Complainant

Respondent

Parties

Aoife O’Shea

Praxis Care [CRO Registration No: 908491]

Representatives

SIPTU

Internal/Self-represented

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-00045391-002

28/07/2021

This case is one of a block of cases, taken by SIPTU, on behalf of a group of employees who had previously worked for Cork Association for Autism (C.A.A.). A transfer of undertakings took place in March 2021 for this group of employees from C.A.A., the transferor to Praxis Care, the transferee.

It is the union’s case that the sick leave policy the employees had enjoyed at their previous employment did not transfer with them. It is the union’s case that the employees’ contracts set out that they were entitled to three months sick leave at full pay, and after that, the awarding of paid sick leave was to be awarded on a discretionary basis. However, it submits that every employee who applied for the paid discretionary sick leave at C.A.A. was granted it, and that the enhanced period of sick leave therefore became a term of the employees’ contractual terms and conditions of employment, as a matter of ‘custom and practice.’

The union submits that subsequent to the transfer of their employment to Praxis Care, it became apparent that the application of the sick pay policy had changed; and that employees who had exceeded the guaranteed three months of paid sick leave, were not necessarily granted paid sick leave when they applied for the additional discretionary period.

The union submits that this constitutes a change in the employees’ terms and conditions of employment in breach of Regulation 10 of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003).

The Respondent (transferee) submits that as part of the TUPE transfer from C.A,A, to the Respondent Employer, there were a number of legacy issues which had not been resolved and the 12 week sick pay clause was one of those. It submits that clarification was sought by the union on behalf of the Complainants, from the Board of C.A.A. (the transferor), but none was forthcoming.

It submits that despite efforts to resolve the matter between the parties by way of conciliation, ultimately this proved unsuccessful.

It submits that clarity is sought as to the ‘intent’ of the sick pay clause, as well as to the correct reference period to be applied, pertaining to sick leave and sick pay.

It has set out the parameters of its indemnity by its funding organisation and an excerpt of the legal advice it received.

The Respondent particularly emphasises its good faith and its good will, and in particular, wishes to state that at all times the TUPE  process was followed, in line with its legal obligations and duties to its (newly acquired) employees.

It is submitted that the case herein relates to the Complainant who is currently employed by Praxis Care, since March 2021 when her employment transferred under the TUPE Regulations from Cork Association for Autism (C.A.A.).

The employee understood that all her terms and conditions of employment would be transferred and were transferred with her to the new employer. However, after the transfer occurred, it was discovered the Sick Pay Scheme had not transferred to the new employer or had not been accepted by the new employer Praxis Care.

Background

Cork Association for Autism (C.A.A.) is a section 39 agency mainly funded by the Health Service Executive (HSE). The Staff Handbook, which forms part of the contract (attached in Appendix 1) states the following:

‘Permanent staffare entitled to three single days per annum without medical certificatefor which you will be paid. Medical certificates must be producedfor absences in excess of one day at any time up to a maximum of three occasions in any 12 month period. All additional sick leave should be certified in order to receive payment.

Should the C.A.A. agree to pay you during sick leave absences, you will be paid for a maximum of 12 weeks during any 12-month period. Payment ofsick leave will not exceed general norms that apply to the sector.’

Leading up to and after the transfer, the union submits that it sought clarification from C.A.A. regarding the Sick Pay Scheme and the correspondence issued from [CO], the Interim Director of Services stated the following:

‘Sick Leave: All CAA contracts will TUPE across to Praxis Care as they are. In your letter you made reference to a number of staff who have a sick leave allowance of 12 weeks please see below excerpt direct from a contract relating to the 12 weeks sick pay as you can see it is over a four-year rolling period.’

‘For the 4th and 10th certified and consecutive day's absence from work up to a maximum of 12 weeks and thereafter at the discretion of the CAA payment will be made to top up social welfare entitlements to gross salary levels, subject to a maximum of 12 months sick leave in any four-year period or less.’

Letter in Appendix 2

Further correspondence issued to SIPTU in this regard dated 19th January 2021 states the following:

The Board of the CAA confirm that the sick pay as per [NAME REDACTED] contract is payment of a maximum of 12 weeks and thereafter at the discretion subject to a maximum of 12 months sick leave in any four-year period. The CAA is only able to pay 12 weeks sick pay over four years which is in line with the sector norm.

Appendix 3

It is submitted that it must be noted that the C.A.A. confirmed the sick pay is a maximum of 12 months in any 4-year period. It should also be noted that some employees received this benefit while out sick and therefore it was the custom and practice for members involved in this dispute.

Attached in Appendix 5 is a contract of employment confirming this.

Also attached in Appendix 6 are pay slips confirming sick leave was paid to another staff member that amount to 582 hours over a period of 1 year, this equates to 15 weeks’ pay in one year.

Appendix 7 contains Staff Annual and Sick Leave recording Sheets for 2015 and 2016 where it shows this staff member received over 15 weeks sick leave within these 2 years also.

Appendix 8 contains correspondence from C.A.A. to another staff member which confirms this staff member received sick leave pay of 721.75 hours (18.50 weeks) over a period of one (1) year.

Appendix 9 further confirms that C.A.A. policy and practice on sick leave was 'maximum of 6 single days uncertified sick leave & maximum of 12 weeks certified sick leave all paid for in any 12 month period.'

The Praxis Care sick leave policy is as follows:-

Sick Pay Scheme: This varies dependent on length of employment [See Appendix 4]

It is submitted attempts to resolve this matter at local level, between this group of employees, the union entered into discussions with Praxis Care on this matter.

The union’s argument:-

It contends that the Respondent is in breach of Regulation 4(1) of S.I. No. 131/2003 European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 which states: "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."

It contends that the employer has also breached Regulation 4(2) of the 2003 Regulations where it states: "Following a transfer, the transferee should 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 payment.”

Case Law

The Labour Court in J. Donoghue Beverages Ltd & Murphy TUD185 (February 2018) held that the law was that:-

Since the State has not chosen to transpose into domestic legislation its optional provision in relation to joint and several liability... following a transfer of undertakings within the meaning of the Regulations, the liability for the transferor's rights and obligations arising from contract from employment existing on the date of a transfer, rests with the transferee.

It is also requested the Adjudicator to take account of the CJEU case Von Colson & Kamann v Land Nord Rhein-Westfalen (1984) ECR 1891 where does CJEU made it clear that where a right grounded in European law is infringed, the judicial redress provided shall not only compensate for economic loss sustained but must provide a real deterrent against future infractions.

Conclusion

In conclusion, the union is seeking a decision that:-

•      The complaint is well founded.

•      Requires the Respondent to comply with the relevant provisions, and to implement the Complainants’ terms and conditions with immediate effect.

At the hearing

At the hearing, the union representative for the Complainant submitted that what was in issue in this (and the other related cases) was ‘custom and practice.’ She submitted that there was no staff member who applied for additional paid leave who was refused it prior to the transfer, and submitted that the manner in which the ‘discretionary’ term was interpreted constitutes ‘custom and practice’ applicable to all the employees, which should have transferred with the TUPE to the Respondent Employer (transferee) but which did not.

She explained that – as it is sick leave - only some staff would have availed of it. It is therefore not that easy to provide examples, but cited two staff who were out longer than the guaranteed period of paid sick leave and submitted that the situation changed post-TUPE. She submitted that prior to the transfer, the sick pay scheme allowed for 12 weeks’ pay in a 12-month period and that some staff – those who were out sick had availed of more than 12 weeks paid sick leave in a one-year period. She emphasised that it was applied to them before the transfer but was not applied to them after the transfer; and submitted that ‘whatever they had prior to the transfer must transfer with them.’ She submitted that she could not show it for all nine (9) employees whose cases are before me, because not everyone went on sick leave [or sick leave for a long enough period].

She said that, as with all TUPE cases little niggling things may arise which need to be fixed/amended. She said there had been an issue in relation to the long service increment, which had to be addressed also. However, the union representative characterised the sick pay issue is ‘a big thing’, which she said: ‘should have transferred’ [with the TUPE] and which she submitted ‘didn’t transfer’. She expressed the view that it should be honoured.

It was submitted that there was an offer made to resolve the dispute, that some of the staff that accepted the Respondent Employer’s offer have a higher rate of pay, so there was not much of a disparity for those staff members. For the remaining staff members, there was an offer, and the Workers were told at the last minute that it was ‘all or nothing’, i.e. that they all had to agree or none of them would receive it, and at the ‘eleventh hour’ the offer was withdrawn. It was submitted that the offer should be honoured for those staff willing to accept it. The S.I. was being cited in that regard – it was submitted that the manner in which it was handled was unfair.

Respondent – As per its Written Submission

In late 2019, the Respondent Employer was invited to bid to run the services which were being supplied by C.A.A. The circumstances of the prior employer are set out in the submission.

As part of the TUPE transfer from C.A,A, to the Respondent Employer, which occurred on 1st March 22021, there were several legacy issues that had not been resolved and the 12 week sick pay clause was one of those. It is submitted that clarification was sought by the union on behalf of the Complainants, from the Board of the prior employer (the transferor). However, none was forthcoming.

It is submitted that there then were efforts to resolve the matter between the parties – the Complainants and the Respondent Employer (the transferee) which were ultimately unsuccessful.

It is further submitted that there is a compounding lack of clarity as to the applicable reference period, pertaining to sick leave and sick pay.

The parameters of the indemnity supplied to the Respondent Employer by its funding organisation (the HSE) is set out in the submissions.

An excerpt of the legal advice the Respondent Employer submitted is also set out in its submissions.

The Respondent re-iterates that at all times the TUPE  process was followed; and highlights that it has continued to pay staff within this grouping until the outstanding matter is resolved.

The proposed terms of a settlement offer, which ultimately collapsed, are also set out in the submissions, as are the circumstances surrounding that.

The Respondent Employer re-iterates the efforts it has made to resolve the matter, and its good faith in terms of its handling of long-term sick leave and sick pay in respect of two staff members who are on long-term sick leave (who do not form part of this cohort of nine employees).

At the hearing:

The Respondent company submits that it is HSE funded – it is a s. 39 organisation.

It submits that there were 47 employees who previously worked for C.A.A. and who were TUPE-ed across to two different organisations - 12 to the Respondent organisation, and 35 to another organisation.

The Respondent organisation submits that it cannot clarify the intent of the clause, and that the HSE should be present. It said that the TUPE process was ongoing and that it cannot agree to any costs increase unless the HSE agrees to pay it.

It submits that the Respondent’ company’s view turns on the issue of ‘intent’, i.e. what is the clause and what is its intent. It submits that there had also been a dispute as to whether there was a 12 month rolling period or a 4 year rolling period. It submits that it is seeking clarity on the intent of those clauses, that ‘everyone needs to know what the clause means’. It submits that the Adjudication Officer cannot even really look at the ‘custom and practice’ issue because ‘that happened differently for different people’, i.e. that it is slightly different in each contract.

It submits that the three months could mean three months up ‘to a maximum of 12 months” in 4 years or that it could mean up to a maximum of 12 weeks in a ‘rolling four-year period.’

It submits that one approach the Respondent company was willing to take was to be willing to restart the sick leave, i.e. have a blank slate from April 1st.

The Respondent company (the transferee) submits that it does not know and therefore cannot provide clarification as to the application/meaning of the term ‘discretionary’ in the instant circumstances.

It also clarified that the fact that it was paying some employees in the interim did not constitute a concession of the claim, but rather that those employees were being paid, as an interim measure, until this was resolved.

As per S.I. No. 131/2003 - European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003:-

s. 4 sets out 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.

(3) Subject to paragraph (4), this Regulation shall not apply in relation to employees’ rights to old-age, invalidity or survivors’ benefits under supplementary company or inter-company pension schemes that do not fall within the Social Welfare Acts.’

In relation to the right to ‘Consultation’, s. 8 sets out that:-

‘(1) The transferor and transferee concerned in a transfer shall inform their respective employees’ representatives affected by the transfer of –

(a)    the date or proposed date of the transfer;

(b)    the reasons for the transfer;

(c)     the legal implications for the employees and a summary of any relevant economic and social implications of the transfer for them

and

(d)    any measures envisaged in relation to the employees.

(2) The transferor shall give the information in paragraph (1) to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer is carried out and, in any event, in good time before the transfer is carried out.

(3) The transferee shall give the information in paragraph (1) to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer is carried out and, in any event, in good time before the employees are directly affected by the transfer as regards their conditions of work and employment.

(4) Where the transferor or the transferee envisages any measures in relation to employees, he or she shall consult the representatives of the employees, where reasonably practicable, not later than 30 days before the transfer is carried out and, in any event, in good time before the transfer is carried out, in relation to any such measures with a view to reaching an agreement.

(5) Where there are no employees’ representatives in the undertaking or business of the transferor or, as the case may be, in the undertaking or business of the transferee, the transferor or the transferee, as may be appropriate shall put in place a procedure where by the employees may choose from among their number a person or persons to represent them (including by means of an election) for the purposes of this Regulation.

(6) Where, notwithstanding paragraph (5), there are still no representatives of the employees in an undertaking or business concerned (through no fault of the employees), 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) the date or proposed date of the transfer;

(b) the reasons for the transfer;

(c) the legal implications of the transfer for the employee and a summary of any relevant economic and social implications for that employee;

and

(d) any measures envisaged in relation to the employees.’

s. 7 clarifies that that the Regulation applies whether the decision resulting in the transfer is taken by the employer or an undertaking controlling the employer; and that the information concerned not being provided to the employer by the undertaking controlling the employer does not release the employer from those obligations.

s. 9(3) sets out that nothing in the Regulations prohibits the inclusion in an agreement of a provision more favourable to an employee than any provision of the Regulations, i.e. the regulations set out the minimum legal standard applicable. 

In this instance, consultation and notification took place.

However, there is a dispute as to the application/meaning of ‘discretionary.’

The transferor has not engaged in this process. [The transferee has clarified that it has an indemnity from the transferor pertaining to any claims arising up to the date of transfer.]

The transferee submits that it does not know and therefore cannot provide clarification as to the application/meaning of the term ‘discretionary’ in the instant circumstances, but submits that the fact that the union representing the body of workers has altered its position, from its initial position as to what the term means, and how it is to be applied. It further submits that the issue of ‘custom and practice’ is not something the Adjudication Officer can really look at, as different employees whose employment started at different times with the transferor have slight variations in their contracts. [The union at the hearing clarified that it was seeking a rolling four-year period, as the correct reference period with respect to this cohort of employees, in line with the standard approach in this sector, which is not the most favourable reference period potentially possible (depending on interpretation/application).]

The transferee is a s. 39 body funded by the HSE. The transferee is willing to engage but submits that the HSE should be present and submits that, as a s. 39 body, it cannot agree to any increase in spending, without the consent of the HSE.

s.10(4) of S.I. 131/2003 sets out that:

“Where a complaint is presented to a rights commissioner under paragraph (1), the rights commissioner shall –

(a)    give the parties an opportunity to be heard and to present any evidence relevant to the complaint;

(b)    give a decision in writing in relation to the complaint; and

(c)     communicate the decision to the parties.

(5) A decision of a rights commissioner under paragraph (4) shall do one or more of the following:

(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 in the opinion of the rights commissioner, is 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.

I find that this complaint is well founded.

A term of a contract of employment can be express or implied, and an express term of a contract of employment can be oral or written.

I have carefully examined the submissions made by the parties and have directed my mind to the relevant law, both domestic and European, in this area. It falls to me to determine whether the automatic granting of putatively ‘discretionary’ sick pay, in relation to an additional period of sick leave, became an implied term of the employee’s contract, by virtue of the creation of ‘a reasonable expectation’ on the part of the employee on foot of a ‘custom and practice’ instituted by the consistent behaviour of the prior employer (the transferor) over a period of years. I find that it did.

The Respondent has sought to rely upon two things:-

1.       the written terms of the contract of employment which sets out, in respect of the payment in relation to the additional period of sick leave, that it is ‘discretionary’, and

2.       it submits that it is a stranger as to the ‘intent’ attributable to that word, as the transferor has not engaged with the transferee (or the union representing the employees whose employment was transferred to the transferee), in relation to this point, subsequent to the transfer occurring. It does not dispute that payment may be applicable, just that it cannot speak to the point.

The Respondent Employer seeks to point to ‘industry norms’ in terms of entitlement to an additional period of sick pay as indicating that the Complainant may have no contractual entitlement to the payment in relation to the additional portion of sick leave, but emphasises its willingness to engage with the employee(s) on this point. It further emphasises that it is a s. 39 organisation, and its perception that the HSE should be party to any such negotiations as it would be the funding organisation. However, that does not address the issue of ‘custom and practice’ in respect of a particular term, and if the contract stands altered as a result.

For completeness, the HSE is not the Respondent Employer, i.e. it is not the transferee for the purpose of the applicable Directive or the domestic S.I. giving effect to the applicable Directive.

The word ‘discretionary’ does not afford an employer an automatic entitlement to decline an application for said discretionary payment – if there is a provision in an employment contract for something which can be granted on a ‘discretionary’ basis, it has to actually exist; and in line with a fair and transparent approach (which does not fall foul of equality law) it has to be something of which an employee could potentially avail. If the employer having directed its mind to, and considered any such application, decides to grant the additional ‘discretionary’ period of sick pay, in a particular case, there has to be funding to pay it. It is also worthy of note that any ‘discretionary’ provision – in this instance, the decision to grant or decline an application for an additional period of sick pay has to comply with the requirements of equality law (both domestic and European), and cannot be directly or indirectly discriminatory in its application or approach.

I have had regard to the decision of the then-ECJ, in the Daddy’s Dance Hall case (Foreningen af Arbejdsledere I Danmark V. Daddy’s Dance Hall A/S [1988] IRLR 315 ECJ), which held that the mandatory provisions pertaining to TUPE could not be overridden by agreement between employer and employee. Wide protection is afforded to acquired rights in relation to conditions of employment both individually and collectively. The transferee employer has the same obligation to the transferring employees as the transferor employer had immediately prior to the transfer.

In considering the instant case, I am also guided by the approach taken by the Supreme Court in McKelvey V. Iarnrod Éireann/Irish Rail [2019] IESC 69, and that of the Irish Courts consistently in relation to the interpretation of employment contracts. I am, as ever, cognisant of the power imbalance between the employee and the employer, and mindful that employment contracts should be strictly construed as against the commissioning party, i.e. the employer.

The UK Supreme Court has again emphasised this point, in the case of  Uber BV and others (Appellants) V. Aslam and others (Respondents) [2021] UKSC 5 at para 71, wherein it addresses the intersection of contract law and employment law, highlighting that employment law has a remedial social purpose in the redressing of power imbalance:

“…The purpose of protecting workers

71. The general purpose of the employment legislation invoked by the claimants in the Autoclenz case, and by the claimants in the present case, is not in doubt. It is to protect vulnerable workers from being paid too little for the work they do, required to work excessive hours or subjected to other forms of unfair treatment (such as being victimised for whistleblowing)…”

In this situation, where a transfer of undertakings has occurred, the transferee is said to ‘stand in the shoes’ of the transferor. Furthermore, the CJEU has consistently taken the approach that both applicable European Directive and the Regulations made thereunder – in the case of Ireland, the applicable domestic regulation is. S.I. 131/2003 European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 - should be interpreted flexibly so as to give reality to the intent of the Directive. It is of further note that no time limit is set out in the Irish regulations with respect to the protection of employment conditions, despite the fact that the Directive allowed the Member States the option of limiting that protection to a period of not less than one year.

While a transfer of undertakings cannot be used as a ‘landgrab’ in order to secure more favourable terms and conditions of employment (except by consent), neither can it be used as the delineating point whereby prior to the transfer there were more favourable employment conditions as compared against the conditions of employment in force subsequent to the transfer.

For completeness, the CJEU stated in Minister for Justice and Equality V. Commissioner of An Garda Síochána Case C-378/17 at [38]: “As the Court has repeatedly held, that duty to disapply national legislation that is contrary to EU law is owed not only by national courts, but also by all organs of the State — including administrative authorities — called upon, within the exercise of their respective powers, to apply EU law.” The Court held at [47]: “Furthermore, in so far as the Workplace Relations Commission must be considered to be a ‘court or tribunal’ within the meaning of Article 267, it may refer to the Court, pursuant to that article, questions of interpretation of relevant provisions of EU law and, as it is bound by the judgment in which the Court gives a preliminary ruling, it must forthwith apply that judgment, disapplying, if necessary, of its own motion conflicting provisions of national legislation. The effect of the decision in Minister for Justice and Equality V. Commissioner of An Garda Síochána Case C-378/17 is that an Adjudication Officer of the Workplace Relations Commission has a duty to give full effect to EU law, including through the disapplication of national legislation which conflicts with EU law, where required. 

Alternatively, the question of whether the relevant section conflicts with EU law can be referred to the CJEU pursuant to Article 267 TFEU.

The Workplace Relations Commission is the body with jurisdiction to hear a case under S.I. No. 131 of 2003, European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003, the Workplace Relations Act 2015 being the enabling legislation.

Having carefully considered and having had regard to all of the above, I find that the consistent granting of sick pay in respect of any employee who applied for it, pertaining to the additional period of sick leave, has created – by virtue of ‘custom and practice’ at the transferor employer, across time - a reasonable expectation in the employee, and has had the effect of altering the applicable contractual term, in circumstances where its application arises. I find, therefore, that how the relevant contractual term in the employment contract has been interpreted and applied - something which now survives the transfer of undertakings to the Respondent Employer (the transferee) - was altered in the employee’s favour, by the conduct of the transferor employer.

Consequently, I find that the relevant term is to be interpreted and applied in the same manner, going forward, with respect to the Complainant(s) whose employment transferred across from the transferor employer to the transferee employer, as part of this transfer of undertakings. I find that the Complainant is entitled to the more favourable interpretation of the putatively ‘discretionary’ sick pay provision, relating to an additional period of sick leave, up to the stated maximum in each employment contract, in a rolling four-year period.

TUPE; European Directive; Domestic Regulations (Statutory instrument); Discretionary additional paid period of sick leave; ‘Custom and Practice; Body of Workers; Test Case;