Complainant

Respondent

Parties

Youcef  Feddal

Bidvest Noonan

Representatives

  Self-represented

Ibec

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997

CA-00060732-001

24/12/2023

The Complainant submits that he is entitled to receive payment for unused annual leave accrued prior to a transfer of undertakings in November 2023. 

The Respondent asserts that it is not the correct respondent to these proceedings and refutes this complaint in its entirety.

The Complainant submits that he worked for the Transferor from 8 June 2021 until 31 October 2023 as a security supervisor.  The Respondent took over the contract from the Transferor with effect from 1 November 2023 under a TUPE. The Complainant submits that he is still working in the same position and in the same location as he was prior to the TUPE.

The Complainant submits that the Transferor did not pay him his outstanding annual leave of 33.47 hours which he accrued in the period from 28 August 2023 to 31 October 2023.  The Complainant contacted the Transferor seeking payment, but the Transferor refused to pay him.

Preliminary Matter – Incorrect Respondent

The Respondent (the Transferee) were successful in a tender and awarded a security services contract previously held by the Complainant’s previous employer (the Transferor) on 1 November 2023 (the transfer date). The Complainant commenced employment with the Respondent on 1 November 2023 and is engaged as a security supervisor. The Complainant continues to be employed by the Respondent, working 48 hours per week, Monday to Thursday on a gross hourly rate of €14.75. 

The Transferor confirmed to the Respondent that it had entered into a proposed agreement whereby it agreed to pay the Complainant for any outstanding annual leave that he had accrued but had not used up prior to the date of the transfer. 

The Respondent submits that, as this was an agreement made between the Transferor and the Complainant, the Respondent would be prejudiced in responding to any claims pertaining to that agreement. Hence, the Respondent submits that it is incorrectly listed as the respondent in this matter and, therefore, the Adjudication Officer does not have jurisdiction to hear this complaint. 

Preliminary matter: incorrect respondent

The Respondent submits that it is the Transferor who bears responsibility for payment of the Complainant’s accrued annual leave and that an agreement to that effect was concluded between the Transferor and the Complainant prior to the effective date of the transfer of undertakings. Despite its assertion as to the existence of such an agreement, the Respondent was unable to produce a copy of the agreement at the adjudication hearing.

While I note that this is not a complaint under the Regulation 10 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003), I am of the view that the preliminary issue cannot be resolved without reference to those regulations.

Directive 2001/23/EC (‘the Directive’), transposed into domestic law by the Regulations, provides in the first paragraph of Article 3(1) that “The transferor’s rights and obligations arising from a contact of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee”.  The second paragraph of Article 3(1) of the Directive includes an optional provision which permits a Member State to derogate from the strict terms of the first paragraph of Article 3(1) as follows:

“Member States may provide that, after the date of transfer, the transferor and the transferee shall be jointly and severally liable in respect of obligations which arose before the date of transfer from a contract of employment or an employment relationship existing on the date of the transfer.”

The Irish State did not transpose this optional provision into domestic legislation.

In Rotsart de Hertaing v J Benoidt SA Case C-305/94 [1996] ECR I-52927, the European Court of Justice held that:

“Article 3(1) of the Directive is to be interpreted as meaning that the contracts of employment and employment relationships existing on the date of the transfer of an undertaking, between the transferor and the workers employed in the undertaking transferred, are automatically transferred from the transferor to the transferee by the mere fact of the transfer of the undertaking, despite the contrary intention of the transferor or transferee and despite the latter’s refusal to fulfil his obligations.”

In J Donoghue Beverages Limited V Elizabeth Collins TUD183 the Labour Court found that following a transfer of undertakings within the meaning of the Regulations, the liability for the “transferor’s rights and obligations arising from a contract of employment existing on the date of a transfer” rest with the transferee.

Taking all the above it account, I am of the view that, with effect from the date of a transfer of undertakings, the party which has liability for the employment rights of a transferred employee is the transferee not the transferor.  I find, therefore, that liability in respect of this complaint rests with the Transferee (the Respondent) and not with the Transferor (the Complainant’s previous employer).  Accordingly, I find that Bidvest Noonan is the correct respondent in these proceedings.

Substantive matter

At the hearing, there was no dispute between the parties that the Complainant had accrued 33.5 hours of annual leave during his employment with the Transferor which was still outstanding at the time that his employment was transferred to the Transferee. 

The Complainant submits that he was due payment of €486.75 in respect of his outstanding annual leave.  The Respondent does not dispute this but argues that the Transferor is liable for the payment.

Regulation 4 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 provides 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.

The effect of Regulation 4 is that an employee’s employment does not cease as a result of a transfer of undertakings and all of an employee’s entitlements, including annual leave, are transferred to his employment with the transferee. 

Section 23(1)(a) of the Organisation of Working Time Act 1997, as amended (the Act) provides that where:

(i)                  an employee ceases to be employed, and

(ii)                the whole or any portion of the annual leave in respect of the relevant period remains to be granted to the employee,

the employee, shall as compensation for the loss of that annual leave, be paid by his or her employer an amount equal to the pay, calculated at the normal weekly rate or, as the case may be, at a rate proportionate to the normal weekly rate, that he or he would have received had he or she been granted that annual leave.

The Act, however, does not make any provision for a payment in lieu to be made in respect of outstanding annual leave in a situation when an employee’s employment has not ceased.

In Top Security Ltd and group Of Workers DWT017, the Labour Court held as follows:

Article 7 of Directive 93/104/EC on the Organisation of Working Time (the Directive) provides that the prescribed minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated. The Act was enacted to transpose that Directive and in accordance with settled law it must be interpreted and applied so as to achieve the result envisaged by the Directive (C – 14/83 Von Colson and Kamann v Land Nordrhein-Westfalen [1984] ECR 1891). Article 7 reflects the fact that the Directive is a health and safety measure and the requirement to provide employees with a minimum amount of paid annual leave per year is a health and safety imperative. This was made clear by the ECJ in C – 173/99 R v Secretary of State for Trade and Industry ex parte Broadcasting, Entertaining and Cinematography and Theatre Union [2001] IRLR 559.

In line with the above determination of the Labour Court, if I were to take the view that the Respondent could discharge its liability in respect of outstanding annual leave by paying the economic value of the outstanding leave to the Complainant, this would amount to sanctioning payment in lieu of annual leave in circumstances where the employment relationship is continuing, an option that is not open to me.

I find that the Complainant has carried his entitlement to 33.5 hours annual leave to his employment with the Respondent.  This leave should be taken in line with the Respondent’s normal procedures in relation to annual leave.

I declare that this complaint is well founded, and that the Complainant has carried an entitlement to 33.5 hours annual leave to his employment with the Respondent.

I also direct the Respondent to pay the Complainant €500 in compensation for the breach of the Complainant’s rights under the Organisation of Working Time Act 1997.

Liability for outstanding annual leave following a transfer of undertakings