Complainant

Respondent

Anonymised Parties

Contract Catering Staff

Respondent A-Catering Service Provider

Representatives

Liam J Sheridan Sheridan & Co, Solicitors

Denis O'Mahony VP McMullin Solicitors, Stephen O Sullivan BL

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-00032431-001

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-00032431-004

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-00032431-005

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-00032431-008

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-00032431-013

22/11/2019

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

CA-00032522-001

22/11/2019

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

CA-00032522-002

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 transferor 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 by Respondent A from 14/11/2016 until her last working day-30th May 2019. She was employed as a catering assistant working 14.2 hours and receiving €139.65 per working week at the school where the Respondent provided a catering service. Employment at the school was aligned with the school year. Her income in 2018 on the most recent P60 gave her income for the year as €2523.59.

The complainant was one of five employees of Respondent A working at the school until May 2019.

It was submitted by the complainant that she and the other employees at the school had an understanding from the School Principal that she and the others employed by Respondent A would be retained if there was ever a change of contract provider.

The complainant’s manager told another complainant that their company was pulling out of the contract but that the staff would not be affected.

On July 15th, 2019, the complainant was informed in writing by Respondent A that they had ceased to provide the service at the school. The letter informed her that Respondent A would facilitate the transfer of her employment under TUPE and her permission was requested to release her personal details to the incoming contractor, which she did on or around July 23rd.

In August the complainant discovered that the incoming catering service was advertising for new employees. One of her colleagues spoke to a named representative of the incoming contractor informing the representative that she and others had been employees of Respondent A and were informed that they would be transferring to work for Respondent B. That colleague was informed that she and others who wanted to continue to work at the school should apply for positions with the incoming contractor and that vacancies would be filled on the basis of experience and qualifications.

The complainant in this case was interviewed by the incoming contractor but was not engaged by them. One of the complainants informed Respondent A of what had occurred and that there was no transfer.

On September 4th the complainant received a letter from respondent A in which he confirmed their previous position that a transfer of undertakings to the employment of Respondent B had occurred and suggesting that the complainant take legal advice on the matter.

Complaint under Transfer of Employment Regulations,2003 (TUPE)

The submission on behalf of the complainant cited Regulation 8-provision of information and consultation and Regulation 6-notice requirement containing associated details as set out in that Regulation. It was submitted that the Respondent failed to comply with these provisions in terms of notification or consultation.

As the hearing progressed, the case on behalf of the Complainant became one that a transfer of undertaking had occurred, and the complainant’s representative then accepted that only Regulation 8 could apply to Respondent A.

In consideration of the question as to whether there was a transfer of undertakings from Respondent A to Respondent B 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 that 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.

In consideration of the question as to whether there was a transfer of undertakings from Respondent A to Respondent B 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 that 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

At the hearing, Counsel accepted that if the decision is that a transfer of undertakings did occur and therefore continuity of employment to the incoming contractor occurred by application of the Regulations, then it is accepted that a complaint of unfair dismissal against Respondent A does not arise. Alternatively, should it be decided that there was no transfer of undertakings, the complaint is one of unfair dismissal. The complainant was dismissed without payment of notice. The Respondent has a number of other contracts to which the complainant could have been redeployed. Those contracts were located in places which would have suited the complainant’s personal circumstances.

Re-engagement with Respondent A on other contracts was sought by way of remedy.

Measures taken by the complainant to mitigate loss were set out at the hearing.

Redundancy Payments Act 1967

In the event that it is decided that there was no transfer of undertakings from Respondent A to Respondent B, and it is found that the complainant was dismissed by Respondent A, while re-engagement is the preferred form of redress of the complainant, the matter of whether the dismissal, if it occurred, was in fact a redundancy situation would also arise for consideration by the Adjudication Officer.

Respondent A provided catering services at the named school from 2008 until May 2019. In 2018, Respondent A was required to retender for the contract and was successful in that tendering process. Clause 2.11.2 of said contract referred to the contractor being obliged to include an undertaking to comply fully with TUPE. In May 2019, the Respondent had five people in employment on the contract at the named school. Four of these are now complainants against Respondent A. Originally employed on a fixed-term contract, the complainant became entitled to and was employed on a CID.

In May 2019, the complainant was laid off for the summer months, as was the normal practice. At that stage Respondent A expected her to return to her employment with a new contractor in the school at the commencement of the school year 2019/2020. This followed the decision of Respondent A to terminate its contract with the school which they had notified to the school in March 2019.

On May 27th, 2019, the school asked Respondent A to complete a transfer of undertakings form which the school had provided, and Respondent A duly did so.

On June 7th the school issued a further request for tenders with a deadline of June 27th. The request contained the following statement at paragraph 1.5:

Tenderers should note that S.I. No. 131 of 2003 may apply to this contract (Protection of Employees on Transfer of Undertakings). Tenderers are requested to engage directly with the outgoing service provider.’

On June 26th, the day before the expiry of the timeline for submitting a tender, the school notified Respondent A as follows:

‘To whom it may concern, an amendment has been made to Appendix 1 in relation to TUPE along with the removal of TUPE information, as there is no contract in place.’

Respondent A did not submit a tender.

On July 15th Respondent A notified the complainant that they would no longer be providing the service and asking for permission to provide her employment details to the school for the purposes of TUPE, which she duly did and which the Respondent passed on to the school.

In August Respondent A was contacted by the school asking that they would consider providing the contract services for the upcoming school year, which Respondent A declined to do.

Respondent A was not informed of the identity of the incoming contractor and learned of their identity only when a named complainant contacted him.

Respondent A understands that the incoming contractor commenced providing catering services at the school on August 23rd, 2019.

Response to Complaint under TUPE

Respondent A contends that the change of service provider at the school in August 2019 was a transfer of undertakings.

Decisions of the ECJ in the case known as ‘Suzen’ and ‘Abler v Sodexho’ were cited on behalf of the Respondent as supporting the contention that a transfer of undertakings had occurred as between Respondent A and B.

In consideration of the question as to whether there was a transfer of undertakings from Respondent A to Respondent B the steps set out in the ruling known as ‘ Spijkers’ (Spijkers vs Gebroe Benedik Abbatoir CV) were put to representative of Respondent A at the hearing and he was asked to set out how those elements applied in this case. The tests in that case are commonly used in determining whether a transfer of undertakings has occurred and particularly arises where the change stems from a change of contractor providing a service. The following is the response set out on behalf of Respondent A 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. Agreeing with the complainant representative, adding-this is a not a temporary need, each of the employees had a minimum of two- or three-years contract. The complainants were employed mainly in the one place on the one contract except if required to provide cover on limited occasions and not all of the employees were requested to do so.

2. Has the entity retained its identity?

Yes. Agreeing with the complainant representative adding-the tender was a circular tender issued to different contractors for the same service.

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

No. On behalf Respondent A, Counsel added that it was difficult to fathom why the incoming contractor had taken one employee and not the others as 4 or 5 of the previous employees were interviewed. The selection of only one of Respondent A’s employees suggests a purposeful intent on the part of the incoming contractor not to employ those employees of Respondent A. It was not a case that the incoming contractor had readymade replacements-they advertised for staff and held interviews.

4. Has the customer base transferred?

Yes. Students, staff and visitors-complainants position agreed by Respondent A

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

Yes. A catering service for students’ and staff and also visitors as required. All of the tasks to be performed by employees remained the same. Respondent A agrees with the complainant on this point.

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. Respondent A agrees with the complainant on this point.

7. Has there been a transfer of assets?

Yes. Respondent A and B had the use of a fully equipped kitchen on site. Respondent A provided some small items of equipment, but the use of the school kitchen equipment passed from one contractor to the other i.e. from Respondent A to Respondent B-this point is agreed between the complainant and Respondent A. Counsel submitted that at most, in the entirety of  the complaints against Respondent A, any shortfall on their part is limited to meeting their obligations under terms of Regulation 8 of the statutory instrument and a corresponding finding of compensation payable up to a maximum of four weeks pay per year of service. In considering this point regard should be had to the fact that Respondent A did inform the complainant of the change of contractor and did provide the necessary employee information to the school, was not notified of the name of the incoming contractor by the school and he understood at all times that the incoming contractor had obligations under TUPE and was aware of those obligations. Respondent A provides catering services at a number of schools and has always transferred the employees of the previous contractor to their employment based on their understanding of their obligations under TUPE.

Complaint under Unfair Dismissals Act 1977, as revised.

Respondent A contends that he has no case to answer in respect of a dismissal. There was a transfer of undertakings as a consequence of which employment was continuous as between Respondent A and Respondent B. Respondent A did not terminate the employment of the Complainant. In any event, Respondent A did examine their other contracts to see if there were suitable vacancies for any of the complainants but there were none available.

Complaint under Redundancy Payments Act 1967.

The complainant was not made redundant by Respondent A. There was a transfer of undertakings as a consequence of which employment was continuous as between Respondent A and Respondent B and no redundancy existed.

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 Respondent A and B, the two service providers. 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 Respondent B, 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, as will be seen in the related complaints against them, Respondent B does not disagree with the analysis of Respondent A or the Complainants when addressing the Spijker tests except for one-the first question, is this a stable entity. Respondent B submits 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. Respondent B stated that, in the absence of any contract they had no obligation to remain in the school and therefore the contract operated by Respondent B 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, 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 Respondent 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 and 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 undoubtedly take place between Respondent A and Respondent B.

Given the forgoing conclusions, the question to be addressed towards Respondent A is whether they met their obligations to the complainant under TUPE. When the chronology is examined, Respondent A was aware that they would no longer be providing the service at the school in March 2019. This followed a discussion with the school. Nothing material changed in terms of the Respondent A’s interest in the contract thereafter. From that point and certainly no later than June, when Respondent A knew they were not tendering for the contract, the obligations of Respondent A to their employee under TUPE commenced. In addition, and most seriously when Respondent A saw the change in the contract term issued by the school in June, implying very clearly that the school now believed that TUPE did not apply, then Respondent A should have advised their employees of developments. Instead he sent a letter on July 15th saying, ‘we are in a position to provide the client with details of your terms and conditions whilst in out employment to facilitate TUPE, however we require your permission to do so….’ Crucially, this letter sent to the complainant was based on information requested by the school in May. When issued to the complainant in July, the school had corrected the tender document removing the reference to TUPE. The letter was issued by Respondent A as though nothing had altered between May and July when, in the view of the school at least, the circumstances were very much altered in terms of the application of TUPE to any incoming contractor. While the earlier text in the tender document setting out the obligation of the contractor to ensure adherence to the TUPE Regulations is very carefully worded so as to place an obligation on the contractor while indemnifying the school against any claim or costs arising from a failure to fulfil its obligations under TUPE, it cannot be read as an interpretation that the Regulations automatically applied to a change of contractor. In contrast, the removal by the school of that clause in its entirety on June 26th gave an absolute interpretation that TUPE did not apply to any incoming contractor and by extension, to the employees of Respondent A.

The obligations of Respondent A under TUPE were not met by gathering information for the school regarding their employees and at the request of the school. The letter of information on July 15th would lead any reasonable employee to believe that the school and Respondent A had an agreed understanding regarding the future security of their employment with a new contractor whereas from no later than June 26th, 2019, this was absolutely not the case.

How Respondent A  could have assumed that there was a protection arrangement for their employees between the school and any incoming contractor is difficult to fathom when there is no evidence that they challenged the school on the change in the tender documentation in June 2019 or indeed set out their position on the matter of a transfer in writing to the school with whom they had a long association and could easily have done so. There is no evidence that they even inquired of the school who would be taking over the contract so that they could carry out their obligations under TUPE. The advice to the employees on July 15th was misleading given Respondent A’s own state of knowledge at that time. A subsequent letter on September 4th advising the complainant to take legal advice and a letter of the same date to the incoming contractor containing one line ’For your information, I have enclosed correspondence issued to affected employees relating to transfer of undertakings in the above catering contract.’ was all a case of, too little too late.

The complainant is entitled to the maximum compensation from Respondent A arising from their failure to meet their obligations under Regulation 8 of the Transfer of Undertakings Regulations noting that this amount of compensation paid to a part time worker on low income goes only a little way to compensate her for the cost and inconvenience to her caused by  being effectively left to her own devices by Respondent A and then following his advice.

Complaints of Unfair Dismissals and Redundancy.

Following of from the finding that there was a transfer of undertakings from Respondent A to Respondent B, it follows that the claims of unfair dismissal and redundancy pay can have no merit where the employment of the complainant transferred from the Respondent in this case, A, and by definition was not terminated by Respondent A.  

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

The complaint that the Respondent in this case breached Regulations 8 of the Transfer of Undertakings Regulations is well founded. The Respondent is to pay the complainant the sum of €558 compensation.

Complaint under the Unfair Dismissals Act 1977, as revised. As the complainant was the subject of a transfer of undertakings from the employment of the Respondent in this case, her employment was not terminated by the Respondent and as such, the complaint of unfair dismissal against the Respondent is not well founded.

Complaint under the Redundancy Payments Act 1967. As the complainant was the subject of a transfer of undertakings from the employment of the Respondent in this case, her employment was not terminated by the Respondent and as such the appeal for payment of redundancy is disallowed

Transfer of Undertakings-Change of Contractor