Complainant

Respondent

Parties

Kieran  Philbin

Boylesports Unlimited (amended on consent at hearing)

Representatives

 Appeared in Person  

 Human Resource Manager

Act

Complaint 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-00031961-002

01/11/2019

This matter was heard by way of Remote Hearing pursuant to Civil Law and Criminal Law (Miscellaneous Provisions) Act, 2020 and SI 359/2020, which designates the WRC as a body empowered to hold remote hearings.

This a conjoined case with ADJ 25579.

As the hearing in this case post-dated Zalewski v Adjudication Officer and WRC [2021] IESC 24 and considering the revised guidelines issued on the procedural aspects of WRC hearings now held in public, I canvassed the parties on their views on progressing with the case.

Both parties told me that they had no issue advancing with a hearing held in public. Neither party sought to await the legislative changes on Oath/ Affirmation to advance this case.

The Complainant presented as a Lay Litigant and the Respondent was represented by the Human Resource Manager.

I requested sight of the Complainants contract of employment, July 22, 2019 letter and details, if any on the Share Purchase Agreement.

The Complainant was employed as a Shop Manager following a transfer of undertakings in 2019. He had worked continuously at the premises from 14 August 2017 to his elected departure in March 2020. He was a full-time employee who received a gross pay of €580.00 per week. He was simultaneously engaged in private study.

The Complainant had made a parallel complaint regarding “rest breaks “to the WRC Inspectorate.

By way of written complaint, the Complaint had raised a complaint in respect of the Transfer of Undertakings which had occurred at the business in July 2019 (ref ADJ 25579)

The Complainant submitted that he had received 6 days official notice of the takeover of the business. He had picked up on a rumour from customers of take over previously, but this had been denied by the previous owner of the business.

The Complainant stated that he had met with a representative from the Transferee (the respondent in this case) 3 days before the takeover who rejected the need to give 30 days’ notice of takeover as the company did not employ more than 50 employees.

At hearing, the Complainant expanded on the transition of the business from the respondent in ADJ 25579 to the present respondent.

He outlined that early in June 2019, a customer had intimated that the business was to be sold. The Complainant was unable to verify this until July 2019, when he discovered informally that the Lease Agreement had changed on the Building where he worked. The then Owner, once challenged confirmed that an offer was on the table.

Early the following week, the then Owner told staff that the deal was now complete, and the Business was to transfer, staffing intact, the following Sunday. He promptly departed the Business.

The Complainant was directed to engage with the Respondent Human Resource Team.

The Complainant submitted he had engaged with the Respondent as requested the following Wednesday/Thursday. He received a formal notice of takeover. At this meeting, he sought to raise the obligations that accompany a transfer of business through TUPE but was informed that the Regulations were not applicable as the company had not employed more than 50 employees.

He was permitted to retain his 3-day sick leave, which was an implied term of his contract. He was also permitted to retain his Bonus structure. The staff reduced to two. The Complainant stated that he had no knowledge of a letter from the Respondent dated July 22, 2019. He did not recall details of a Share Purchase Agreement.

He submitted that he continued to work in the same shop, but the system changed, but was fed up as having been deceived by his earlier employer. He submitted details of an application for a Bookmakers licence by the Respondent from May 2019, which he argued put the intention to take over the business much sooner than July 2019. He left the Business in March 2020.

The Complainant submitted that he had not been advised by the respondent in relation to the transfer in July 2019. He remained disenchanted by his treatment at the Business following take over in July 2019.

The Respondent operates a large Book Making Business.

The Respondent outlined that a Share Purchase Agreement had been concluded by the named respondent and the Respondent in ADJ 25579 on 19 July 2019. She submitted that TUPE had kicked in on July 22, 2019 in the complainant’s case. The Respondent undertook to furnish details of the Share Purchase Agreement post hearing. This was received and shared with the complainant.

The Respondent took issue with the complainants attempt to place “rest breaks “into the realm of this complaint and argued that these issues were not properly before the Adjudication hearing.

The Respondent acknowledged that the Complainant was consulted on the transfer of the business 6 days before the takeover on 22 July 2019.

She submitted that the company had found that a best practice approach is to meet each staff member individually, rather than collectively, as this had been gleaned from 24 successful take overs.

She spoke to every member of staff individually. This totalled 18 staff across several sites.

The Human Resource Manager outlined that she had met the complainant on 18 July 2019. He had not mentioned retention of bonus at this point. The meeting addressed a protection of terms and conditions on transfer, in addition to communication that opportunities for progress within the respondent company.

The Complainant was offered transition to a respondent contract, but he declined.

There was a Commercial sensitivity associated with the take over as it preceded a large race meeting week. Opening of the brand was a priority for the business.

The Complainant had not raised a grievance during his employment and he had signed for the staff handbook.

The Human Resource Officer referred to a letter dated 22 July 2019, which confirmed the details of the consultation meeting. This was forwarded to WRC in tandem with the Share Purchase Agreement and shared with the Complainant.

I have been asked to decide in accordance with Regulation 10 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003. In reaching my decision, I have had regard for the parties oral and written submissions, the contract of employment and the extract from the Share Sale Agreement received post hearing. Neither party pro offered any response to these post hearing receipts.

I note that the complainant has made a parallel complaint to the WRC Inspectorate on rest breaks commensurate with the submission date of the instant complaint. While, I see that he has registered some dissatisfaction with the initial framing of his complaint on 4 September 2020, I must record that this complaint is not properly before me. My sole inquiry in this case comes in under Regulation 8, Information and Consultation.

I appreciate that this complaint has taken some time to come to hearing, given the initial submission of November 1, 2019. However, the hearing date of 15 April 2021 was the earliest possible date available.  

I have two issues to address in this case.

1 Did a transfer of undertakings occur within the meaning of the 2003 Regulations?

2 Did the Transferee uphold its obligations set down in Regulation 8.

A brief background to the evolution of the 2003 Regulations may centre a certain focus in this case. In Chapter 23 of Maeve Regan, Employment Law, Gary Byrne draws from a circuitous route to the Acquired Rights Directives culminating in Council Directive No 2001/23/EC of 12 March 2001.

“The aim of the 2001 Directive was to reduce the differences then existing in Member states on the protection of employees in situations where the ownership of the undertaking in which they worked changed resulting in them having a new employer “

The 2001 Directive was adopted verbatim by SI 131/2003 European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003.

A transfer is to be construed in accordance with Regulation 3.

These Regulations shall apply to any transfer of an undertaking, business or part of an undertaking or business from one employer to another employer because of a legal transfer (including the assignment or forfeiture of a lease) or merger.

(2) Subject to this Regulation, in these Regulations

“transfer “means the transfer of an economic entity which retains its identity

“economic entity “means an organised grouping of resources which has the objective of pursuing an economic activity whether that activity is for profit or whether it is central or ancillary to another economic or administrative entity

The Regulations cover Public and Private undertakings engaged in economic activities for gain or otherwise.

A Transfer of Undertaking is defined in article 1 of the Directive as

Transfer of an economic entity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic identity, whether that activity is central or ancillary.

C- 13/95 Suzen , C-48/94 Rygaard .

Retention of Identity has been a key criterion for transfer of undertakings based on the overall assessment of 7 criteria from C-24/85 Spijkers

1.      Type of Business

2.      Transfer of tangible assets

3.      Value of intangible assets at time of transfer

4.      Takeover of majority of employees by the transferee

5.      Transfer of customers

6.      Similarity/overlap in the activities carried out before and after the transfer

7.      Whether activities suspended for a period.

The legal consequences of a Transfer of Undertakings at individual level places the transferee into a position of responsibility for the rights and duties arising from the existing employment relationship

1 prohibition of termination

2 information to employees

At Collective level, the transferee is responsible for a continued application of collective Agreements, preservation of status and function of employee representatives and for information and consultation of employee representatives.

Regulation 8 sets out the respective responsibilities of both the transferor and the transferee towards employee representatives affected by the transfer.

1 the date or proposed date of the transfer

2 the reason for the transfer

3 legal implications of the transfer

4 any measures envisaged in relation to the employees

This information is meant to be imparted to employee representatives not later than 30 days before the transfer or by default “in good time “before the transfer is carried out.

Regulation 8 (5) depicts the action required where there are no employee representatives in the undertaking.

…. The transferor or transferee, as may be appropriate, shall put in place a procedure whereby the employees may choose from among their number a person(s) to represent them (including by means of an election) for the purpose of this Regulation

Regulation 8(6) applies a default action plan in the continued absence of employee representatives

….. 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)   Date or proposed date of transfer

(b)   Reason for transfer

(c)    Legal implications of the transfer

(d)   Any measures envisaged in relation to employees

I must now move to consider the facts of this case as presented at hearing.

1.      Did a Transfer of Undertaking occur in July 2019?

Both parties in this case accept that a transfer of undertakings took place on July 22, 2019. The Complainant has argued that his transfer was not governed by information and consultation. The Respondent has argued that the Transferor had undertaken a share sale agreement which had not triggered any of the TUPE rituals.

 I did not have the benefit of hearing from the Transferor in this case, for reasons I will outline in that decision.

The Respondent in this case was clear that TUPE covered the complainant’s employment from July 22, 2019. The Complainant was very unclear of his legislative status following the Transferors disclosure that the Business had been sold, coming as it did on foot of several persistent denials. I accept that he sought a collective engagement with this respondent to clarify this. I have found that he was unfairly denied access to this forum.

I am not at one with the complainant’s certainty that an application for a Book Makers licence was unequivocal proof that the take-over was pre-meditated and not spontaneous in July 2019. This licence may well have nationwide application and was not specifically linked to the Shop where he was Manager.

I saw an extract from the Share Sale Agreement but did not take evidence from any of the signatories. From first glance, I noticed that a portion of the document reflected a reference to employees. This suggested to me that the transaction which occurred between the Transferor and Transferee amounted to more than a share sale as employment changed as a result.

In this, I am persuaded by the facts of the UK Court of Appeal case in Millam v the Print Factory (London) 1991ltd [2006] IRLR 93

The case involved a Printer whose employment was taken over by Norwich Union in 1998. The Company was then sold to another printing company in 1999. It was a share sale agreement. Mr Millam was informed that that the identity of his employer was unchanged. A year later, he was informed that his employment had been continued under TUPE Regulations. The Companies were separately registered, and both companies went separately into administration in 2005.

The Employment Tribunal, at first instance had concluded that TUPE applied

We are not satisfied that the Claimant remained an employee of FenCourt ltd discrete from Mc McCorquodale after Mc McCorquodale’s acquisition in 1999. The Share Sale agreement gave the superficial impression that no TUPE transfer had occurred. The buyer of the shares did far more than a simple shareholder would have done following a simple sale……. Mc McCorquodale’s handling of a significant element of the management of Fen Court set its actions apart from those of a mere shareholder. It made key decisions in relation to Fen courts workload, it attempted to bring about contractual changes and it ultimately made the decision to put Fen Court into administration.

The Court of Appeal in allowing an appeal of the Employment Appeals Tribunal made the following salutary statement

The legal structure is of course important, but it cannot be conclusive in deciding the issue of whether, within that legal structure, control of the business has been transferred as a matter of fact

 My attention is also drawn to a more recent UK High Court case of ICAP Management services ltd V Berry, [2017] IRLR 811, where the Court ruled that Mr Berry’s employer remained IMSL at all times and the asserted employer had not “stepped into the shoes “of his employer at any stage. His employment had not changed. The ICAP judgement highlighted the key things to consider on whether a share purchase may lead to a TUPE transfer (the indicia of transfer)

1 Has the new parent company become responsible for carrying on the subsidiaries business?

2 has it taken over the day to day running of the business?

3 has it taken on the obligations of the employer?

This was applied in a more recent case of Guevera ltd v Butler and ors, a UK, EAT case [2017]UK EAT 0265 16 2111

This was a case where Tesco had sold all its shares in BML to a subsidiary company, Guevara in January 2015. BML continued to employ the staff, before 54 BML staff were dismissed before company entered administration in June 2015. The Employment Tribunal and The UK EAT, on appeal found that Guevara had “stepped into the shoes “of the employer and TUPE applied.

I am back to considering whether from the facts adduced through evidence in this case, did a take-over through TUPE apply?

In this, I wish to apply the test in Spijkers

The Business was indisputably a Book Making Business. I am satisfied that tangible assets and intangible assets transferred. The Business was carried out in the same premises and under the existing lease. It relied on the same equipment in the short term, prior to IT changes. All employees were transferred across, two of whom accepted respondent contracts. The Complainant did not. It was undisputed that customers transferred to the respondent business. In fact, their presence was given as the rationale for the speed and commercial sensitivity surrounding the change. The business carried out the same activities as before the transfer, on a continuum, albeit now as part of a much wider entity.

I am satisfied the transfer of business amounted to an integration of two businesses and thus a transfer of an economic entity which retained its identity on July 22, 2019.  Spijkers applied.

The Transfer is protected by the European Communities (Protection of Employees on Transfer of Undertakings) Regulations, 2003.

2 Did the Transferee honour the terms of   Regulation 8?  Information and Consultation

Parties to a transfer have obligations to notify, inform and consult with employees and their representatives before a transfer takes effect. In Maeve Regan, Employment Law, Gary Byrne, stresses this point of Regulation 8 and adds:

Given the importance to employees of a change in their employer and the impact on the business in which they are employed, it is essential for employees to protect their interests that they get advance notice of and appropriate information on, any proposed change …….

He also emphasises that the obligation to notify and consult rests with the employee representatives and not the employee. He references the overarching presence of the Employees (Provision of Information and Consultation) Act, 2006 which places an additional responsibility in entities with more than 50 employees.

I note that the complainant understood from the respondent that duty to consult collectively rested in an entity with over 50 employees. While, the respondent denied this “push back “I noted that there was no visible attempt to allow the employees by site or across the several sites to elect a representative to manage the notification period.

This places my analysis into the Transferees role regarding Regulation 8(6).

The Respondent accepted that they had a role to notify and inform the complainant of the transfer. It was their understanding that this had been adequately addressed by the 1;1 meeting of 18 July 2019 followed by the letter of July 22.

The Complainant was dissatisfied with this meeting and disputed receiving the follow up letter of July 22, 2019. He did not respond on receipt of a copy of this letter post hearing.

I am left to consider whether the Transferee, the respondent in this case complied with the terms of Regulation 8(6) as a default to lack of consultation with nominated staff representatives?

Firstly, I must find that neither the meeting of 18 July or the follow up letter dated July 22 fell into the recommended 30-day window or indeed “in good time “window.

I found that while an engagement certainly occurred, the engagement failed to reflect the full extent of the legal, relevant economic and social implications of the transfer to the employee. I found that the complainant was not advised that he was entitled to retain his 3-day sick leave. He was not provided with details of any measures envisaged in relation to his employment in terms of the differential on bonus payment.

I appreciate that he was invited to respond to the letter and did not raise a grievance in respect of his dissatisfaction with the communication of the transfer prior to the referral to the WRC in November 2019.

In all the circumstances of the case, I found that both the Meeting of 18 July and the letter dated 22 July 2019 as issued by the respondent in accordance with obligations under Regulation 8 fell someway short of the Transferees obligations in that regard. I have taken account of the commercial imperative faced by the respondent to aim to launch a business without losing standing and trust of customers. It appeared to me at hearing, that an insufficient investment in information and consultation directly with the complainant resulted in an early disconnect in the respondent employment which was incapable of being fixed.

I find that the contravention came in the aftermath of zero information and consultation by the Transferor. It is regrettable that both Transferor and Transferee did not simultaneously embrace and balance their respective obligations under Regulation 8 in the best interests of the complainant and their own commercial interests.

I find the complaint to be well founded.

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.

Regulation 10 of European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 requires that I make a decision reflective of Regulation 8.

I have found the complaint to be well founded in that the Transferee contravened Regulation 8.

I require the Respondent to pay to the Complainant the sum of €1,740, equivalent to 3 weeks pay in compensation for the contravention.

Consultation, Transfer of Undertakings