Complainant

Respondent

Parties

Lauren  Collins

CLG Na Fianna

Representatives

Gary Irwin Gary Irwin Solicitors/ Arthur Cush BL

Leo Fay Michael J Kennedy & Co/Mark O’Connell BL

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-00035261-001

15/03/2020

The complainant contends that the activities that her company were engaged in and the services that her company provided to the college, substantially remain intact and  have been transferred to CLG. She asserts her right as an employee under Regulation 10 of European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003, (S.I. No. 131 of 2003). She seeks a declaration that she is now an employee of CLG and that her terms and conditions of employment are protected; as the transfer from SGM to CLG is essentially the same economic entity and no fundamental change in the activities that CLG have now assumed has occurred. In those circumstances her contract of employment moved with the transfer of the economic activity to  CLG and they are legally bound to honour those terms.

The complainant states that CGL deny that she is their employee and rely on the fact that a lease now exists between the College and the Club and they are a stranger to her claim that she is their employee. They argue that in fact they pay rent to the College, in contrast to SGM who were paid a substantial management fee.

CLG contend that the economic entity did not transfer from SGM to them intact. The fact is the College students over several years had significantly reduced their use of the sportsgrounds. The College had built new services on the College campus itself and also the students began to use sport facilities closer to the city centre. CLG is a growing club with a heavy demand for playing pitches. It is expanding and has a very active membership who through voluntary endeavour maintain their club grounds. They are based near Dardistown and the fact that the grounds were under- utilised by the College presented CLG with an opportunity to enter into a lease for the grounds.

The Club entered into a lease with the College and pays rent. The College can use the facilities subject to an agreed notice period. The lands and grounds are maintained by CLG for CLG . While other clubs can avail of the pitches; that service is subject to CLG approving of the request and to their  own needs being met first. CLG do not seek to optimise the use of the grounds for fee income; so that the College is afforded a new stream of income. The buildings and grounds are maintained by club members for the benefit of the members. The economic entity provided by SGM has in all respects ceased.

It is accepted that the lease between CLG and the College is not as detailed; however, when carefully analysed it contains the same service obligations such as at clause 4.4 (repairs); 4.5 (cleaning and maintenance); 4.11.3 (security); 4.11.4(acting as key holder).

Clause 6.9 of the lease states that the Landlord will be entitled to request that the facilities be made available to the College.

The complainant argues that the arrangement between the College and CLG  are:

1.       In part benefit for RSCI see clauses 6.9 and 6.10 of the lease.

2.       In part benefit for CLG see clause 5.1:

“To permit the Tenant, provided he pays the rent reserved by and otherwise complies with the provisions of this Lease, peaceably to hold and enjoy the Demised Premises during the Term without any interruption by the Landlord or any person lawfully claiming through, under or in trust for it.”

3.       In part so that the facilities can be rented to third parties see clauses 4.11 and 4.13 and the Club’s own website:

4.11 Not without the prior written consent of the Landlord ( which consent shall not be unreasonably withheld}

4.13 Not to assign sub-let, part with or share possession of the entirety of the Demised Premises without the prior written consent of the Landlord (which consent shall not be unreasonably withheld);

The complainant argues that this lease is not a standard one, such as clause 6.8.2 where CLG can spend any sum by way of capital expenditure in the first three years and be reimbursed by the College and the other clauses such as the right to use the grounds by the Landlord. The true purpose of the arrangements is for RCSI to retain the right to use the facilities subject to its needs with CLG assuming the responsibility for the management and rental of the facilities which had previously been undertaken by SGM.

CLG contend that the economic entity did not transfer from SGM to them intact. The fact is the College students over several years had significantly reduced their use of the sportsgrounds. The College had built new services on the College campus itself and also the students began to use sport facilities closer to the city centre. CLG is a growing club with a heavy demand for playing pitches. It is expanding and has a very active membership who through voluntary endeavour maintain their club grounds. They are based near Dardistown and the fact that the grounds were under- utilised by the College presented CLG with an opportunity to enter into a lease for the grounds.

The Club entered in a lease with the College and pays rent. The College can use the facilities subject to an agreed notice period. The lands and grounds are maintained by CLG for CLG . While other clubs can avail of the pitches; that service is subject to CLG approving of the request and to their  own needs being met first. CLG do not seek to optimise the use of the grounds for fee income; so that the College is afforded a new stream of income.

The relationship between the Club and College is not that of supplier and provider of services. It is based on a lease arrangement that reflects the ethos of both the College and Club; where the College sees the benefit of supporting the local community through a relationship with a non- commercial body like CLG. The sportsgrounds are being used primarily by CLG and for CLG club members. The buildings and grounds are maintained by club members for the benefit of the members. The economic entity provided by SGM has in all respects ceased.

SGM was formed in 1999 and provided ground and  a management services contract to the Royal College of Surgeons at the Dardistown sports grounds. Ms Lauren Collins was employed part time with SGM since 2017 and became full time in 2018.

In 2019 CLG entered into a lease agreement with the Royal College of Surgeons where the club would:

·       be given full use of the Dardistown premises;

·       ensure that the playing surfaces would be properly maintained by volunteer members

·       keep the changing rooms/clubhouse and car park area in good order; and

·       allow the RSCI limited use of the facilities under agreed conditions whenever sought.

The lease arrangement incorporated an annual rent of €12,000 and in the first year the rent was €5000 which took account of an investment of €20,000 by the Club. The lease was executed on the 5th of June 2020.

The lease was subsequently approved by the Leinster Council of the GAA.

Paragraph 1.11 of the Definitions section in the Lease states:

“Permitted user means the use as a GAA sports facility for all the purposes connected with the functions of CLG Na Fianna as a GAA Club PROVIDED ALWAYS that the Demised Premises shall not during the Term constitute or be used as the primary sporting or administrative facility of CLG Na Fianna.”

The complainant relies on the fact that clauses within the lease have the same effect and describe the same obligations that previously existed between the College and SGM in their service agreement. However, it is important to carefully look at these clauses and compare these clauses to those that exist in the lease and compare the service agreement format to the structure and purpose of the lease.

The detail of the lease does not replicate the service agreement-that is a very crucial distinction.

The reason why this is so reflects the fact that the relationship between the Club and the College is fundamentally different to that which exists between SGM and the College. It is a landlord tenant relationship and not a service provider. The tenant has obligations to maintain the grounds and buildings but not as a service provider; those obligations arise from being a responsible tenant.

The detail of obligation is very different. The service agreement reflects the fact that services will be provided to the College and these are specified in great detail so that the service provider can be held to account for the monies agreed to be paid for providing these services directly for the College. The relationship is that of a service provider who must carry out the agreed tasks as so detailed; the following are sample tasks that are detailed at page 21 of the Service Agreement:

 e.g. filling of rabbit holes 7 day per week; all Waste is disposed of by SGM as part of their services; cleaning of the pavilion includes the provision of specialist machinery, equipment and all of the products/supplies associated with the items listed in Addendum 1

Access by the landlord to the grounds do exist; however, they are restricted and subject to the following term see clause 6.9 Use for the RSCI teams:

·       a minimum of 7 days’ notice in writing is provided to the Facilities Committee of the Tenant

·       the Demised Premises is not to be used by the Landlord as its main sports grounds

·       the persons using facilities shall abide by any rules and requirements of the Tenant in that regard

·       all appropriate insurances are in place for such matches or activities of the Landlord’s teams or invitees,

·       the Landlord hereby indemnifies the Tenant in respect of any costs, expenses, loss damage, injury, claims, proceedings, incurred, suffered by and/or taken against the Tenant as a consequence of any such activities permitted under this Clause 6.10

The complainant argues that the arrangement between the College and CLG  are:

4.       In part benefit for RSCI see clauses 6.9 and 6.10 of the lease.

5.       In part benefit for CLG see clause 5.1:

“To permit the Tenant, provided he pays the rent reserved by and otherwise complies with the provisions of this Lease, peaceably to hold and enjoy the Demised Premises during the Term without any interruption by the Landlord or any person lawfully claiming through, under or in trust for it.”

6.       In part so that the facilities can be rented to third parties see clauses 4.11 and 4.13 and the Club’s own website:

4.11 Not without the prior written consent of the Landlord ( which consent shall not be unreasonably withheld}

4.13 Not to assign sub-let, part with or share possession of the entirety of the Demised Premises without the prior written consent of the Landlord (which consent shall not be unreasonably withheld);

The complainant argues that this lease is not a standard one, such as clause 6.8.2 where CLG can spend any sum by way of capital expenditure in the first three years and be reimbursed by the College and the other clauses such as the right to use the grounds by the Landlord. The true purpose of the arrangements is for RCSI to retain the right to use the facilities subject to its needs; with CLG assuming the responsibility for the management and rental of the facilities which had previously been undertaken by SGM.

The complainant relies on clause 6.8.2 which states:

There shall be paid to the Tenant by the Landlord no later than the Option Date (regardless of which party exercises the option) an amount equal to the amount of capital expenditure by the Tenant on the Demised Premises during the first three years of the Term

However, no clause can be read in isolation and that clause should also be considered having regard to clause 4.12 Alterations:

4.12.1 Not to make any other additions or alterations to the Demised Premises without the prior written consent of the Landlord (which consent shall not be unreasonably withheld)

Having regard to these facts the complainant argues that CLG has taken over the same business and will provide the same services for the benefit of the same parties: RSCI; CLG and third parties. However, the above clauses do not replicate what is in the service level agreement and do not mirror the same service that was provided by SGM. The crucial difference is that this new arrangement is a Landlord Tenant lease and not a commercial agreement as existed previously to provide ground management services on the sports grounds at Dardistown. The College is leasing these grounds and now is the Landlord with obligations as set out in the lease. Access to the grounds are restricted and as set out in the lease. The Tenant now takes charge of the grounds subject to meeting their obligations as set out in the lease. However, they are not providing services to the College, it is not a barter arrangement that they will look after the grounds in return for use of the grounds. The agreement entered into clearly gives control to the Tenant subject to paying rent and meeting the obligations to maintain the grounds as set out in the lease.

This is a lease agreed between two parties who possess an Ethos that is not based on deriving the maximum amount of profit for their owners. Their purpose is rooted either in advancing healthcare or being part of the wider GAA community and commit to the values and objects of the organisation. This lease reflects those values; however, it still is a lease, and nothing contained in the lease cloaks its true character, which is of a landlord and tenant relationship.

The complainant also relies on Top Security Limited and Thomas Sadlier and ors [2017 IEHC 134]. The Employment Appeals Tribunal determined that the service involved was an economic entity and not merely an activity. That the words and phrases “economic entity” and “undertaking” and “business” are interchangeable. That the security guards identity was retained, in that they would continue to carry out the same work for the same customers in the same location.  That a transfer involving a service or services assets includes intangible assets such as its workforce and goodwill. The absence of a transfer of assets does not necessarily preclude the existence of a transfer of undertaking. That the transfer would involve a change of employer for the employees and that Top Security knew or should have known from previous dealings and correspondence that it was intended that TUPE regulations would apply in this situation. Further that the EAT considered and applied cases cited by CLG in this case: Spijkers; Suzen and Sanchez Handalgo and determined that an economic activity and or transfer of a business undertaking had taken place.

The learned Judge stated in Top Security:

In the same case, Keane J. citing with approval the comments of Carroll J. in the High Court, stated:-

“In an appeal on a question of law the court does not go into the merits of the decision. The primary facts are not in issue. Where there is a question of conclusions and inferences to be drawn from facts ( a mixed question of fact and law) the court should confine itself to considering if they are conclusions and inferences which no reasonable person could draw or whether they are based on a wrong view of the law”

In Daddy’s Dance Hall Case 324/84, [1984] ECR 739 it was held that a transfer of an economic entity occurred where there was no change in the legal ownership but there was a change in who was responsible for the management of the day to day business. Also the complainant states that a technical change such as the lease between the parties is not the overriding issue, rather the substance of the transfer, and that all the circumstances relating to the case are taken into account. Also Redmond Stichting v Bartol Case C-29/91,[1992] ECR 1-3189 where it was held that the decisive criterion is whether the transfer of the unit maintains its identity. It is argued that the functions carried out by CLG and therefore the identity in fact has been maintained.

The facts in this case are not the same as existed in Top Security. The work or identity of the employees have not been retained. The work is dispersed among a large number of volunteers. It is true that no assets have transferred in this case; however, no goodwill has transferred as the economic entity or undertaking or business is not intact as the College no longer maintains control over the grounds and now leases those grounds to CLG.  What has come into being is a totally new arrangement, it is not what went before, it is a Tenant and Landlord agreement and that is fundamentally different to a commercial service agreement that existed previously. The tenant enjoys substantial control over the grounds subject to the covenants contained in the lease. While the complainant informed the club that TUPE would apply, that does not mean that it would apply in this case.

The facts of this case show that the College developed new sports facilities at its city campus and students began to avail of the Dardistown facilities less and less. This in turn gave rise to a fundamental reappraisal of the role of Dardistown as the primary sports grounds of the College. It is true that Dardistown is not the primary sportsground of the Club; however, its intended use is primarily for the Club and that intention is reflected in the terms of the lease and in the reality of day to day use of the grounds.

The new arrangement between the College and CLG has not maintained the previous identity and it has fundamentally changed as reflected in the terms in the lease and the control transferred to the tenant. The College has significantly less control and access to the services and facilities at Dardistown. The elements or activities previously determined by the Service Management Agreement no longer exist and have been replaced by covenants between the College and the Tenant that do not replicate or mirror what those terms were between the College and SGM. The economic activity or business undertaken does not survive and the transfer therefore has not occurred.

Article 9(1) of the Directive 2001/23/EC states:

a)      This Directive shall apply to any transfer of an undertaking, business or part of an undertaking or business to another employer as a result of a legal transfer or merger.

b)      Subject to (a) and the following provisions of this Article, there is a transfer within the meaning of the Directive where there is a transfer of an economic entity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.

And relevant to the complaints made against the respondent Article 3(1) states:

“The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of transfer shall, by reason of such transfer, be transferred to the transferee.”

Regulation 3(2) of the Regulations defines ‘economic entity’ as:

“An organised grouping of resources which has the objective of pursuing an economic activity whether or not that activity is for profit or whether it is central or ancillary to another economic or administrative entity.”

Gary Byrne in Employment Law 2nd Edition Bloomsbury at page 925 states:

“the Regs apply to any transfer of an undertaking, business, or part of an undertaking or business from one employer to another employer as a result of a legal transfer (including legal/factual event like the assignment or forfeiture of a lease) or merger—provided it ‘retains its identity as the term ‘Transfer’ is defined as the ‘transfer of an economic entity which retains its identity’.

Spijkers v Gerbroeders Benedik Abbatoir CV Case C-24/85, [1986] ECR 1119 is citied by both parties to advance their case. It is one of the earliest cases of the ECJ to interpret the terms of the directive and continues to maintain a central importance in the law relating to the transfer of undertakings.

As in Spijkers a key question relating to the matters in contention is- has a transfer taken place?

The Court in Spikers set out the following test when considering if a transfer has or has not occurred:

·         It is necessary to take account of all the factual circumstances of the transaction in question including the type of undertaking or business in question

·         the transfer or otherwise of tangible assets such as buildings and stocks,

·         the value of intangible assets at the date of transfer,

·         whether the majority of staff are taken over by the new employer,

·     the transfer or otherwise of the circle of customers and the degree of similarity between    activities before and after the transfer

·         and the interruption in those activities

The facts on balance do not support the case that a transfer of undertaking has taken place. No assets have transferred. No staff have transferred. The grounds will be primarily used by the Club. There is no substantial transfer of a customer base. No staff have replaced the roles of the previous employees. There is a requirement to give adequate notice by the College to the Club, prior to access. CLG will be the primary beneficiaries of the grounds and also will be using the grounds to meet their needs. The fact that grounds will still be maintained and at times other sporting groups may use the grounds does not replicate what was in place previously. The relationship has changed which was the College working with SGM to ensure that the grounds were maintained for the use primarily for their students and staff. CLG are now in charge of the grounds and manage the grounds for the benefit of their members; not for the College student body-that is a fundamental change and in essence negates the need for the existing entity to continue. This new arrangement has little similarity to the previous one and does create a seismic disruption to those activities previously carried out by SGM as they are no longer required in that form. That is mainly caused by the College stepping back from having control of the grounds and maintaining those grounds primarily for the use of their students and staff members.

 When regard is had to all the factual circumstances and how the requirements of the College and its demand for services to maintain Dardistown has changed dramatically since the contract was entered into with SGM, the entity which was SGM and all the functions that they were obligated to complete as per the management services agreement no longer were required; as the demand for those services had fundamentally changed with the development of new facilities and the resistance of students to travel to Dardistown to access sporting grounds. It is this change in the needs of the College that gave rise to a fundamental reappraisal of its need for Dardistown and for it to maintain control of the site. That gave rise to a question concerning how best to use the grounds and that answer was guided by a desire to support the community. The new arrangement with CLG reflects that desire and it also creates a new and distinct arrangement to that which existed before.

The complaint is not well founded as the  new arrangement between the College and CLG has not maintained the previous identity of the economic entity that was SGM as reflected in the service level agreement between the company and the College. This means that the liability for the complainant’s terms and conditions remains with their employer who is SGM and did not transfer to CLG on signing the lease with the College. The economic activity has fundamentally changed as reflected in the terms in the lease and the control transferred to the tenant. The College has significantly less control and access to the services and facilities at Dardistown. The elements or activities previously determined by the Service Management Agreement carried out for the benefit of the College students no longer were required and have been replaced by covenants between the College and the Tenant that do not replicate or mirror what those terms were between the College and SGM. This new arrangement reflects the reality that students now use other facilities and sports grounds. The tenant has entered into a lease so that the grounds can be used primarily for its members and they do not have a relationship or carry out functions on behalf of the College for the benefit of the College’s students. The economic activity or business undertaking does not survive and the transfer of employment contracts to CLG; therefore, has not occurred.

TUPE-Economic Activity-Entity Intact