ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00009846
A Recruitment Consultant
A Recruitment Consultancy
Will Joyce Business & Commercial Solicitors
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)
Date of Adjudication Hearing: 15/06/2018
Workplace Relations Commission Adjudication Officer: Gerry Rooney
In accordance with Section 41 of the Workplace Relations Actfollowing the referral of the complaint to me by the Director General, I inquired into the complaint and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint.
The Complainant submitted she was employed with the Respondent from 18th January 2016 and in April 2017 the Respondent transferred the business. The complaint refers to an alleged breache of the Respondent’s obligations under a transfer of undertaking. The Complainant was seeking compensation for the alleged breaches.
The Respondent, a Recruitment Consultancy refuted the complaint.
Summary of Complainant’s Case:
The Complainant submitted that she was initially hired as a receptionist on 18th January 2016 at a rate €9.50 per hour. Shortly thereafter, on completion of a 2-week trial on the 1st February 2016, she was hired as a Trainee Recruitment Consultant, at the rate of €21,000 per annum plus commission.
The Complainant maintained that on 31st March 2017 the business transferred ownership to another entity owned by the Director, but she was never advised of this occurrence. She advised she was surprised to learn that a new entity, with a similar name, was assuming the business of her former employer; however, she was assured her role would remain. She advised she did not receive a P 45 from the Respondent, and where the new employer was also the same Company Director as in the previous company.
The Complainant submitted that on 29th May 2017 she met with the Director, who as stated was a common party for both the Respondent and the new employer and she was offered a contract of employment in relation to a new role with the transferee. She was issued with a fresh contract which was identical in every way to that of her former contract. The only change related to a performance structure was being put in place, and that a probation clause was also inserted.
The Complainant referred to S.I. 131/2003-European Communities (Protection of Employees and Transfer Of Undertakings) Regulation 2003 (the Regulations). The Complainant maintained that in accordance with Regulation 4(1) her contract of employment transferred from the Respondent (the transferor), to the new employer who became the transferee. She further submitted that contrary to Regulation 8 she was not informed of the transfer 30 days before the transfer was carried out, or in good time before the transfer was carried out. She also maintained that the transferee failed to provide her with information regarding the transfer. The Complainant stated she was not advised of the proposed date of the transfer, the reasons for the transfer, or the legal implications of the transfer. She therefore maintained she should have been consulted with in accordance with Regulation 8. Specifically, the Complainant submitted that there was no consultation at all regarding the transfer. Therefore, the Complainant was seeking compensation payment of four weeks for the failure of the transferee to consult with her.
The Complainant argued that there was no break in her contractual service between the transferor and the transferee; that she worked in an identical role; that the contract of employment issued by the new entity was identical terms to the former employer’s contract; that the transferee had an identical employee handbook to that of the transferor. The Complainant also advised that her previous holiday leave entitlement was honoured by the new employer.
Summary of Respondent’s Case:
The Respondent advised it was a Recruitment Consultancy and it strongly disputed the claims that the Complainant was entitled to the protections afforded under a transfer of undertaking.
It advised the business was run by two partners who were directors and shareholders of the company and the company went into liquidation in May 2017. The Respondent submitted that the Complainant started her employment with that company on and where the Complainant commenced employment as a Recruitment Consultant with the company on 1st February 2016 and her contract was terminated on 31st March 2017. The Complainant then commenced employment on 3rd April 2017 with another entity owned by the Director, and this change was by mutual consent.
The Respondent submitted that in the first quarter of 2017 it was having severe financial issues and it recognised that the business would not survive. The Directions took it in hand to put a plan in place that would create as smooth and controlled end the business.
The Respondent submitted that that company employed two Directors and four staff including the Complainant. It also had a large number of industrial workers on the payroll and it negotiated with another agency to TUPE these agency workers to ensure minimum disruption for the agency workers. The Respondent submitted that all the agency workers were correctly advised that a TUPE was to take place, and all regulations are followed to ensure their transition. The Respondent maintained that as part of the transfer a new agency employed one former employee where the employee applied for and received employment on the recommendation of one of its Directors.
The Respondent contended that the Complainant’s situation was not a TUPE. The Respondent maintained that none of its direct employees were transferred under TUPE. It maintained the Complainant’s role was terminated due to a redundancy situation, but as she did not have two year’s service she did not qualify for a redundancy payment. The Complainant was offered a new contract of employment with the new consultancy business. The Respondent maintained that none of the business from the former consultancy was transferred. It advised that no legal transfer, assignment or forfeiture of the lease, or merger occurred.
The Respondent advised that its two partners/directors met with the Complainant and explained that the former business was going into liquidation and there was no longer a role for her. It maintained that redundancy would have been the simplest process, however as the Complainant was not entitled to redundancy payment, and due to having a strong sense of loyalty, she was offered a new role in another business. This occurred on 3rd April 2017 where a former director of the Respondent became the Complainant’s line manager in the new business.
The Respondent argued that as there were five companies in the group the same staff handbook applied in the new organisation. It submitted that the Complainant’s holiday entitlements were not transferred, and that the Complainant had taken all her leave entitlement before 31st March 2017.
Findings and Conclusions:
The Complainant submitted that contrary to Regulation 8 of SI 13/2003 she was not consulted by the Respondent, as a transferor that her role was to be transferred. The Respondent denied that the Complainant was transferred, but instead by mutual agreement her job was terminated in the company as it was going into liquidation and she accepted a new role in another company under the ownership of the Director of the Respondent.
Section 3(1) of the Regulations 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.
Section 3(2) of the Regulations defines a “transfer” as the transfer of an economic entity which retains its identity; and where an “economic entity” means an organised grouping of resources which has the objective of pursuing an economic activity whether or not that activity is for profit or whether it is central or ancillary to another economic or administrative entity.
In accordance with Section 8 of the Regulations, the transferor and transferee concerned in a transfer shall inform their respective employees' affected by the transfer of (a) the date or proposed date of the transfer; (b) the reasons for the transfer; (c) the legal implications of the transfer 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. Furthermore Regulation 8 requires that 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.
Evidence presented by the Complainant corroborates that the Respondent was experiencing financial difficulty and was facing liquidation. As a consequence, it transferred some of its economic activities, namely that part of it business relating to its agency workers, to another business entity. It also made two staff redundant. In addition, the Complainant was offered a role another business operated by the director of the Respondent. I therefore find, in effect, her activities as a recruitment consultant continued in the new business entity, and where it appears this work was practically identical to her former work. In addition, a Director of the former business became the Complainant’s direct line management in the new entity.
Accordingly, I can draw no other conclusion but that the economic activity of the Recruitment Consultancy was in fact transferred by the Respondent to another economic entity which happened to be operated by the Directors of the Respondent. In this regard it appears for all intents and purposes that the recruitment consultancy work being performed by the Complainant continued with the new entity. It is also significant that a Director of the Respondent in a parallel complaint to the WRC (ADJ 00009845) has relied upon the performance of the Complainant since 2016 as the rationale for her dismissal in July 2017.
I therefore find, the Complainant’s job was in reality transferred. The Complainant was provided with no notice of redundancy to support the assertion from the Respondent that her role was in fact finished. Rather she was issued with a new contract of employment that was similar to her former role, where there was no break in service. She was never formally notified of the termination of her role, nor was she issued with a P45 to support the assertion as espoused by the Respondent.
I therefore conclude that the transfer of the recruitment consultancy business took place between the two economic entities in March/April 2017. This transfer was not as a result of a compulsory liquidation of the Respondent, but where Directors of the Respondent, who also had an interest in the new business, decided to continue with the Recruitment Consultancy activities in the new entity. As such the Respondent was the transferor and had a responsibility to consult with the Complainant in accordance with the obligations as set down in SI 131/2003, which it failed to do.
Section 8 of the regulations requires the Transferor to provide the employee with information 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. I find the Respondent failed to comply with this obligation. I therefore find that the Complainant was not informed of the transfer at any time during her employment.
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.
Section 10 of S.I. No. 131/2003 - European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 requires that I make a decision in relation to the Complaint, and declare that the complaint is or, as the case may be, is not well founded.
In the event that I find a complaint is well founded I can require the employer to comply with the Regulations and, for that purpose, to take a specified course of action, or I can require the employer to pay to the employee compensation of such amount (if any) as in my opinion, is just and equitable in the circumstances. In the case of a contravention of Regulation 8, such compensation must not exceed 4 weeks remuneration.
As I have found the Respondent has contravened S.8 of the Regulations, I require the Respondent to pay the Complainant compensation of four week’s pay, this being the maximum amount I can award under the regulations. This sum amounts to a total of €1,725 in compensation.
Dated: 23rd October 2018
Workplace Relations Commission Adjudication Officer: Gerry Rooney
Transfer of Undertaking, Obligations to Consult with Employees