TUD224

1.Appeal Of Adjudication Officer Decision NoADJ-00024763.

BACKGROUND:

2.The Employer made an appeal of an Adjudication Officer's decision under Section 11 (1), European Communities (Protection of Employees on Transfer of Undertakings) Regulation, 2003on 25 June 2020. A Labour Court hearing took place in a virtual environment on 14 January 2021. The following is the Determination of the Court.

DETERMINATION:

Background to the Appeal:

This is an appeal by Mr Christopher Carroll (‘the Respondent’) from a decision of an Adjudication OfficerADJ-00024763/CA-00029384-007, dated 17 June 2020) under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (‘the Regulations’). The Respondent’s Notice of Appeal was received by the Court on 25 June 2020. The Court heard the appeal in a virtual courtroom on 14 January 2021 in conjunction with an appeal by the Respondent from ADJ-00024763/CA-00029384-004, under the Minimum Notice and Terms of Employment Act 1973. The Court’s determination in that appeal bears reference number MN/20/30.

Factual Matrix:

The Complainant in this matter is Ms Mary Campbell (hereafter, ‘the Complainant’). She was employed as an assistant in the local post office in Kiltimagh, County Mayo, by Ms Marion Dunne until Ms Dunne ceased trading on Friday, 12 April 2019. The Respondent opened a post office in a dedicated area within a Londis store he runs with members of his family on Monday, 15 April 2019. The Londis store is located approximately twenty to thirty metres from the premises in which Ms Dunne had operated her post office business.

It is common case the Complainant’s employment with Ms Dunne commenced on 16 June 2017. The Complainant told the Court that that she worked 16 hours per week, over two days, for Ms Dunne and was paid €10.00 per hour. The Respondent sought to question this on the basis that he believes Ms Dunne had verbally informed him that the Complainant had worked only one day per week for her. Having examined a selection of payslips submitted by the Complainant, the Court is satisfied that the Complainant normally worked a minimum of two days per week when in Ms Dunne’s employment.

The Complainant’s employment ceased on Ms Dunne’s last trading day, 12 April 2019. The Complainant did not receive any notice period or payment in lieu of notice from Ms Dunne as the latter was of the view that the Complainant’s employment would transfer to the Respondent pursuant to the Regulations.

Written Submissions of the Parties:

The Complainant was assisted by her daughter at the hearing and did not have the benefit of legal assistance in presenting her case. Her submission comprises largely of her recollection of the events that took place immediately prior to the cessation of Ms Dunne’s business, including assurances given to her by Ms Dunne that there would be a transfer of her employment to the Respondent’s business and also the Complainant’s engagement (via text message and face-to-face) with the Respondent. The Complainant submits that the Respondent offered her employment in his new post office but on terms and conditions that differed significantly from those she enjoyed while in Ms Dunne’s employment.

The Respondent denies that a transfer of undertakings within the meaning of the Regulations took place between Ms Marion Dunne and himself in April 2019, or at all. In support of his appeal, the Respondent makes the following submissions:

No assets nor employees transferred from Ms. Dunne to the Respondent;

When the Respondent’s post office commenced trading on 15 April 2019 the staff employed there comprised the Respondent (as postmaster), the Respondent’s wife along with a third member of staff, ‘CC’; CC had never worked in Ms. Dunne’s post office;

There was no transfer of premises: the Respondent’s post office operates from an entirely different location i.e. from within his existing Londis store and not the premises from which Ms. Dunne’s post office previously operated;

The Respondent paid for all materials, labour, electrical and security services required for the construction of the dedicated post office space within his Londis store in accordance with specifications provided to him by An Post;

The bespoke premises comprises the primary asset necessary for the conduct of the business of a post office;

There are reduced monetary benefits for new postmasters by comparison to the arrangements that would have been in place with postmasters and postmistresses historically. For instance, the commission on transactions (which is the primary source of a postmaster’s income) has reduced. This means there is a lot more focus on sales in the Appellant’s post office than there would have been or would have needed to be in the post office operated under the historical arrangement Ms. Dunne had the benefit of. This translates into much more active selling of all An Post services and in particular of An Post insurance and An Post credit card services by both the Appellant himself and his staff and this is a key focus in the Appellant’s business

All assets and equipment required by the Respondent to open a fully functioning post office were either procured and paid for by the Respondent himself or provided to the Respondent by An Post; those provided by An Post were not leased by the Respondent and remained at all times the property of An Post;

The equipment provided to the Respondent by An Post included: two computer screens, two cheque teller machines, a “main safe” (i.e the safe in which much of the monies were to be stored), a “working safe” (i.e. the safe for day-to-day operations), two key pads, two electronic signing pads, two weighing scales, two franking machines, the external signage, the window graphics, the internal point of sale merchandise and the queue management system;

There was no transfer of any assets or equipment between Ms. Dunne and the Appellant although some of the equipment received by the Respondent from An Post had been in use in Ms Dunne’s premises; any such equipment previously used by Ms Dunne was ancillary to the most important items of equipment necessary for the conduct of business in a post office premises; that equipment was at all times wholly owned by An Post;

No information in relation to individual An Post account holders was transferred from Ms Dunne to the Respondent as the model under which An Post operates is that individual post offices do not automatically have access to customer account information; such information is held on An Post’s central server and can only be accessed by a postmaster/postmistress when a customer presents with, for example, their post office book; the bar code on the customer’s post office book is then scanned which allows the postmaster/postmistress in question temporary access to that account to carry out whatever transaction the customer requires;

The Respondent has different opening and closing times from those operated by Ms Dunne;

The Appellant operates a very different business model involving co-location whereby the post office and the Londis convenience store co-exist side by side within the same premises under the same general management with a view to maximising footfall to both businesses; this business model involves reliance on cross-purchasing e.g. someone collecting a pension or posting a letter in the post office may buy groceries from Londis while at the premises;

The Respondent enjoys a less favourable compensation package for providing post office services than those which applied historically to operators of post offices on behalf of An Post, including Ms Dunne; as a result of this change, the Respondent and those in a similar position, must - in order to make their business financially viable - proactively engage in encouraging customers to avail themselves of other financial products offered by An Post.

Evidence:

The Court heard evidence both from the Complainant and from the Respondent.

Legal Authorities relied on by the Respondent:

The Respondent’s submission cites several seminal and well-known judgments of the Court of Justice of the European Union interpreting the so-called Acquired Rights Directives, includingJMA Jozef Maria Antonius Spijkers v Gebroeders Benedik Abattoir CV et Alfred Benedik en Zonen BV[1986] ECR119;Suzen v. Zehnacker Gebaudereinigung GmBH(Case C13/95) [1997] E.C.R.1259;Hidalgo and Others v Asociation de Servicios Aser and Sociedad Cooperativa Minerva(C-173/96);Horst Ziemann Sicherheit GmbH and Horst Bohn Sicherheitdienst(C-247/96);Oy Liikenne AB v Liskojarvi and Juntunen[2001] IRLR 171 (EC|J);Hernandez Vidal SA v Perez[1999] I.R.L.R. 132 andCLECE SA v Valor[2011] I.R.L.R. 251.

Discussion and Decision:

Counsel for the Respondent told the Court that there was no transfer of significant operational assets from the Complainant’s former employer to the Respondent. She submitted, for example, that the “most significant assets required to undertake the role of a post office - the customer’s data, files or records were not transferred to the Appellant”. On the basis of the foregoing, she requested the Court to distinguish the within appeal from the facts ofMinister for Employment Affairs and Social Protection v The Labour Court and Dunne[2019] IEHC 634, a decision of the High Court in which the Labour Court’s determination that a transfer of undertaking had taken place in circumstances where the files and records of social welfare customers were relocated from a local, independently operated social welfare office to the Department’s nearby ‘Intreo’ centre was upheld.

The Respondent’s evidence to the Court is that he was provided access to the centrally-held database of An Post account holders on commencement of his post office business. It is clearly the case that this is one and the same database that Ms Dunne would likewise have had access to when operating her post office business. It follows, in the Court’s view, that no meaningful distinction can be drawn between the facts of the instant case and the facts ofDunnein this regard: the Respondents in both cases had access to the relevant records previously available to the respective Complainants’ original employers. It appears to the Court that, although customer records and some other significant operational assets required to operate the post office business in Kiltimagh did not transfer directly from Ms Dunne to the Respondent, the Respondent had equivalent access to that of Ms Dunne to those records on an ‘as needs’ basis via An Post’s central database.

Likewise, although only a limited number of physical items of equipment may have moved from Ms Dunne’s premises to the Respondent’s, the Respondent was provided with several key operational assets, including safes, weighing scales and franking machines, the equivalents of which had undoubtedly also been provided by An Post to Ms Dunne and were equally essential to her post office business.

In its seminal decision inSuzen v. Zehnacker Gebaudereinigung GmBH(Case C13/95) [1997] E.C.R.1259, the Court of Justice drew a distinction between labour-intensive and asset-reliant businesses. It seems to the Court that the post office businesses operated by both Ms Dunne and the Respondent fall into the latter category i.e. they are asset reliant. Furthermore, in its judgment inAbler v Sodexho, [Case C-340/01] the Court of Justice considered the application of the Acquired Rights Directive to certain asset reliant businesses (such as contract catering) where there is no direct transfer of assets between an incoming and outgoing service provider, but both providers have the use of significant operational assets necessary for the conduct of the business in question, which operational assets are at all material times in the ownership of the client on whose behalf the service is being provided. It is clearly the case that neither Ms Dunne nor the Respondent could have run a post office business on behalf of An Post unless they had respectively been provided with a suite of significant operational assets that, as it happens, were – in each case – the property of An Post at all material times. That being the case, this Court finds that the reasoning of the Court of Justice inAbler v Sodexhocan be applied to the facts of the within case.

A central plank of the Respondent’s legal submission turns on the following interpretation of the judgment of the Court of Justice inCLECE SA v Valor[2011] I.R.L.R. 251 advanced by Counsel atparagraphs 91 to 92 of her written submission to the Court:

• “91. The necessity for intangible assets to transfer, alongside tangible assets, in order for the Directive to apply was propounded by the European Court of Justice inCLECE SA v Valoras follows:
  • "In order to assess whether an economic entity within the meaning of the Directive has been transferred, not only the tangible assets but also intangible assets which may have been provided by the original employer with a view to carrying out the activity, are important."
  92. Therefore even if it is accepted that tangible assets were transferred from Ms Dunne to the Appellant (which is denied), the fact that no intangible assets were transferred is determinative of the issue and no economic entity was transferred.”

	Signed on behalf of the Labour Court
	Alan Haugh
SL	______________________
24 June 2022	Deputy Chairman