ADJ-00019246

Complainant

Respondent

Anonymised Parties

A café worker

A cafe

Representatives

Adrian Twomey, Jacob and Twomey Solicitors

Patrick M. McCarthy Solicitor

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-00025113-001

18/01/2019

The Complainant worked in the Respondent’s café from 31st July 2017 until February 2018.

The Complainant’s average weekly wage was €345.73.

This complaint was received by the Workplace Relations Commission on 18th January 2019.

The Complainant commenced employment with company A on 31st July 2017. She was employed as café worker. Her duties included baking, washing up, running and managing a café.   The Complainant was a fulltime employee and worked varying hours. She was paid minimum wage rates (€9.25 per hour initially rising to €9.55 per hour later). The Complainant was dismissed on 5th February 2018 in anticipation of a pending transfer of the undertaking in which she was employed. Company A runs the café which incorporates a service station with a shop, a camping and caravan park, a fuel yard and a number of buildings which are leased out to other business owners. The named Respondent (the transferee) runs a café.   He leases the building and catering equipment from Company A. The Complainant also runs a number of other catering businesses. The Complainant submitted her complaint to the WRC on 18th January 2019. She complained against the Respondent under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 that she had been dismissed due to the Respondent leasing the entity to the Transferee. The Respondent also failed to inform the Complainant in writing of the transfer of the business as required under the legislation.

THE FACTS

The Complainant commenced her employment with the Company A on 31st July 2017. She was never furnished with a contract of employment or statement of her terms and conditions of employment. Neither was she furnished with an employee handbook containing any of the policies or procedures of the Company A. In fact, the Complainant is not aware of the Company A having any policies or procedures governing grievances, disciplinary matters, dignity at work etc. The Complainant’s role initially was to organise and get the café up and running as it had only been open for approximately two months at that point. There was one other person employed in the café, the chef.   The Complainant’s normal initial working hours were from 9am to 5.30 pm Monday to Friday although this would soon change. The Complainant’s gross average weekly wage was €345.73. In mid-August 2017 the chef left his employment and returned to his home country. The OWNER hired a local chef who covered the role for a period of just three weeks. No further staff were hired for the café. From that point on, the Complainant was expected to cook, bake, serve customers, clean, wash up, ensure compliance with HACCP (hazard analysis and critical control points) food safety standards, prepare meals, order supplies and prepare accounts. The owner also had the Complainant do the vegetable and salad shopping at a supermarket located 17km away. He informed her that he would pay her for her travelling expenses, but this never happened. The Complainant continued to discharge all functions in the café up until her dismissal in February 2018.

DISMISSAL

The employer telephoned the Complainant on Saturday 3rd February 2018 and asked her to meet him downstairs in the café. He informed her at the meeting that he was leasing out the café to someone else.   He requested that the Complainant not buy any more stock as the transfer would most likely happen within the following two weeks. When the employer left the Complainant realised that she had not asked him about her employment. She telephoned him and asked him and was told that he was terminating her employment. The employer contacted the Complainant on the Monday evening (5th February 2018) to confirm that the lease was going ahead but that the café remained closed. The Complainant met the employer on Tuesday 6th February 2018 as she was entering her apartment. He apologised for what was happening. The Complainant told him that she was unhappy and believed she had rights under the transfer of undertakings regulations and she would be seeking legal advice. He replied, saying that he didn’t think she would be interested in that at all.   The Complainant said she was and that she would be getting legal advice to which he responded, “oh we are going all legal now, are we?”.   The employer went over to his car and tried to give the Complainant her letter of termination.   She refused to take it from him until she received legal advice. The employer gave the letter of termination to the Complainant’s son the following evening when her son went into the shop.

Meeting with the Transferee

The Complainant was contacted by the Transferee in early February 2018 and she met with him.   During this meeting, he asked the Complainant to put together a CV for him. The Complainant did so and met him again about one week later. During that meeting he told her that he would not be taking on staff at that time (a statement that appears to be contradicted by his placing an advertisement looking for management and full and part time floor staff for the café on Facebook on 10th February 2018). The Complainant told him that she had rights arising from the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003.   At that point, he told her that he would have to get advice on the matter and the meeting ended. Following this meeting, the Transferee telephoned the Complainant numerous times requesting that she sign a document releasing him from his responsibilities following the transfer of the café. In fact, one such telephone call occurred while the Complainant was meeting with her Solicitor for the first time to seek legal advice on 27th February 2018. During one of the many times he called the Complainant requesting her to sign the document, the Transferee told the Complainant that the Respondents would leave the café closed for 6 months and 1 day in order to “get around” their obligations under the European Communities (Protection of Employees on the Transfer of Undertakings) Regulations 2003. It is assumed that the Complainant was of the belief that his obligations under the 2003 Regulations and the Acquired Rights Directive would expire six months after the Complainant’s dismissal.

Re-Opening of Café

In December 2018 an advertisement for staff was broadcast on Radio by the Transferee. The ad stated that a café would be opening and that it would be hiring staff to fill a number of positions including café manager, waiting staff and cooking staff. The Respondent appears to have re-opened the café under a different name on 18th February 2019. The lease agreement in the Transferee’s company name was dated 28th November 2018 and is to last until 17th November 2023. It is noted that the catering equipment which was used in the café by the Complainant is also included in the lease.

Consultation

Regulation 8 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 provides that:

1)      The transferor and transferee concerned in a transfer shall inform their respective employees’ representatives affected by the transfer of –

a)       The date or proposed date of the transfer

b)      The reasons for the transfer

c)       The legal implications of the transfer for the employees and a summary of any relevant economic and social implications of the transfer for them

d)      Any measures envisaged in relation to the employees

2)      The transferor shall give the information in paragraph (1) to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer is carried out and, in any event, in good time before the transfer is carried out.

3)      The transferee shall give the information in paragraph (1) to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer is carried out and, in any event, in good time before the employees are directly affected by the transfer as regards their conditions of work and employment.

4)      Where the transferor or the transferee envisages any measures in relation to employees, he or she shall consult the representatives of the employees, where reasonably practicable, not later than 30 days before the transfer is carried out and, in any event,, in good time before the transfer is carried out, in relation to any such measures with a view to reaching an agreement.

5)      Where there are no employees’ representatives in the undertaking or business of the transferor or as the case may be, in the undertaking or business of the transferee, the transferor or the transferee, as may be appropriate, shall put in place a procedure whereby the employees may choose from among their number a person or persons to represent them (including by means of an election) for the purposes of this Regulation.

6)      Where, notwithstanding paragraph 5) there are still no representatives of the employees in an undertaking or business concerned (through no fault of the employees), each of the employees concerned must be informed in writing, where reasonably practicable, not later than 30 days before the transfer and, in any event, in good time before the transfer, of the following

a)       The date or proposed date of the transfer

b)      The reasons for the transfer

c)       The legal implications of the transfer for the employee and a summary of any relevant economic and social implications for that employee

d)      Any measures envisaged in relation to the employees

7)      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 those obligations”.

The Respondents failed to comply with their obligations under Regulation 8 resulting in the Complainant being unclear as to exactly what was happening and when it was happening.

Dismissal

Regulation 5(1) of the 2003 Regulations prohibits dismissals arising from transfers of undertakings (with the exception of those occurring for economic, technical or organisational reasons), providing that “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”.  Regulation 5 reflects Article 4 of Council Directive 2001/23/EC of 12th March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses. Article 4 provides as follows: 1.       “The transfer of the undertaking, business or part of the undertaking or business shall not in itself constitute grounds for dismissal by the transferor or the transferee. This provision shall not stand in the way of dismissals that may take place for economic, technical or organisations reasons entailing changes in the workplace. Member States may provide that the first subparagraph shall not apply to certain specific categories of employees who are not covered by the laws or practice of the Member States in respect of protection against dismissal. 2.       If the contract of employment or the employment relationship is terminated because the transfer involves a substantial change in working conditions to the detriment of the employee, the employer shall be regarded as having been responsible for termination of the contract of employment or of the employment relationship”.

The first named Respondent made it abundantly clear to the Complainant in his telephone call on her on 3rd February 2018 that the café would be leased to another person within a short amount of time. When she contacted him later that evening, he was also quite clear that she was being dismissed because that is fact. That is precisely the type of dismissal that the Regulations and Directive seek to prohibit. The first named Respondent deliberately and unashamedly dismissed the Complainant in advance of the transfer. The second named Respondent (transferee) told the Complainant that he would not be taking on staff at that time. However, unknown to the Complainant at that time, he placed an advertisement on Facebook page on 10th February 2018. It advertised vacancies for the manager’s position and for full and part time floor staff for the café. The ad stated that the café would be opening “shortly”. When the Complainant referred to her rights under the Regulations, the Respondents sought to evade their obligations by delaying the transfer. The Complainant was expressly informed that they would wait for six months and one day. In that regard, the Complainant relies on the decision of the Court of Justice in Bork International v Londmodtagernes Garantifond, Case 101/87, in which the Court held (in paragraph 18) that “… the employees of the undertaking whose contract of employment or employment relationship was terminated with effect from a date prior to that of the transfer, contrary to Article 4(1) of the directive, must be regarded as still in the employ of the undertaking on the date of the transfer, with the result, in particular, that the employer’s obligations towards them are automatically transferred from the transferor to the transferee in accordance with Article 3(1) of the directive”.  In a recent ruling in matter of Colino Siguenza v Ayuntamiento de Valladolid (C-169/18) the Court of Justice found that a five month cessation of activities does not prevent a transfer of undertaking under EU law.   The Court found despite a company ceasing operating and dismissing all of its employees, that when a new company began trading in the same premises using the same equipment five months on that this scenario was capable of being a transfer of an undertaking.

Time Limit

The first named Respondent argues that

1.       The within complaint is out of time

2.       The Complainant has referred multiple claims in relation to the same matters.

The Complainant submits that: She was not informed and consulted with by the transferor and transferee as required under the Regulations and the Directive. This was an obvious breach of the Regulations and the Directive and left her in a situation where she was unclear as to exactly what was happening. She sought legal advice.   Some time later they informed her that they acted for the second named Respondent and could not continue to advise her. She then sought legal advice from another firm of Solicitors. At that time, it was not clear whether or not a transfer had actually taken place. Complaints were submitted to the WRC on 12th July 2018 under the Terms of Employment (Information) Act (in relation to the non-provision of a statement of terms and conditions of employment), the Organisation of Working Time Act 1997 and the Minimum Notice legislation. Those claims have since been heard by the WRC and the Labour Court on appeal. The Complainant was successful with her claims. In circumstances where the Complainant had not been furnished with the requisite information by the Respondents and was unclear as to whether or not a transfer had yet taken place, she also referred a complaint to the WRC under the Industrial Relations Act 1969. The first named Respondent objected to the WRC hearing same. The matter was referred to the Labour Court and has been adjourned pending the outcome of the instant matter. The Complainant later discovered that the transfer had in fact taken place and that the second named respondent was advertising for staff. At that juncture, the instant complaints were filed (on 18th January 2019). That date of filing as well within a year of her “dismissal” in February 2018. The first named Respondent argues that the claims are out of time. In that regard, the Respondent submits that: a)       In light of the decision in the Bork International case, she was still in employment on the date of the transfer and so the six month time limit only started to run when the transfer took effect and the second named Respondent failed to continue her employment.   When was the date of transfer? It now appears that a lease was signed on 28th November 2018 (less than six months before the instant claims were submitted). In those circumstances, as a matter of law, the Complainant should have been paid up to at least that date and was then effectively dismissed in breach of the Directive and the Regulations. b)      Even if that were not the case, the applicable time limit may be extended out to up to 12 months pursuant to section 41(8) of the Workplace Relations Act 2015 if the Adjudication Officer “is satisfied that the failure to present the complaint or refer the dispute within that period was due to reasonable cause”. In the instant case there is certainly reasonable cause in circumstances where the Complainant was not informed or consulted with and was left in the dark as to what was happening until her Solicitors heard the advertisement on local Radio during the Christmas period. Paragraph 10(5) of the Regulations: The first named Respondent relies on paragraph 10(5) of the Regulations but does not quote it in its entirety.

The following is a chronology of events taking place between the Complainant and the Respondent.

15th February 2018

Our client was contacted via telephone by a lady whom at that time was unknown to him (the Complainant). Her reason for contacting the Respondent on the above date was simply to look for employment. Our client was told by the Complainant that she was employed by a business, a café located in (location named) and it had recently closed. At that time, the Respondent company had an interest in the vacated property and had an interest in opening a new café. The Complainant had heard this and was enquiring to see if there would be a position available, should the Respondent company proceed with this project.   The Complainant confirmed to our client that she had been working in the café for five months prior to its closing down.

6th March 2018

The Respondent was once again contacted by telephone by the Complainant. She requested a meeting so that she could produce her curriculum vitae. Our client accepted her invitation to meet and the meeting was scheduled for 14th March 2018 in a hotel in a nearby town.

14th March 2018

As agreed, the Respondent met with the Complainant in a hotel in a nearby town. On arrival, she produced a paper copy of her cv.   In an informal conversation, the Complainant told our client that the previous employer was also her landlord, had given her son the letter of “termination of work”. Due to him not handing it to her personally, the Complainant had sought legal advice and had been advised that she could bring a legal action against her previous employ for not terminating her employment contract (as well as her home lease) in the correct manner. The Respondent was further informed by the Complainant that her Solicitor had also advised her that she should have a right to employment with the new owner of the café under the European Communities Regulations, whereby there is a right of Protection of Employees on the Transfer of Undertakings. It was then made clear to the Respondent by the Complainant that she had every intention of bringing a case against her former employer. As a result, the Respondent informed the Complainant that he had no intention of reopening a café if there was going to be an ongoing legal case which might impinge somehow on his company. The Complainant confirmed to our client at this meeting that her legal case would not involve his company and her intentions were to seek justice for the way her former employer had treated her. The Complainant was adamant that she did not want to stand in the way of another company conducting business from the premises in which she had previously worked. The Respondent expressed his concerns and kindly requested if this could be put in writing as he felt that he needed to be 100% sure that any legal case going forward would not involve his company. The Complainant again stated that she had no interest in his company and that our client would receive this in writing. The Complainant also stated that before she would put this in writing, she would consult her Solicitor. At the end of the meeting the Complainant asked the Respondent to call her on Saturday 17th March 2018 in relation to discuss further the requested paperwork.

17th March 2018

The Respondent contacted the Complainant via phone as agreed. She informed the Respondent that she had not been to her Solicitor yet and again it was reiterated to the Respondent to continue his steps to secure the property for the opening of a new café. She stated again that she would not delay or involve his company.   She instructed the Respondent to follow this up with her with a phone call within the next week.

Week of 19th March 2018

As instructed the Respondent contacted the Complainant the following week via telephone. The phone call was intercepted by a man, at that time unknown to the Respondent. He explained that he was representing the Complainant as his client. The Complainant’s representative asked for as to what reason he was contacting the Complainant. The Respondent explained that the phone call was from a request made by the Complainant in regard to a letter she agreed to provide. The Representative said that his client, would not be producing any such paper work and that legal action was being taken by his client.

March / April 2018

After careful consideration the Respondent company decided it would not proceed with this project.

August 2018

The premises that the Respondent had previously shown interest came up for lease. The Respondent noted an advertisement in the website Daft.ie. He contacted the letting agent to arrange a viewing and request further information on the understanding that all legal matters had been finalised. From this point, the Respondent dealt exclusively with the Auctioneers. At that time the previous café had been closed for over six months. An agreement was signed on 28th November 2018 with a commencement date of 18th February 2019. The café had been closed since February 2018 and would have needed to be totally revamped.

February 2019

The Respondent opened a food establishment business in the premises and trading commenced on Monday 18th February 2019.  It is imperative to note that this was over one year from when the previous owners closed down the café.

Initial Point – Complaint made outside time limit

The complaint in this case is made outside and after the expiration of the period of six months from the date of the contravention to which the complaint relates. This was set out by the WRC in correspondence of 21st January 2019 and therein stated that an Adjudication Officer may not entertain a complaint / dispute under Regulation 10 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (“The Regulations”) if it has been presented after the period of six months has expired. It is accepted that an Adjudication Officer may look at a complaint if the said Adjudication Officer is satisfied that the failure to stay within the said statutory timeline was due to a reasonable cause. The Respondent does not accept that any threat was made to the Complainant stating that he would wait for six months. The Respondent is adamant that he had given up all hope of his company opening a café.   It was only after seeing the property put up for lease on Daft.ie that the matter was reviewed again. At that time, it had been conveyed to him that the former business had all matters sorted and dealt with.The former business had terminated in February of 2018 and the premises had remained shut and closed down until December 2018. No business whatsoever had been carried out in the interim period. If the Claimant had taken proceedings against her former employer there is no reason why she should not have taken her claim within the statutory timeline allowed. No proper rational reason has been given for the Adjudication Officer to entertain the complaint and there is no reasonable cause for the delay.

Submissions

The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 is clear. For the transfer of an undertaking to take place, there must be a change in the person (either an individual or a company) responsible for the running of the undertaking/business. The previous economic activity of the undertaking/business must be carried on by the new employer and The undertaking /business must be transferred as a going concern. A going concern is defined as a business that functions without the threat of liquidation for the foreseeable future which is usually regarded as at least the next 12 months. A going concern implies for the business to keep operating its activities at least for the next year which is the basic assumption for preparing financial statements. Simply stated a going concern is the ability of a business to meet its financial obligations when they fall due. The business that was carried out by the Complainant’s former employer, the café, was closed in February 2018 due to the fact that the café was not making any money and no business was carried on for one year until February 2019.   Accordingly, this claim cannot come within the ambit or parameters of the Regulations. The café was not making any money for the previous owner and he closed its doors. This was proven once again when the Respondent’s company had to close its doors on 21st August 2019 for the same reasons. A further issue arises with the complaint. The Respondent as tenant agreed the letting of the property with the Complainant’s former employer and is also the employer of the employees that gained employment in the premises from 18th February 2019. The WRC had set out in their documentation Complaint Ref no. CA-00025113 and Adjudication Ref ADJ-00019246 that the Respondent is xxxxxx.   This is incorrect. The Correct Respondent in this matter is xxxxx Supplies Ltd and it is our submission that on this basis the complaint cannot be successful against our client xxxxx.

The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003) is possibly the most complex piece of employment legislation and to quote one eminent barrister is “A series of confusing and sometimes unclear indicators regarding what must be taken into consideration” (Kerr). In this instance the Complainant commenced employment with the Respondent on 31st July 2017.   She was employed as café worker.   Her duties included baking, washing up, running and managing a café. The Complainant was a fulltime employee and worked varying hours. She was paid minimum wage rates (€9.25 per hour initially rising to €9.55 per hour later). The Complainant was dismissed on 5th February 2018 and she contends that this was in anticipation of a pending transfer of the undertaking in which she was employed.

The Respondent ran the café which incorporates a service station with a shop, a camping and caravan park, a fuel yard and a number of buildings which are leased out to other business owners.

There are two questions to be answered:

1.       Was there a transfer of undertakings and if so?

2.       The date of the transfer has to be established.

The Respondent telephoned the Complainant on Saturday 3rd February 2018 and asked her to meet him downstairs in the café. He informed her at the meeting that he was leasing out the café to someone else.   He requested that the Complainant not buy any more stock as the transfer would most likely happen within the following two weeks. When the Respondent left the Complainant realised that she had not asked him about her employment. She telephoned him and asked him and was told that he was terminating her employment. The Respondent contacted the Complainant on the Monday evening (5th February 2018) to confirm that the lease was going ahead but that the café remained closed. The Complainant met the Respondent on Tuesday 6th February 2018 as she was entering her apartment. He apologised for what was happening. The Complainant told him that she was unhappy and believed she had rights under the transfer of undertakings regulations and she would be seeking legal advice. He replied, saying that he didn’t think she would be interested in that at all.   The Complainant said she was and that she would be getting legal advice to which he responded, “oh we are going all legal now, are we?”.   The Respondent went over to his car and tried to give the Complainant her letter of termination. She refused to take it from him until she received legal advice. The Respondent gave the letter of termination to the Complainant’s son the following evening when her son went into the shop. The situation described above is very indicative of a transfer of undertakings and in this regard the Respondent becomes the Transferor. It is clear at this stage that it was the intention of the Respondent to lease the business as a going concern. Regulation 4(1) reads as follows: “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” Regulation 5(1) reads as follows: “The transfer of an undertaking, 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 transferee is prohibited”. In relation to a transfer date the representative for the Complainant has cited some recent case law - Colino Siguenza v Ayuntamiento de Valladolid (C-169/18) the Court of Justice found that a five month cessation of activities does not prevent a transfer of undertaking under EU law.   The Court found despite a company ceasing operating and dismissing all of its employees, that when a new company began trading in the same premises using the same equipment five months on that this scenario was capable of being a transfer of an undertaking.

Colino Siguenza v Ayuntamiento de Valladolid (C-169/18) – this case is not straight forward:

The Court of Justice of the European Union has held that, contrary to the opinion of Advocate General Tanchev in December 2017, a gap of five months in an undertaking’s activities does not necessarily preclude a transfer for the purposes of the Acquired Rights Directive (2001/23/EC) (ARD). The Claimant, Mr Siguenza, worked as a teacher at a music school in Spain. The School was run by the local authority until 1997 when it outsourced to a contractor. Following poor financial performance, the contractor dismissed all the staff in April 2013 and subsequently ceased to operate. At the start of the next academic year in September 2013 the management of the school was given to a new contractor, who employed a different staff team. The CJEU considered that in this case there could be a transfer of an economic entity within the meaning of the ARD. The Court took into account the fact that the premises and other assets of the business were owned by the local authority at all times, and that three months of the closure had been school holidays. However, the CJEU also held that the claimant’s dismissal appeared to be for an economic, technical or organisational (ETO) reason. The final decisions on both points were referred back to the Spanish Courts. In the instant case I note that lease agreement was signed by the Respondent on 28th November 2018 and the lease arrangement commenced on 18th February 2019. On reading through the terms of this lease agreement I note that assets were included: hot counter, cold counter, fridges, dishwater, barista coffee machine, cooking hob, fryer, full range of pots and pans, catering utensils tables, chairs and a cash register. In Celtec Ltd v Astley and Others (Case C -478/03) [2005] ECR 1 – 4389, the ECJ held that art 3(1) of Directive 77/187 must be interpreted as meaning that the date of a transfer within the meaning of that provision is the date on which responsibility as employer for carrying on the business of the unit transferred moves from the transferor to the transferee. That date is a particular point in time which cannot be postponed to another date at the will of the transferor or transferee. For the purposes of applying that provision, contracts of employment or employment relationships existing on the date of the transfer between the transferor and the workers assigned to the undertaking transferred are deemed to be handed over, on that date, from the transferor to the transferee, regardless of what has been agreed between the parties in that respect.  In applying Celtec Ltd v Astley and Others (Case C -478/03) [2005] ECR 1 – 4389 to the instant case the date of transfer was 18th February 2019. This complaint was received by the Workplace Relations Commission on 18th January 2019, approximately one month before any transfer of undertaking took place. I find that from this fact I must decide that the complaint is not well founded and therefore fails.

I decide that the complaint is not well founded and therefore fails.

TUPE