Complainant

Respondent

Parties

Gillian  Reilly

Wedding List Solutions Limited – in liquidation – Liquidator – CROWE, 

Representatives

Robert McNamara Mandate Trade Union

Declan Hanly , CROWE

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-00041064-001

16/11/2020

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

CA-00043478-001

09/04/2021

The claimant commenced employment with Brown Thomas & Co. Ltd on the 2.04.2001 – she worked as a gift guru in the Wedding Dept. On the 23.05.2008 the business transferred to Wedding List Solutions Ltd. The latter company is now in liquidation. The claimant asserted that the respondent was in breach of the Regulations for failing to honour the severance terms and conditions of employment that applied to her as a Brown Thomas employee. The respondent denied any breach of the Act and contended that the union had failed to provide any evidence of a collective agreement on redundancy that could now be applied 17 years after  the transfer of undertaking took place.

 The union submitted that the case   concerns a claim by MS. Gillian Reilly (hereinafter referred

to as “the Claimant”) under Regulation 10 of the European Communities

(Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No.

131 of 2003) to the effect that her former employer Wedding List Solutions Limited

t/a The Wedding Shop (hereinafter referred to as “the Respondent”) failed to comply

with the provisions of regulation 4(2) of European Communities (Protection of

Employees on Transfer of Undertakings) Regulations 2003 as amended. It is alleged

by the Claimant that the Respondent failed to continue to observe same terms of a

collective agreement which were applicable the previous employer (transferor),

insofar as the respondent failed to honour the terms of a collectively agreed

enhanced redundancy package.

Background

2. The claimant commenced employment as a sales assistant with Brown Thomas & Co.

Limited on April 2nd, 2001.

3.  It was submitted that Mandate and the Brown Thomas business had a long standing

collectively agreed redundancy package, of five weeks pay per year of service. It was submitted that

shortly after the Claimant commenced employment with Brown Thomas, Mandate

and Company agreed another iteration by concluding collective agreement vis-a-vis

redundancies in July 2003.  It was asserted that the aforesaid agreement contained a provision for

enhanced redundancy of five weeks pay per year of service.

4. Again in 2005 the collectively agreed terms of 5 weeks per years of service was

implemented.

5. The Claimant’s employment remained uneventful until April 22nd, 2008, when the

claimants then employer Brown Thomas corresponded with the claimant and

advised them that they intended to transfer her to the employment of the

respondent via transfer of undertakings (TUPE).

6. The Claimant was advised by Brown Thomas that all of her terms and conditions and

collective agreements would be honoured by the respondent upon transfer and

thereafter.

7. Subsequent to the transfer the respondent’s company, the Claimant’s employment

continued in an affable and productive manner.

8. At the time of the transfer the respondent operated on the basis of concession

agreement to operate within the Brown Thomas business. The concession

agreement Appendix 5 made provision from number of different eventualities including a

provision at section 8.1 which states,

“The Wedding Shop shall employ and pay the salaries and commission of

suitable qualified staff for the concession and be responsible for all such

matters as PRSI, PA YE and other payroll taxes. Such staff shall remain

 the employees of The Wedding Shop

for all purposes and The Wedding Shop shall be responsible for compliance

with all statutory requirements relating to such employees, together with

such ex-gratia termination payments as would normally be paid by Brown

Thomas to its own staff in accordance with the formula used in the most

recent severance package paid by Brown Thomas to its employees.”

9. In or about, December 2011 the Respondent offered the Claimant and her colleague,

the terms of the Mandate Trade Union/Brown Thomas collectively agreed

redundancy agreement, equalling 5 weeks per year of service. The claimant

contends that the forgoing clearly demonstrates that the terms of the collective

agreement vis-à-vis redundancy had clearly and un ambiguously transferred from

Brown Thomas to the respondent.

10. In November 2020 the respondent commenced redundancy consultations with the

Claimant.

11. The claimants representative corresponded with the respondent on November 16th

2020 outlining;

“Furthermore we note your comments with regard to Redundancy pay and

wish to advise that our members are in dispute with the company in this

regard. Our members believe that the company’s position with regard to

redundancy pay is disingenuous to say the least. It is an incontrovertible

fact that a 5 Week collectively agreed severance agreement was in place

with the previous employer before the aforementioned members

transferred to your business by virtue of TUPE. In addition the company’s

obligations in this regard is clearly set out in section 8.1 of your agreement

with Brown Thomas whereby it states; ““The Wedding Shop shall be

responsible for compliance with all statutory requirements relating to such

employees, together with such ex-gratia termination payments as would

normally be paid by Brown Thomas to its own staff in accordance with the

formula used in the most recent severance package paid by Brown Thomas to

its employees”.

12. It was submitted that the company ignored the forgoing correspondence and on November 19th

corresponded with the Claimant by way of letter dated November 19th, 2020,

advising that the Claimant had been made redundant on statutory terms.

13. The claimant appealed the matter  - an appeal meeting was held on December 4th, on

December 15th, 2020, the Company advised the Claimant that her appeal was not

upheld.

14. Accordingly, the matter was referred to the Workplace Relations Commission for

Adjudication.

Legislative Provisions

15. The European Communities (Protection of Employees on Transfer of Undertakings)

Regulations 2003, which came into operation on April 11, 2003, The ECJ defined the

regulations as;

“ensuring the continuity of employment relationships existing within a

business irrespective of any change of ownership”

The same court further defined the regulations in Landsorganisationen Danmark V

Ny Mølle Kro as follows;

“the purpose of the Directive is to render irrelevant any changes in

ownership of (or, more generally, title to) an undertaking as regards

employment relationships existing within it. Whatever the nature of the

transaction, the transfer must be neutral (or, if it is preferred, must have no

prejudicial effects): the employees must not be affected by it, that is to say,

they cannot be dismissed or subjected to less favourable treatment. The

sole requirement to which the Court makes such protection subject is the

capacity of the business transferred to retain its ‘identity’, that is to say to

remain in operation as a going concern.”

16. Regulation 2 defines a contract of employment as meaning;

“contract of employment” means—

(a) a contract of service or apprenticeship, and

(b) any other contract whereby an individual agrees with another person,

who is carrying on the business of an employment agency within the

meaning of the Employment Agency Act 1971 (No. 27 of 1971), and is acting

in the course of that business, to do or perform personally any work or

service for a third person (whether or not the third person is a party to the

contract),whether the contract is express or implied and, if express, whether

it is oral or in writing;”

It particularises an employee as meaning;

“employee” means a person of any age, who has entered into or works

under (or, where the employment has ceased, entered into or worked

under) a contract of employment and references, in relation to an

employer, to an employee shall be construed as references to an employee

employed by that employer…”

17. The provisions of the regulations are expressed to apply in the following

circumstances;

“3(1) These Regulations shall 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 the assignment or

forfeiture of a lease) or merger.”

18. Regulation 4 particularises that;

(1) 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.

(2) Following a transfer, the transferee shall continue to observe the terms

and conditions agreed in any collective agreement on the same terms

applicable to the transferor under that agreement until the date of

termination or expiry of the collective agreement or the entry into force or

application of another collective agreement.

19. Regulation 10 as amended outlines;

10. [Decision under section 41 of Workplace Relations Act 2015

A decision of an adjudication officer under section 41 of the Workplace

Relations Act 2015 in relation to a complaint of a contravention of a

provision (other than Regulation 4(4)(a)) of these Regulations shall do one

or more of the following, namely—

(a) declare that the complaint is or, as the case may be, is not well founded,

(b) require the employer to comply with these Regulations and, for that

purpose, to take a specified course of action, or

(c) require the employer to pay to the employee compensation of such

amount (if any) as the adjudication officer considers just and equitable in

the circumstances, but—

(i) in the case of a contravention of Regulation 8, not exceeding 4 weeks'

remuneration and, (ii) in the case of a contravention of any other

Regulation, not exceeding 2 years' remuneration, in respect of the

employee's employment calculated in accordance with regulations made

under section 17 of the Unfair Dismissals Act 1977.]

Union Argument

20. It was asserted that it was an indisputable fact that the claimant was employed by Brown Thomas and transferred to the respondent’s employment under a Transfer of Undertakings in

accordance with the 2003 regulations.

21. Furthermore, it was submitted that it was abundantly clear that prior to and at the time of the transfer there was in place a collectively agreed Redundancy package with the Brown Thomas

business in the event that any redundancies are affected then the company would

pay, 5 weeks per year of service.

22. It was contended  that the 2003 and 2005 Mandate Trade Union/Brown Thomas

redundancy agreements, together with the company’s own concession agreement

which was in force at the time of the Transfer, demonstrate beyond any doubt that

there was a collectively agreed redundancy package.

23. It is common case that the respondents, own offer of redundancy to the Claimant in

2011, signifies and delineates that the company were operating the collectively

bargained redundancy package, which have transferred to their business via the

provisions of TUPE.

24. Remuneration is a central part of any employment contract, and it is a well established

jurisprudence that severance or redundancy comes within the ambit of

the definition of “remuneration” the Labour Court considered the question of

whether ex gratia pay constitutes remuneration in Sunday World Newspapers Ltd

v Kinsella {2006} E.L.R. 325 , Appendix9 quoting the authority of Barber v Guardian

Royal Exchange Assurance Group Case C-262/88 [1990) E.C.R. 1-1889 the Chairman

Mr. Kevin Duffy held inter alia;

"The definition of "remuneration" at s.2 of the Act of 2003 is identical for

present purposes with the definition of that term contained at s.2 of the

Employment Equality Acts 1998 and 2004. That latter definition was

adopted from Article 141 of the EC Treaty. It is well settled that words and

expressions used in one Act should be given the same meaning as was

judicially ascribed to them in earlier Acts which are in in parimaterial (that

is their context is similar) (see McArdle v State Laboratory Labour Court

Determination ( April 4, 2006). By application of this principle the term

"remuneration" should be given the same meaning as it has been held to

bear in employment equality law."

25. Mr Duffy went on to state;

“In a line of authorities the ECJ has ascribed a wide ambit to the concept of

remuneration for the purpose of Article 141 of the Treaty and Directive

75/117 (the Equal Pay Directive). These authorities are binding and have

been consistently followed in construing the term “remuneration” in cases

under the Employment Equality Acts 1998 and 2004. It follows that the term

“remuneration” should be similarly construed in cases under the Act of

2003. In Garland v BREL Case 12/81 [1982] E.C.R. 359, the Court of Justice

considered if an ex gratia travel facility offered as a concession after

retirement constituted pay. In answering that question in the affirmative

the court formulated the now familiar definition of the term “pay”, which is

largely repeated in the definition of “remuneration” contained at s.2 of the

Act of 2003. The court said:

“It is important to note in this regard that in para.6 of its judgment of May

25, 1971 in Defrenne Case 80/70 [1971] E.C.R. 445 at 451, the court stated

that the concept of pay contained in the second paragraph of Article 119

comprises any other consideration, whether in cash or in kind, whether

immediate or future, provided that the worker receives it, albeit indirectly, in

respect of his employment from his employer.”

Later, in concluding that the concessionary or ex gratia nature of the

payment was irrelevant, the court said the following:

““It follows that where an employer (although not bound to do so by

contract) provides special travel facilities for former male employees to enjoy

after their retirement this constitutes discrimination within the meaning of

Article 119 against former female employees who do not receive the same

facilities.””

26. The Court in Sunday World Newspapers Ltd v Kinsella also considered the question

of whether redundancy payments as distinct from ex gratia payments constitutes

remuneration for the purpose of s.6, in this regard Mr. Duffy held that;

“The question of whether redundancy payments come within the definition

of pay was directly considered by the court in Barber v Guardian Royal

Exchange Assurance Case C-262/88 [1990] E.C.R. I-1889. The court said the

following: ““As the court has held, the concept of pay, within the meaning of

the second paragraph of Article 119, comprises any other consideration,

whether in cash or in kind, whether immediate or future, provided that the

worker receives it, albeit indirectly, in respect of his employment from his

employer (see, in particular, the judgment of February 9, 1982 in Garland v

British Rail Engineering Case 12/81 [1982] E.C.R. 359, paragraph 5).

Accordingly, the fact that certain benefits are paid after the termination of

the employment relationship does not prevent them from being in the nature

of pay, within the meaning of Article 119 of the Treaty.

27. Perhaps the most instructive jurisprudence which may assist the adjudicator in the

instant case, is that of Billy Bligh and others (claimants) v Stobart Ireland Driver

Services Limited (respondent) Appendix10 whereby in almost identical circumstances to

the instant case a number of workers were transferred from a supermarket to a

distribution company via a transfer of undertakings, when shortly after the move the

respondent in that case altered the terms and conditions of employment of the

claimants. The Employment Appeals Tribunal held the company had breached

regulation 4(2) in not honouring the terms and conditions of employment of the

claimants both expressed and implied and stated;

The respondent is herewith required to honour all the conditions of

employment and the terms of the agreement made between the transferor

and the representatives of the appellants prior to the transfer and

compensate each of the appellants for all and any financial loss suffered by

( Stobart Case)them by the non-adherence of the respondent to the terms and conditions

of their employment and the said agreement from the date of the transfer,

October 22, 2010, to the date of this determination.

Conclusion

28. For all of the above reasons, the union requested the Adjudicator to declare the

Claimant’s case to be well founded, that the Respondent breached provisions S.I. No.

131 of 2003 (Protection of Employees on Transfer of Uorites relied upon by the union undertakings) Regulations 2003.  The Adjudicator  was requested to  award the claimant

compensation that is just and equitable in the circumstances.

The claimant’s representative stated that while there may not be a document that specifically says   “ collective agreement “ , the chronology of events outlined by the union demonstrates that there clearly was a collective agreement. He contended that the expiry of the concessionaire  arrangement  was moot – he advanced that the Regulations protected what was in place at the time of the transfer. He submitted that the authorities quoted by the union supported their contention that exgratia payments are remuneration.  He submitted that it was clear from ISS Services v Conroy that conditions are respected by the transferee- while sick pay was not specifically mentioned in the contract , it was found that the workers could not be treated less favourably. The payment of 5 weeks redundancy was an implied term of the claimant’s contract. It was submitted that the Company was in voluntary liquidation and the union did not accept that this had any bearing on the claimant’s entitlements under the Act. The Claimant’s representative submitted that he was never made aware that the  Company was insolvent.

The union asserted that the redundancy package had always been paid by other concessionaires.  The representative stated that 2 workers were affected by the instant dispute – the claimant’s employment ended on the 19th.Nov. 2020.

The liquidator’s representative submitted as follows:

The claimant states that Wedding List Solutions Limited (in voluntary liquation) (the “Company”) did not observe the terms and conditions transferred from her previous employer in relation to redundancy payments.

The claimant transferred to the Company in May 2008 from her previous employer (Brown Thomas & Co Limited) and the transfer was subject to Transfer of Undertakings (Protection of Employment) Regulations. As part the transfer the Company confirmed that the claimant’s terms and conditions of employment (save for a pension scheme membership which was not covered to Transfer of Undertakings legislation) would remain unchanged.

The claimant maintains that a voluntary redundancy package offered to employees of her former employer in July 2003 forms part of the terms and conditions of her employment. There is no evidence provided to indicate any entitlement to enhanced redundancy pay forms part of the terms and conditions of her employment or that it ever did. The claimant was paid statutory redundancy in line with all other employees made redundant by the Company.

We have been provided with a copy of an announcement issued to employees of Brown Thomas & Co Limited in July 2003 which relates to a voluntary redundancy package. We do not see how this evidences any amendment to the claimant’s terms and conditions, or how a voluntary redundancy package offered by the previous employer, 17 years prior to the claimant’s redundancy, could be binding on the Company.

We have also been provided with a concession agreement between the Company and Brown Thomas & Co Limited which sets out at section 8.1 that, while operating in Brown Thomas & Co Limited as a concession:

“…The Wedding Shop shall be responsible for compliance with all statutory requirements relating to such employees, together with such ex-gratia termination payments as would normally be paid by Brown Thomas to its own staff in accordance with the formula used in the most recent severance package paid by Brown Thomas to its employees”

As set out at section 1 of the concession agreement, the agreement expired on 1 March 2008. Furthermore, this agreement does not establish a commitment by the Company to employees, nor a term of employment (which would be protected under the TUPE Regulations). This agreement is between Brown Thomas & Co Limited and the Company and bound the Company to these terms whilst it operated as a concession within the Brown Thomas & Co Limited department store. The Company vacated the Brown Thomas & Co Limited department store in 2015 and, as set out above, the concession agreement has been terminated.

A copy of the following documents were referenced :

- Tupe Letter dated 22 April 2008

- Voluntary Redundancy Announcement dated 7 July 2003

- Concession Agreement dated 1 March 2005

- Email from the complaint appealing the redundancy

- Notes of appeal meeting held 4 December 2020

- Notes of 2nd appeal meeting held 15 December 2020

It was submitted that the union failed to produce evidence of a collective agreement – it was submitted that there was nothing to preclude changes to terms and conditions in place some 17 years prior to the redundancy.It was advanced that the concession agreement between the company and Brown Thomas expired on the 1st.March 2008 after a  3year period.It was submitted that the concession arrangement ceased in 2015 .The respondent representative stated that he was managing the liquidation of the company .He asserted the company was insolvent and had become insolvent on the 31st.March 2019. It was submitted that the company ceased trading in March 2021.He stated that the liquidator was appointed on the 8th.October 2021.It was contended that the authorities invoked by the  union dealt with situations of voluntary redundancy which was not applicable to the instant case of compulsory redundancy.

I have reviewed the evidence presented at the hearing and noted the respective positions of the parties. Based on the chronology of events set out by the union and in particular the documents submitted by the union i.e.

1.       Company Announcement of July 2003 which references “A severance payment of 5 weeks pay per year of service, inclusive of Statutory Redundancy entitlement , will be paid subject to a maximum of 2 years pay “ 

2.       “Key Points for Meetings with Union – Monday 7th.July 2003”

3.       “Company Announcement” 7th.July 2003

4.       Brown Thomas – Severence Terms – Final Proposal 1st.Sept. 2005

5.       Letter dated 12th.April 2005 from Brown Thomas to Mandate referencing the 5 weeks per year of service

6.       Document dated 1st.Sept.2005 from Brown Thomas setting out severance terms and referencing the “Union Committee recommend acceptance of this proposal”

7.       Letter dated 22nd.April 2008 from Brown Thomas to the claimant confirming that the claimant’s conditions would not change on her employment transferring to the Wedding Company.

8.Paragraph 8.1 of the respondent’s own concession agreement with Brown Thomas““The   Wedding Shop shall be responsible for compliance with all statutory requirements relating to such employees, together with such ex-gratia termination payments as would normally be paid by Brown Thomas to its own staff in accordance with the formula used in the most recent severance package paid by Brown Thomas to its employees”.

              9.Email of December 2011 referencing 5 weeks per year of service

constitutes sufficient evidence of a collective agreement between Mandate & Brown Thomas of a severance package of 5 weeks per year of service in cases of redundancy. This was confirmed to the claimant  when her employment was transferred to the respondent via TUPE in 2008.No evidence has been advanced by the respondent of the claimant being put on notice that the 5 weeks per year of service severance package would expire on the expiry of the concession agreement between the transferor and the transferee.

There is no dispute between the parties  about a transfer of undertakings having taken place .The Directive – 2001/23/EC provides that following the transfer of the undertaking , the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement , until the date of termination or expiry of the collective agreement or the replacement of the collective agreement by another collective agreement.The Directive in paragraph 3.3  provides  that Member States may limit the period for observing such terms and conditions with the proviso that it shall not be for less than 1 year. While Ireland implemented the Directive in the 2003 Regulations , Regulation 4(2) repeats the wording of paragraph 3.3.However , Ireland did not take up the option to legislate for the option to place a limit to the  time for future observance of the terms of a collective agreement. Accordingly , I am upholding the complaint  of  a breach of Regulation 4(2) of the European Communities (Protection of Employees on Transfer of Undertakings )Regulations2003 as amended and declare the complaint to be well founded .

I require the respondent to pay the claimant compensation amounting to 5 weeks pay per year of service.

Time Limit for observation by transferee of the terms of a collective agreement