Complainant

Respondent

Parties

Kieran  Philbin

Reva Racing Ltd

Representatives

  Appeared in Person

 No Appearance on or behalf of the Respondent

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-00031961-001

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 25578. Both cases were scheduled to commence at 9am on 15 April 2021. The Respondent in ADJ 25578 attended the hearing and responded for the Company. During that response, she indicated that she would forward a redacted copy of the Share Purchase Agreement and followed up with that post hearing for comment.

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 Complainant, as the only party in attendance on his position on progressing the case.

The Complainant told me that he had no issue advancing with a hearing held in public. He did not seek to await the legislative changes on Oath/ Affirmation to advance his case. No member of the Public applied to join the hearing.

The Complainant presented as a Lay Litigant and filed a written submission.

On the day before the hearing and in response to the WRC request for nomination of intended attendees at hearing, the Respondent forwarded the following response by email.

Please note that we are no longer Directors or Shareholders of Reva Racing and as such have no authority to make submission on behalf of the respondent. However, on a without prejudice basis, I can confirm that this was a Share Purchase Agreement (sale of company shares only) and as such does not fall under the remit of the Transfer of Undertakings as per the complaint.

The Respondent was invited to make application for postponement, if needed, but this was not acted on.

At the end of the hearing, I sought sight of the Complainants contract of employment and a copy of a pay slip.

The Complainant had worked for the Respondent as both Assistant and Shop Manager as he balanced personal study commitments from 14 August 2017 to when he was notified of the Respondent intention of passing on the Business to the Respondent in ADJ 25578.

He worked a 40-hour week in return for €580.00 gross pay.

The Complainant submitted that he had not been advised by the Respondent in relation to the transfer of his employment in July 2019. He felt that the lack of information regarding the transfer left him no time to consider his future.

In early June 2019, a customer of the Business informed staff that the business was about to be sold. This was denied by the Owner. The Complainant subsequently learned that the lease on the Office Building had changed to the respondent in ADJ 25578 on July 12, 2019.

The Owner continued to deny that the business was changing until the following Monday, when the Owner declared “It’s all done “and staff were informed that the business was transferring the following Sunday. After this, the Owner left the Business and the Complainant was directed to engage with the Human Resource Manager for the Respondent in ADJ 25578.

The Complainant retained his contract of employment with the present respondent but was employed by the respondent in ADJ 25578. He expressed a major disappointment at the way he had been treated by the respondent who maintained a denial of change up to 2 days before the eventual disclosure. Ample opportunity to consult on the change had been available but not utilised and trust had disappeared.

The Complainant outlined that later in August 2019, he was asked to visit the local Garda Station to renew a Book Makers Licence. The document cited a date of May 30, 2019, which the complainant contended showed a much longer lead in time to the change that the Owner disclosed.

The Complainant had not been part of any conversation where a Shares Agreement was mentioned. His employment continued seamlessly with the Respondent in ADJ 25578. He recalled that the Respondent left all the Computers in the Business as it carried on uninterrupted into a busy period.

The Complainant expressed his disappointment that he was denied options on the take over as he went on to have an unhappy transition with the respondent prior to leaving the Business in March 2020.

He emphasised that he had been denied an opportunity to consult on the changes fore cast in his employment by his Employer since 2017. He submitted that the change was common knowledge outside of the staff directly affected He had been in receipt of a quarterly bonus and a provision for 3 days paid sick leave.

The Complainant forwarded a copy of the contract of employment post hearing.

There was no appearance on or on behalf of the Respondent.

The sole communication received from the respondent is referenced in the Background section above. There was no further contact from the Respondent post hearing.

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 Complainants oral, written submissions and his uncontested evidence. I reviewed the contract of employment and the extract from the Share Sale Agreement received post hearing from the Respondent in the conjoined case ADJ 25578.

I am satisfied that the Respondent in this case was on full notice of the hearing in this case and made an informed decision not to attend. The brief submission quoted above is a completely unsatisfactory response in this case and has demonstrated the hall marks of avoidance.

 In conducting my inquiry in this case, both parties were invited to participate to assist me in arriving at the full facts from both parties’ perspectives. It is a statutory claim.

I was disappointed to find that the complainant was the sole attender at hearing. I am satisfied that he made earnest preparations for his hearing.

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.

In addressing these points, I am mindful that the Complainant was the sole participant at hearing and his evidence was uncontested.

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?

The Complainant asserts that a transfer of undertakings took place on July 22, 2019. The Complainant has argued that his transfer was not preceded by information and consultation. 

 I did not have the benefit of hearing from the Transferor in this case. On the day before the hearing, the Respondent wrote to the WRC to submit that a Share Purchase Agreement (Sale of Company Shares only) had occurred which did not come under Transfer of Undertakings.

 I have received a redacted copy of a Share Agreement through the conjoined case ADJ 25578, but I have been unable to probe this information. The Complainant has not made comment on this Agreement apart from a declaration that his continued employment was not linked to a Share Agreement, but rather a transfer of undertakings.  

 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. He felt that he was not given time to consider his options.

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. In a Share Sale, employees continue to be employed by the company being sold and their status remains unchanged. In an Asset sale, the new owner is legally obliged to take on the sellers’ 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. The Complainant confirmed that he received an increase in his hourly pay on commencement with the respondent in ADJ 25578. They paid his wages and he worked under their direction and control until his departure in March 2020.

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 always ruled that Mr Berry’s employer remained IMSL 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 of its shares in BML to a subsidiary company, Guevera 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 Guevera 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.  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. I find that respondent in ADJ 25578 did indeed step into the shoes of the respondent employment to distinguish the facts of the case from an asserted share sale only to that of the realm of the confirmed “indicia of transfer “and full control of the business. By operation of law, a transfer occurred.

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

Section 41 of the Workplace Relations Act 2015 requires that I decide 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 Transferor contravened Regulation 8.

I require the Respondent to pay to the Complainant the sum of €2,320, as equivalent to 4 weeks’ pay in compensation for the contravention. This is the maximum award permitted to me.

Information Consultation, TUPE