive would be an error of judgement in the context of the Regulations and the circumstances of this case. An overly simplistic application of this element of the Spijkers test could reward chicanery at the expense of a legitimate expectation of protection from such behaviour through the application of the EU Regulations.

In their response, Respondent A in this case does not disagree to any great extent with the Complainant (or the Respondent in the related cases) when addressing the Spijker tests except for one-the first question, is this a stable entity. They submit that there is no stability as there is no written contract or terms agreed by them with the school. They had not applied for the contract through the tender system and only took on the provision of a service when asked to by the school in August 2019. In the absence of any contract they have no obligation to remain in the school and therefore the contract operated by Respondent A in this case could not be regarded as a stable entity. On this point, given that the school kitchen is an organised group of resources; the provision of the meal service had continued uninterrupted for eleven years; that the school was actively seeking a service provider in 2019, suggesting an intention to continue to provide the service to the customer base, it is found that the provision of the school meals service does sufficiently meet the criteria for a stable economic entity ,irrespective of the service provider.

The fact that it was the outgoing contractor who decided to terminate the contract to provide the service to the school appears to have influenced the school and the incoming contractor in concluding and /or accepting that this rendered the transfer of undertakings and related obligations null and void. However, that conclusion was arrived at, it has no influence on the facts, the concept of the undertaking as defined in the Regulations, precedent decisions and by extension, the obligations of either the outgoing or the incoming contractor.

While it does seem surprising that a contracting authority, having previously issued a detailed tender document with very particular specifications and conditions, has engaged a contractor on the basis of a verbal agreement, this fact does not change the fundamentals of the business arrangement i.e. that there is a contract between the school and Respondent B to provide a meals service at the school, under the same purpose contract as with Respondent A and involving the same range of tasks for their respective employees over the same period each year, in the same place, using the same equipment and providing a service to the same customer base.

Taking all the circumstances and evidence and submissions into account, the conclusion is that a transfer of undertakings did take place between from the previous contractor to the Respondent in what is known as a second-generation transfer.

On the basis that it is found that there was a transfer of undertakings from the previous service provider to the Respondent in this case, it follows that the employment of the Complainant was continuous or should have been treated as continuous by the Respondent in this case. The failure of the Respondent to apply the terms of Regulations 3,4 and 5 is a breach of those Regulations.

Separate from the breach of Regulations 3,4 and 5 there are the requirements set by Regulation 8, information and consultation. That Regulation permits no exceptions to the obligation to consult and inform employees who are due to transfer from one undertaking to another as defined by the Regulations.

The principle set out Subsection (7) of Regulation 8 is appropriate to the consider in this case:

‘The obligations specified in this Regulation shall apply irrespective of whether the decision resulting in the transfer is taken by the employer or an undertaking controlling the employer and the fact that the information concerned was not provided to the employer by the undertaking controlling the employer shall not release the employer from these obligations.’

The Respondent in this case relied on information provided by the school which controlled the contract as a reason or rationale for not applying the protections of TUPE to the Complainant. Once the school said that TUPE did not apply, that was the law as far as the Respondent was concerned. This approach could be incredible were it not for the fact that this was the interpretation of legislation which suited the Respondent. As stated at the hearing, if they were told that this was a TUPE, they would not have agreed to provide the school meals service and by extension to take on the five employees of the previous service provider. By accepting the information provided by the school principal, the Respondent will now inherit the very liability they wanted to avoid and have no choice in the matter. Nonetheless accepting that the Respondent was misinformed by the opinion of the contracting party cannot be accepted as a reason to ignore the obligation of the Respondent to make their own inquires and to satisfy themselves independently of the contracting party, the school in this case. Ignorance of the legislation is not an acceptable excuse. If the redress provisions under the Regulations were not to be applied against the Respondent in this case, any excuse based on ignorance could become the standard for future avoidance of obligations under this protective legislation. Given the Respondent was personally contacted by one of the employees of the previous contractor and informed of their understanding that they would be transferred from one contractor to another but chose to dismiss or ignore that information compounds the wrongdoing by the Respondent.

The Respondent is found to have breached their obligations under Regulation 8 of TUPE. Given that the Respondent now has other obligations and will incur other costs under the related decisions in this case, the compensation to be paid to the Complainant is limited to two weeks or half the maximum compensation available under Regulation 8 of TUPE. The amount of compensation takes account of the evidence at the hearing that it was August before the Respondent agreed to provide the service and could not therefore have applied the 30-day consultation period set out in Regulation 8.

Complaint of Unfair Dismissal

Following on from the finding that there was a transfer of undertakings from the previous service provider to the Respondent in this case, it follows that the correct application of the Regulations would have seen the employment of the Complainant transfer from her previous employer to the Respondent in this case. Furthermore, it follows that the employment of the Complainant was terminated by the Respondent in this case and, that as the Complainant was dismissed by the erroneous interpretation of the TUPE Regulations, it follows that her dismissal without notice and without any other reason, was unfair.

Complaint under Redundancy Payments Act 1967

As the dismissal is found to have occurred on grounds other than redundancy, the appeal under the Redundancy Payments Act 1967 is disallowed.

Complaint under Transfer of Undertakings Regulations,2003,2003(TUPE) SI 131/2003

The complaint that the Respondent breached the Regulations at Regulation 3,4 and 5 and Regulation 8 is well founded. There was a transfer of undertakings as defined under Regulation 3 from the previous service provider to the Respondent.

The Respondent is to pay the Complainant €289 compensation for the breach of Regulation 8 of the Regulations as this was the main case made by the Complainant aside from the complaint of unfair dismissal to which Regulation 5(1) applies.

As redress in respect of the complaint under the Unfair Dismissals Act is granted under that legislation, as provided for in Regulation 5(4,) there can be no additional award of relief in respect of the breach of Regulation 5(1).

Complaint under the Unfair Dismissals Act 1977 as revised.

The complaint that the Complainant was unfairly dismissed by the Respondent is well founded. The Respondent is to be re-engaged on the payroll at their previous weekly rate of pay with effect from 1 January 2020. The period from 31st May 2019 to 31 December is to be regarded as a period of unpaid lay off without a break in service or loss of other employment rights under the contract of employment which existed prior to May 31st 2019.

The redress of re-engagement is decided as it is the most appropriate for the Complainant and the Respondent. They have no employment relationship as such and can commence one without any concerns around such matters as breach of trust or disciplinary sanction or any known difficulties on the part of the contracting organisation, which can be considerations in deciding on compensation rather than re-engagement or re-instatement as the appropriate remedy. Recognising there will be a certain amount of inconvenience and cost to the Respondent by this decision it is far outweighed by the cost and inconvenience caused to the Complainant by the failure of the Respondent to apply the TUPE Regulations and her subsequent dismissal from usual her place of work.

Complaint under the Redundancy Payments Act 1967.

As the employment of the Complainant was terminated on grounds other than redundancy, the appeal under the Redundancy Payments Act 1967 is disallowed.

Transfer of Undertakings-Change of Contractor