Complainant

Respondent

Parties

Eugene  Donnellan

Elaine Hogan

Representatives

 KOD Lyons Solicitors

 Dundon Callanan Solicitors

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00067402-001

15/11/2024

The Complainant was employed in the Post office run by the Respondent as Branch Manager. The Respondent decided to give up the service and it went out for tender by An Post. The Complainant submitted for the tender but was unsuccessful and the tender was won by a local supermarket. The Complainant stated there was no transfer of undertaking and he was entitled to a redundancy payment from the Respondent and the Respondent stated there was a transfer of undertaking, that there was no redundancy and the Complainant voluntarily decided to take up a post with a new employer and voluntarily gave up his option to transfer to the new Service Provider.

The Respondent formally held an An Post Retail Business Service Provider Contract in Miltown Malbay, Co. Clare. 

The Complainant commenced employment for the Respondent on or about September 2011 at the Post Office in Miltown Malbay . 

The Complainant had an unblemished career working for the Respondent and was considered a very diligent and trustworthy employee. 

The Respondent wrote to the Complainant by letter dated 01 July 2024 noting that the Respondent had tendered her notice to resign from the position of Postmaster for An Post in Miltown Malby.

The July 2024 Letter also informed the Complainant that a Retail Business Service Provider Contract had been awarded by An Post to Mr. John Jones who operates a separate retail premises in Miltown Malby. 

The July 2024 Letter further asserted that the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (the“Regulations”) would apply and that the Complainant would be employed by Mr. Jones.   

The Complainant sent an email to the Respondent on the 6 September 2024 asking that the Respondent set out the basis for the purported application of the Regulations as the Complainant understood that the Contract had ceased and a competitive tender process had been held prior to the awarding of a new Retail Business Service Provider Contract to Mr. Jones. The Complainant asked that the Respondent outline where the “transfer arose” in these circumstances.   

The Respondent replied to the Complainant by email on the 23 September 2024 noting that the legal ownership of a business can transfer without needing the agreement of the contracting parties and that the Regulations applied with the surrender of the Contract. The Respondent further noted that the purported transfer was to have effect from 04 October 2024.   

On 03 October 2024 KOD Lyons Solicitors LLP for the Complainant wrote to the Respondent querying the application of the Regulations and requesting that a formal notice of redundancy issue to the Complainant.   

On 04 October 2024 Dundon Callanan LLP Solicitors for the Respondent replied and noted that the Regulations applied and the transfer would be effective from 04 October 2024

On 15 November 2024 the Workplace Relations Commission acknowledged receipt of a complaint submitted on behalf of the Complainant seeking adjudication under Section 39 of the Redundancy Payments Act (1967) (the “1967 Act”) under reference CA-00067402. 

Section 39 (15) of the 1967 Act states:  

“…any employee who is dissatisfied with a decision given by a deciding officer under section 38 or with any decision of an employer under this Act may appeal to the Director General against the decision…” 

 Section 39 (16A) of the 1967 Act states:

 “The Director General shall refer to an adjudication officer for adjudication by that officer an appeal under subsection (15) or a question referred to the Director General under subsection (16).”

 Hence jurisdiction arises for the present forum to determine whether a payment under Section 7 of the 1967 Act ought to have been made by the Respondent to the Complainant.   

Noting that the Complainant has far exceeded the requisite two years’ service required to qualify for statutory redundancy the Complainant submitted that Section 7 (2) (a) of the 1967 Act applies to the present circumstances. Section 7 (2) (a) states that a valid redundancy arises whereby: 

“this employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed.”[1] 

Regulation 3 (1) of the Regulations states that the Regulations cover:   

“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.”[2]

The Complainant proposes to contest the applicability of Regulation 3 (1) of the Regulations by examining the following:    

Definition of an undertaking;

 ii.Definition of a transfer;  

Distinguishing between the transfer of an undertaking and the transfer of an activity; and  

Distinguishing between transfer of an undertaking and change of subcontractor.   

While an undertaking is not defined in the Regulations, Regulation 3 (3) states that the Regulations apply “to public and private undertakings engaged in economic activities whether or not they are operating for gain”.  

The Regulations at Regulation 3 (2) further define an entity subject to a transfer as “an economic entity which retains its identity”.   

In Spijkers V Gebroeders Bendik Abbatoir CV[3] (“Spijkers”) the CJEU considered the definition of a transfer in circumstances where Mr. Spijkers had worked in an abattoir which consisted of a slaughter-house together various rooms, offices and equipment. The business was sold and the transferee party to this contract did not retain Mr. Spijkers as an employee. Proceedings issued whereby Mr. Spijkers asserted that his employment ought to have transferred to the transferee by operation of law.    

In Spijkers CJEU enunciated various principles which ought to determine the applicability of the Regulations namely:   

“…whether or not the tangible assets (buildings, moveable property and stocks) and the intangible assets (know-how and goodwill) were transferred, the nature of the activities engaged in and whether or not those activities had ceased at the time of the transfer. However none of those factors is in itself decisive.

…it follows that the decisive criterion for establishing whether there is a transfer for the purpose of the directive is whether the business in question retains its identity.”

 It is clear that no buildings or property have transferred from the Respondent to Mr. Jones. While some books and records may have followed the awarding of the new Retail Business Service Provider contract to Mr. Jones such records were transferred as a consequence of the Respondent’s surrender of the Contract and the consequential tender process at the behest of An Post rather than by virtue of any agreement or nexus as between the Respondent and Mr. Jones.   

The Complainant submitted that the operation of the Contract is inextricably linked to the contract holder personally owing to the interpersonal nature of the provision of postal services and the trust and goodwill associated with the long-term operation of such contracts. The Complainant asserts that therefore the business in question did not retain its identity post purported transfer to Mr. Jones.   

In Redmond Stichting V Bartol[4] (“Stichting”) the CJEU found that a Dutch local authority which transferred a contract for the provision of addiction recovery services from one provider to another attracted the application of the Regulations.  While there was no direct nexus between the transferor and the transferee. The transfer in question consisted of funding, facilities, some employees and drug-treatment patients. In the circumstances it was held that an economic entity which retained its identity had been so transferred.   

The Complainant distinguishes Stichting from the present factual matrix on the basis that An Post held a competitive tender process rather than directing the transfer of assets, facilities and funding as seen in Stichting. Moreover, in present circumstances the Complainant asserts that the economic entity as operated did not retain its identity post purported transfer.  

In Ledernes Hovedorganisationn (Rygaard) V Dansk Arbejdsgiverforening (Stro Molle Akustik A/S)[5] Mr. Rygaard was employed by a firm of carpenters in the Netherlands Svend Pedersen A/S (the “Original Employer”).   

The Original Employer held a contract issued by SAS Service Partner A/S (the “Client”) for the construction of a canteen. The Original Employer notified the Client on 29 January 1992 that it wished for part of the contract to be completed by a separate company Stro Molle (the “Proposed New Employer”).

On 29 January 1992 the Proposed New Employer submitted a tender to the Client which was accepted.   

On 30 January 1992 the Client and the Proposed New Employer entered into a contract to govern their relationship in respect of the works.   

On 31 January 1992 the Original Employer wrote to Mr. Rygaard to inform him of the intention of the Original Employer to wind up its business. This correspondence noted that Mr. Rygaard would be dismissed in April 1992 after the completion of the works and his employer henceforth would be the Proposed New Employer.  Mr. Rygaard worked for the Proposed New Employer until May 1992 when he received his notice from the Proposed New Employer in accordance with the 31 January 1992 correspondence.Mr. Rygaard asserted that the Regulations ought to have applied and therefore he ought to have been considered a full time employee with a contract of indefinite duration employed with Proposed New Employer.    

The CJEU noted the position as elucidated in Spijkers approvingly:   

“It is then necessary to consider all the facts characterising the transaction in question, including the type of undertaking or business concerned, whether or not tangible assets, such as buildings and movable property, are transferred, the value of the intangible assets at the time of the transfer, whether or not most of the personnel are taken over by the new employer, whether or not customers are transferred and the degree of similarity between the activities carried on before and after the transfer and the period of any suspension of those activities. All those circumstances are, however, only individual factors in the overall assessment to be made and they cannot be considered in isolation”.

The EUCJ held that a transfer within the meaning of the Regulations had not been occasioned noting that the purported transfer from the Original Employer to the Proposed New Employer did not relate to a stable economic entity whose activity was not limited to the performance of one contract.   

The EUCJ held that the Original Employer had merely made available to the Proposed New Employer certain workers and material for carrying out the works in question and therefore a transfer within the meaning of the Regulations did not occur. The Court noted that if the proposed transfer included a more substantial body of assets enabling the activities a transferor a transfer within the meaning of the Regulations could possibly arise.  

By way of analogy to the present circumstances the Complainant submitted that, following a tender process, the Respondent has merely made available to Mr. Jones certain records required for the carrying out of the An Post Retail Business Service contract and this does not amount to a transfer of a substantial body of assets enabling the activities of the purported transferor.

 A question arises as to whether the Respondent’s surrender of the Contract and subsequent issuing of a new An Post Retail Business Service contract to Mr. Jones gives rise to a transfer of an activity rather than the transfer of an undertaking.  

In CLECE SA V Valor the EUECJ refused to find that a transfer within the meaning of the Regulations had occurred in circumstances where an authority, having previously hired a private company to provide cleaning services, terminated its contract with the company and employed its own staff to provide the required service.  

The Complainant submitted that in present circumstances the Respondent’s Contract has been terminated and a new An Post Retail Business Services contract has issued and therefore at its height an activity, namely the provision of postal services, has transferred rather than undertaking and therefore the Regulations ought not apply.   

The EUECJ has drawn a distinction between an entity concluding a subcontract for services with one provider in favour of another and the transfer of an undertaking. 

In Suzen V Zehnacker Gebaudereinigung GmbH Krankenhausservice the CJEU held that a transfer within the meaning of the Regulations did not arise where a school concluded a contract with a cleaning company (the “Initial Company”) and subsequently issued a contract to another entity (the “Subsequent Company”).  

The CJEU held that the contract held by the Initial Company was more accurately considered an asset of that company rather than part of the undertaking. Therefore when the contract concluded and a new contract was awarded to the Subsequent Company this represented, at best, a transfer of an asset rather than part of the undertaking. The ECJEU found that there was no transfer of a stable economic entity capable of retaining its identity which would attract the application of the Regulations.  

The Complainant submitted that the termination of the Contract and subsequent awarding of a new An Post Retail Business Service contract does not amount to an undertaking and constitutes at best an asset.  

The Complainant submitted that no transfer within the meaning of the Regulations arises in the present circumstances. 

The Complainant requested that this forum give due and adequate consideration to the absence of a contractual nexus as between the Respondent and Mr. Jones. While no such nexus was not considered strictly necessary in Stitching (rather it was deemed one factor to be balanced in determining the application of the Regulations) the academic commentary in is instructive, and in the Complainant’s view persuasive, in relation to the weight to be accorded to any such nexus: 

…it is arguable that it is the decisions of the CJEU in cases such as Redmond Stichting V Bartol to the effect that no such contractual nexus was necessary in order for a transfer of undertakings situation to apply that are the source of some confusion. Put another way, whereas it is, presumably possible on the facts that a transfer of undertakings situation could validly be found to exist in the absence of such a contractual nexus, it may be suggested that the absence in question must surely be a very significant factor militating against such a finding”.

The Complainant requested that the object of the Regulations be considered in determining their application. In ISS Facility Services V Govaerts[6] the CJEU noted that:    

“…Directive 2001/23 is intended to safeguard the rights of employees in the event of a change of employer by enabling them to continue to work for the new employer on the same terms and conditions as those with the transferor. The purpose of that directive is to ensure, as far as possible, that the contract of employment or employment relationship continues unchanged with the transferee, in order to prevent the workers concerned from being places in a less favourable position soley as a result of the transfer…

 In addition it must be stated that although, in accordance with the objective of that directive, the interests of the employees concerned must be protected, those of the transferee, who must be in a position to make adjustments and changes necessary to carry on his business, cannot be disregarded…Directive 2001/23 does not aim solely to safeguard the interests of employees in the event of a transfer of an undertaking, but seeks to ensure a fair balance between the interests of those employee, on the one hand, and those of the transferee, on the other”.

The Complainant submitted that the desired intention of the Regulations is to protect employees in the context of the transfer of an undertaking and to strike a fair balance between such interests and the right of transferee to make adjustments to their business. The Complainant submitted therefore that the object of the Regulations is inconsistent with the present circumvention of a redundancy payment which otherwise would be properly due and owing.   

Finally, it is noted in the academic commentary that the significant ambiguity can arise in determining the applicability of the Regulations:

“On Balance it may be said that all the various directives and regulations dealing with this area have been less than satisfactory in the sense that many uncertainties remain as far as the law is concerned. This is not least because there is a wealth of case law in the area from which, on occasion, conflicting principles emerge”.

The Complainant submitted that on the facts of the present circumstances it cannot be said that the conclusion of the Contract and subsequent awarding of another contract can attract the application of the Regulations.   

The Respondent denied that the Complainant is entitled to any redundancy payment. They submitted there was a transfer of undertaking. It was the Complainant's decision not to continue his employment with the transferee. There was no termination of employment by the Respondent. As there was no redundancy, no redundancy payment arises.

Elaine Hogan was appointed as the Postmistress for Miltown Malbay and ran the Miltown Malbay Post Office under an agreement with An Post from 19 January 2009 to 4 October 2024.

The Complainant was employed in the Miltown Malbay Post Office by Elaine Hogan, at first as a counter clerk on I September 2010, and then (since 27 September 2011) as a branch manager.

Elaine Hogan also employed her mother, Anne Hogan, in the Post Office as a counter clerk.

On 29 April 2024 Elaine Hogan submitted to An Post her intention to resign her contract as Postmistress for Miltown Malbay. The resignation was originally to have effect on 31 July 2024. All staff, including the Complainant, were informed on 1 May 2024.

Eugene Donnellan wished to take over the An Post contract and on 31 st May 2024 applied to An Post to take over the Miltown Malbay Post Office. An Post held interviews on 10 June 2024, but on 6 August 2024 An Post advised both Eugene Donnellan and Elaine Hogan that the contract for the Miltown Malbay Post Office would be given to another applicant, John Jones, who runs the SuperValu shop on the same street.

In the meantime, An Post had asked Elaine Hogan to extend the time for which she would run the Post Office until the new Postmaster (John Jones) was ready to take over the contract. Ultimately this date was pushed out to 4 October 2024. Staff were kept advised of the transfer date as it was pushed back several times.

Elaine Hogan sent a transfer of undertaking letter to all staff, including Eugene Donnellan, on 7 August 2024 (although the letter was dated I July 2024, when it was drafted) formally advising that An Post had awarded the Miltown Malbay Post Office Contract to John Jones SuperValu, that the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 ("the Regulations) would apply, and that current terms and conditions of employment would continue to apply.

On 14 August 2024 Jones Supervalu contacted Elaine Hogan to request that post office staff contact them to arrange employment transfers. On the same day Elaine Hogan made staff aware of this approach.

On 2 October 2024, Elaine Hogan met with Eugene Donnellan. She asked about his intention to transfer to Jones SuperValu Post Office. Eugene Donnellan said that he was not going to transfer to Jones SuperValu Post Office and he said this was on personal grounds.

On 3 October 2024, Elaine Hogan received a letter from Eugene Donnellan's solicitors claiming that the Regulations did not apply and that their client was entitled to notice of redundancy.

On 4 October 2024 the An Post relocation team arrived on site at Elaine Hogan's Post Office for the purpose of moving all the post office equipment to Jones SuperValu. This included assets, technology, equipment and safes.

On 7 October 2024 the Miltown Malbay Post Office reopened at Jones SuperValu, with the equipment that had been moved over from Elaine Hogan's Post Office. Eugene Donnellan had decided not to continue his employment under the transfer of undertaking, but Elaine Hogan's other employee, Anne Hogan, did move over under the Regulations to Jones SuperValu and continues to work there at the Post Office.

The case law is very clear that the transfer of an An Post contract in the circumstances as described above does amount to a transfer of undertaking under the Regulations.

In 2022 the Labour Court (on appeal from Adjudication Officer Decision) considered a very similar case in Chris Carroll -v- Patricia Young (2022) TUD222. The old Postmaster had ceased trading at Kiltimagh, Co. Mayo and the town post office then reopened in the local Londis store. In that case, the employee wanted to transfer, and it was the transferee who was alleging that the Regulations did not apply. The Labour Court carefully considered the legal authorities from the Court of Justice of the European Union and the High Court and determined (as had the Adjudication Officer) that, where the contract with An Post had been terminated and then a new contract entered into by An Post, the business in question had transferred as a going entity from one employer to another employer and the Regulations therefore applied.

A similar conclusion was reached in the earlier Employment Appeals Tribunal case Elaine Swanton -v- William Jones t/a Jones Douglas Post Office (2016) RP296/2015. In that case, the Postmaster had retired. The employee continued working for the new Postmaster who took over. The employee claimed to be entitled to redundancy payment from the retiring Postmaster but the Employment Appeals Tribunal held that the Regulations applied, the employment was therefore continuous, and no redundancy payment was due.

When a transfer of undertaking takes place the employee cannot, of course, be forced to work for the new employer if he does not wish to do so. However, if he chooses not to transfer, that is not a redundancy situation. He has effectively terminated his employment by his own action (as of course he is entitled to do).

The legal position in this situation is set out in the High Court case of Symantec Limited -v- Leddy [2009] IEHC 256. The Court held that:

It does not follow that if an employee decides not to transfer a situation of redundancy automatically arises vis-a-vis the transferor It cannot do so because the fact that an employee objects to the transfer does not of itself have the effect of negativing the transfer. It is just that an employee is not obliged to continue his employment relationship with the transfer.

It is clear, therefore, based on the authority of the Labour Court, Employment Appeals Tribunal, and the High Court, that where a postmaster in a town resigns her contract with An Post, and the contract is then awarded to a new postmaster, the employees of the resigning postmaster are covered by the Regulations and they have a right to transfer to the employment of the new postmaster. However, if they decline to exercise that right (as they are entitled to do), no entitlement to redundancy arises as against the resigning postmaster. The Complainant's claim under the Redundancy Payments Acts must therefore fail.

I have read the submissions and listened to the oral evidence of the parties.  The core issue in this case is whether the Complainant was made redundant or was he covered by the Transfer of Undertakings Act. If he was covered by the Transfer of Undertaking Act then no redundancy situation arose.

Mr. Donnellan gave evidence of seeing the safes taken out by An Post and seeing some computers and safe going into Mr. Jones premises along with the infrastructure for the business. He gave evidence he had worked well with the Respondent for 14 years and was hoping to become the Postmaster when she gave up the business. He confirmed he was asked to meet Ms.. Jones by the Respondent on August 14th but decided not to as he wanted to move on. He confirmed he was then employed directly by An Post elsewhere. Ms. Hogan confirmed in evidence she was appointed Postmistress in 2009 and that Mr. Hogan was exceptional in his job. She confirmed her mother, Anne Hogan, worked two days a week approx. and the hours varied as the business required. She advised she gave her notice in April 2024 and hoped to finish up in July 2024 but this was delayed. She advised she spoke about the Complainant taking over but was advised that co-location was the way forward for An Post. She advised the Complainant was not afforded a full interview. She advised she had discussions with the Complainant throughout May/June and July about the situation. She advised her contract finished up on October 4th 2024. She advised she gave a letter confirming that TUPE would apply on August 7th 2024 to both the Complainant and her mother. She advised she was asked by Ms Jones, wife of Mr. Jones to ask the Complainant to meet her. She advised that existing computers, the safe, printers, coin stackers etc was moved to the new location by An Post.

Ms. Hogan was cross examined by the Complainant Representative. He queried if there was good will built up and that it was solely associated with the Respondent. Ms Hogan replied yes and no that her primarily role was to provide a service and that she only got paid for the service provided.  It was put to Ms. Hogan that identity of the business was “Elaine Hogans Post Office” and Ms. Hogan replied no it was An Post identity and was dealing with a combination and her role was to provide a service.

In her sworn evidence to the Hearing Ms. Anne Hogans (the Respondents Mother) confirmed she has transferred to the new employer under TUPE. While there was no documentary evidence supplied to support this Ms. Hogans evidence was given under affirmation. She confirmed she met Claire Jones and was given the same terms as her current terms and asked would she move to the new location which she did and confirmed she would work 2 days and they would discuss the detail of the 2 days subsequently. Ms. Anne Hogan stated she met with a Representative of An Post, Alan Sloan, and was told TUPE would apply to the situation. Mrs. Hogan confirmed the transfer took place and she continues to work for Mr. Jones.

The Respondent submitted the decision of the Labour Court in TUD222 and argued the circumstances are practically identical in this case and the Courts decision to uphold a Transfer of Undertaking should be followed.  Having reviewed the written and oral evidence of the parties I concur that the facts of this case are almost identical and there would have to be substantial grounds for me to deviate from the Labour Court ruling. It is not necessary for me to go through all the legal background to this decision as it is set out in detail in the various previous decisions and the Parties submissions and the Parties Representatives were well versed in same, albeit having a diverging view.

In the instant case, there was no transfer of significant operational assets from the Respondent to the new Business Service Provider.  An Post moved some basic operational equipment to the new Provider (safe, weighing scale, coin machine etc) , the new Provider had access to the same data base of customers as the Respondent and while technically the customers had the opportunity to change to another Post Office, practically this was not the case.  Although customer records and some other significant operational assets required to operate the post office business in Miltown Malbay did not transfer directly from Ms Hogan to Mr. Jones, Mr. Jones had equivalent access to Ms Hogan to those records on an ‘as needs’ basis via An Post’s central database.

In its seminal decision in Suzen 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 Adjudicator that the post office businesses operated by both Ms Hogan and Mr. Jones  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 Mr. Jones  could not have run a post office business on behalf of An Post unless they had 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. Some assets were taken from Ms. Hogan premises and given to Mr. Jones. The most significant intangible assets at play in the circumstances of the within case is the customer base and the customer’s goodwill. It seems reasonable to the Adjudicator to assume that Mr. Jones potentially had access to at least the same pool of customers for postal services that Ms Hogan had had previously. As per the core issue in Spiikers, if a business transfers or not, it is also clear to the Adjudicator that the business maintained is clear identity, the provision of an Post services, albeit in a different location.

The central issue to be determined is whether or not the business in question transferred as a going entity from one employer to another employer. On the basis of the foregoing, the Adjudicator finds that that is what occurred in this instance: the business of providing postal and ancillary services previously operated by Ms Hogan as an agent of An Post transferred to Mr. Jones on October 4th 2024. The Complainant was by virtue of the Regulations was entitled to continuous employment with the Respondent on no less favourable terms than he had enjoyed up to that date with Ms Hogan. He was approached by the new provider but decided not to engage with them. That was his right. It is understandable that the Complainant was disappointed at not being awarded the Service and decided to take up a new job with An Post shortly thereafter. He did not pursue the option of transferring to the new Provider by his own choice when contacted. The situation is unfortunate for the Complainant that he had to leave the employment after such long and well regarded service but from a legal perspective he was not entitled to a redundancy payment.

The complaint for redundancy entitlement is therefore not well founded.

The complaint for entitlement to a redundancy payment is not well founded.

Redundancy