ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00020597
A Facilities Company
Martina Weir Siptu - Works Rights Centre
Dominika O'Sullivan The HR Suite
Complaint/Dispute Reference No.
Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967
Complaint seeking adjudication by the Workplace Relations Commission under Section 11 of the Minimum Notice & Terms of Employment Act, 1973
Date of Adjudication Hearing: 18/06/2019
Workplace Relations Commission Adjudication Officer: Ray Flaherty
In accordance with Section 41 of the Workplace Relations Act, 2015 and Section 39 of the Redundancy Payments Acts 1967 - 2014 andfollowing the referral of the complaints to me by the Director General, I inquired into the complaints and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaints.
The Complainant was employed, as a cleaning operative, by the Respondent, a cleaning company, from 8 August 2005 to 18 June 2018. The Complainant worked an evening shift, from 6:00 pm to 8:30 pm in a Health Centre, run by the HSE.
On 5 June 2018, the Complainant was notified by management personnel from the Respondent that a new company (Company B) was taking over the cleaning contract at the Health Centre, commencing 18 June 2018. At this meeting, the Complainant was presented with a written document which offered her the choice of (1) transferring her employment to the incoming contractor or (2) objecting to the transfer, thereby resigning from her position. The Complainant chose to transfer to the new employer.
On 13 June 2018, the Complainant received a further letter from the Respondent (the transferor) informing her that her employment details had been passed to Company B (the transferee) and advising her to report for work as normal on 18 June 2018.
On 18 June 2018, the Complainant attended for work as normal and was met by a representative of Company B, who informed her that they were not taking her on as they had their own staff. The Complainant was required to leave the site.
When the Complainant and her Trade Union on her behalf contacted the Respondent, they were both informed that the Complainant had transferred to the transferee.
The Complainant has not worked or been paid since 18 June 2018 and has not received a redundancy payment, despite representations being made on her behalf, by her Trade Union, to both the Respondent and to Company B.
The Complainant submitted three complaints to the Workplace Relations Commission on 13 July 2018, as follows:
(1) a complaint under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003/S.I. No. 131 of 2003 (Complaint reference: CA-00020526-001),
(2) a complaint under the Redundancy Payments Act, 1967, (Complaint reference:CA-00020526-002) and
(3) a complaint under the Minimum Notice & Terms of Employment Act, 1973, (Complaint reference: CA-00020526-003)
These complaints are the subject of this adjudication.
While the complaints were received by the WRC on 13 July 2018, due to an oversight, the complaint application was originally registered solely against Company B (the transferee). Consequently, the Respondent was not put on notice of the complaint when it was originally received. However, following an initial hearing which took place on 6 March 2019, for which they had not receive notification, the Respondent was notified, by way of correspondence dated 25 March 2019, of the complaints. The Respondent duly attended a reconvened hearing on 18 June 2019.
Summary of Complainant’s Case:
Submission made on behalf of the Complainant, by her Trade Union, contends that the responsibility for the situation rests with one or other of the two companies involved (i.e. the transferor or the transferee).
According to the Complainant’s submission, the Respondent informed the Complainant that she had been transferred and that her employment details had been passed to Company B. With regard to Company B, it was submitted that they have informed the Complainant’s Trade Union that they have no responsibility under law for the Complainant.
It was submitted on behalf of the Complainant that the business carried on as normal after the transferee took it over, with the cleaning operation still taking place in the same location as before. Therefore, it was submitted, on behalf of the Complainant, that the business has retained its identity, which is one of the factors that is relevant under the TUPE regulations.
According to the Complainant’s submission, while it appears that no transfer of assets took place as this would be considered a labour-intensive business, such a scenario would be the norm for contract cleaning.
With regards to the issue of consultation, it was submitted that neither the Complainant nor her Trade Union were notified of the change, by the Respondent (the transferor), within the specified 30-day timeframe laid down in the TUPE Regulations. According to her submission, the Complainant was not notified of the change until the meeting on 5 June 2018, less than two weeks before the date identified for the transfer, i.e. 18 June 2018. It was further submitted, on behalf of the Complainant, that this raises the question of whether or not a transfer of undertaking occurred on 18 June 2018.
It was further submitted that, while the Complainant is keen to have a remedy in her situation, she is also quite concerned at the prospect of being placed with an employer who has clearly, albeit for their own reasons and not based on any shortcomings of the Complainant, indicated their unwillingness to employ her.
In conclusion, it was submitted that, on the premise that both employers cannot shirk their responsibilities to her and, under law, one of them must be liable, the Complainant is seeking to be paid her redundancy and minimum notice entitlements or to transfer to the transferee on terms and conditions that are no less favourable that she enjoyed with the transferor.
Summary of Respondent’s Case:
The Respondent submitted that the Complainant’s employment, as a cleaner based at a Health Centre, extended from its commencement on 8 August 2005 until 18 June 2018, when it transferred to Company B, the company to whom the Respondent lost the cleaning contract at the Health Centre.
Referring to Section 7 (2) (b) of the Redundancy Payments Act, 1967, (as amended), the Respondent submitted that the requirement to carry out work still existed at the Health Centre after 18 June 2018 and, therefore, a redundancy scenario did not occur nor was the Complainant dismissed by the Respondent. The Respondent further submitted that the case related to a Transfer of Undertaking which took place when the contract at the Health Centre transferred from the Respondent to Company, who are the transferee for the purposes of the transfer.
According to the Respondent’s submission, as of 18 June 2018, continuation of the Complainant’s employment became a matter for Company B (the transferee). Consequently, the Respondent submitted that Company B are the correct respondent in this case.
The Respondent submitted that they were notified as to the loss of the cleaning service contract on 1 June 2018 and contacted Company B, (the transferee) that day to confirm that they would be required to accept the Complainant, who was the only cleaner servicing the centre.
According to the Respondent’s submission, they received correspondence from Company B on 4 June 2018 advising that they would not be accepting the Complainant. The Respondent submitted that, on 5 June 2018, they corresponded with Company B urging them to accept the Complainant’s employment, in line with the requirements of S.I. No. 131/ 2003.
The Respondent submitted, that having met with the Complainant on 5 June 2018 to inform her of the upcoming transfer and advised her of her rights under the TUPE Regulation, the Complainant indicated in writing that she wished for her employment to transfer to Company B, (the transferee), as per her entitlements under the relevant legislation.
According to the Respondent, they received an email from Company B on 8 June 2018 advising that they were not intending to hire or take on any employees. The Respondent further submitted that they sent an email, dated 12 June 2018, to Company B further referring to S.I. No. 131/ 2003 and their obligations thereunder. The Respondent also advised Company B that the Complainant would be instructed to continue working as normal and to report to her place of work as usual on 18 June 2018. However, when the Complainant presented herself on 18 June 2018, as instructed, she was informed by Company B that they would not be accepting her as an employee and she was refused access to the premises.
The Respondent referenced further correspondence with Company B which concluded on 11 September 2018, when the Respondent advised Company B that the Complainant’s employment had transferred to them.
Legislation and Relevant Case Law:
In support of their submission in response to the Complainant’s complaints, the Respondent referred to Regulations 4.2, 4.3, 4.4 and 4.5 of S.I. No. 131/2003.
With regard to the relevant case law, the Respondent referred to the following European Court of Justice cases (a) Schmidt v Spar-und Leihkasse der fruheren Amter Bordesholm, Kiel und Cronshagen, (2) Ayse Suzen (Case c—13/95) and (3) Botzen and others v Rotterdamsche Droogok Maatshappij, all of which, it was contended, has relevance to and/or findings that could be applied to the within case.
In conclusion, the Respondent submitted as follows:
CA-00020526-001 - Transfer of Undertakings claim / CA-00020526-002 - Redundancy Payments claim
The Respondent submitted that the Complainant’s employment transferred to Company B (the transferee) in line with S.I. No. 131/200, with effect from 18 June 2018 and as of that date the continuation of the Complainant’s employment became a matter for the transferee, therefore, Company B should be the correct respondent in this case.
It was further submitted by the Respondent that they discharge their obligations to the under S.I. No. 131/2003.
With regard to consultation, the Respondent submitted that they were notified of the loss of the contract on 1 June 2018 and contacted Company B immediately to confirm that they would be required to accept the Complainant, who was the only cleaner servicing the centre. It was further submitted that the Respondent advised the Complainant of the upcoming transfer on 5 June 2018, which was as soon as practically possible taking into account the delayed correspondence in relation to same from the transferee.
Findings and Conclusions:
Before considering the merits of the Complainant’s complaints, it is first necessary to consider the legislation applicable in this regard, which is the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131/2003), more commonly referred to as the TUPE Regulations.
Having carefully reviewed the submissions made on behalf of the Complainant, it appears from the evidence that her view and that of her Trade Union, has from the outset, been that the Regulations do apply and that the obligations contained therein are the responsibility of Company B, who are the transferee in this regard. However, in a context where neither the transferor nor the transferee have accepted responsibility for the Complainant’s situation, it is perhaps not unreasonable that separate complaints have been made against both employers.
The views expressed by the Respondent in their submission, mirror those held by the Complainant and her Trade Union. The Respondent was strong in their contention that the regulations apply and, therefore, the responsibility for the Complainant’s situation rests with the transferee (Company B)
An equally strong and contradictory submission was made by Company B, the central premise of which is the contention that they have no obligations under the Regulations, as the contract is with the HSE and they have no legal relationship, contractual or otherwise with the Respondent.
Against that background, the key issue is whether or not the provisions of the TUPE Regulations apply in the within case. Regulation 3 of S.I. No. 131/2003 sets out the circumstances in which the Regulations apply. It states as follows:
“(1) These Regulations shall 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.
(2) Subject to this Regulation, in these Regulations -
“transfer” means the transfer of an economic entity which retains its identity;
“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.
(3) These Regulations shall apply to public and private undertakings engaged in economic activities whether or not they are operating for gain.
(4) An administrative reorganisation of public administrative authorities or the transfer of administrative functions between public administrative authorities is not a transfer for the purposes of these Regulations.
(5) These Regulations shall not apply to sea-going vessels”.
The central purpose of the Regulation is to protect the rights of employees in circumstances where the business, or part of the business, in which they are employed is transferred from one employer to another. In circumstances where the Regulations apply the key objective is that the rights and obligations in respect of contracts of employment in the transferring business are transferred to the new owners.
It is clear from Regulation 4 above that there must be a “transfer of undertaking” in order for TUPE to apply and where such a transfer exists, it triggers the rights and obligations of the Regulations. The 1986 European Court of Justice (ECJ) case Spijkers v Gebroe Benedik Abbatoir CV gave rise to a set of criteria which provide guidance when it comes to deciding whether or not a transfer of undertaking has occurred. The criteria, known as the “ Spijkers Criteria” are as follows:
1. Was the undertaking a stable undertaking, with an ongoing life of its own?
2. Has the entity retained its identity?
3. Have some or all of the staff been taken over by the new employer?
4. Has the customer base transferred?
5. Are the activities post-transfer similar to those carried out before transfer?
6. Has there been an interruption of the activity?
7. Has there been a transfer of assets ?
It is clear from the Spijkers’ ruling that the overriding objective is to protect workers in a business which is transferred. Consequently, it is necessary, when deciding whether or not a transfer is taking place, to consider all of the relevant circumstances and factors.
In the within case, having carefully reviewed all of the evidence adduced, I am satisfied that the undertaking in question, i.e. the cleaning services for the Health Centre, had and has an ongoing life of its own. I am further satisfied that, post the change of contractor, the entity has retained its identity and that the activities being carried on post transfer are identical to those carried out under the previous contractor. It is also clear from the evidence that there was no break or interruption in the activity as a result of the transfer to the new contractor.
However, notwithstanding the above assessment, which is made in the light of the “ Spijkers Criteria”, it is necessary to consider the impact of further case law which has significant relevance to the claims under review. Probably the most significant of the post Spijkers cases is that referred to as the “Suzen Case”[Ayes Suzen v Zehnacker Gebaudereinigung GmbH Krankenhausservices (1997)]. In this case the ECJ held as follows:
“The directive is to be interpreted as meaning that the directive does not apply to a situation in which a person who had entrusted the cleaning of his premises to a first undertaking terminates his contract with the latter and, for the performance of similar work, enters into a new contract with a second undertaking, if there is no concomitant transfer from one undertaking to the other of significant tangible or intangible assets or taking over by the new employer of a major part of the workforce, in terms of their numbers and skills, assigned by his predecessor to the performance of the contract”.
The impact of the ECJ’s findings in the Suzen Case is that a contract for a service provided by a previous contractor being transferred to a new contractor does not necessarily mean that an economic entity has been transferred. The findings in the Suzen Case have generally been applied by the various statutory bodies in this country when considering claims under the Regulations. Having carefully reviewed the relevant case law, in this regard, I find the Employment Appeals Tribunal (EAT) determination in the case of Cannon v Noonan Cleaning Company Ltd and CPS Cleaning Services Ltd [1998 9 ELR 153] to be the most relevant and instructive in this regard, due to its similarity with the details of the within case.
In the Cannon case the EAT found as follows:
“The Tribunal must consider all the factors characterising the undertaking in question. The nature of this undertaking is that of cleaning. The equipment used by Noonans was not transferred to the new contractor. The same premises had to be cleaned by both contractors and each were under the control of the Department of Justice. The staff did not transfer when the contract was withdrawn and given to the new contractor. There was no goodwill as such to be transferred. The undertaking could be said to have retained its identity. While there was no apparent transfer of tangible assets however it could be said that there was a transfer of intangible assets, i.e. the likely profit to be made from the contract. This must have existed, otherwise why was there competition for the contract?
….Also the possible transfer of the intangible profit margin is not of sufficient significance of itself to be a major factor in the transfer. It follows then that this transfer is not caught by the directive as it does not constitute a transfer of undertaking.“
Similar outcomes to that in the Cannon case can be found in Shiels and Others v Noonan and ISS Contract Cleaners [UD461/97]and Dignan v Sheehan Security Corporation. [2005 16 E.L.R. 22]
The common determining factor in each of these cases appears to be the lack of transfer of significant tangible or intangible assets leading to the conclusion that no transfer of undertaking has taken place.
Taking all of the above into consideration and having carefully considered all of the evidence adduced and submissions made, I find that, given the similarities between the Cannon case and the within case and viewed in the context of the Suzen Case, the transfer of the contract from the Respondent to Company B does not constitute a transfer of undertaking.
Therefore, I find that the obligations in relation to the Complainant’s contract of employment remains with the Respondent. In the light of this finding and based on the evidence adduced, it follows the this is now a redundancy situation and, therefore, the Complainant’s claims under the Redundancy Payments and the Minimum Notice and Terms of Employment Acts are well founded. Consequently, I find in her favour in relation to both claims.
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint(s)/dispute(s) in accordance with the relevant redress provisions under Schedule 6 of that Act.
Section 39 of the Redundancy Payments Acts 1967 – 2012 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under that Act.
Having carefully considered all of the evidence adduced and based on the considerations/findings as detailed above, I set out below my findings in relation to the Complainant’s complaints as follows:
CA-00020526-001 - Transfer of Undertakings claim
I find that the transfer of the contract, under which the Complainant was employed by the Respondent, does not constitute a transfer of undertaking under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003/S.I. No. 131 of 2003. Consequently, the obligations in relation to the Complainant’s contract of employment and terms of conditions of employment remain the responsibility of the Respondent.
CA-00020526-002 - Redundancy Payments claim
I find that the Complainant is entitled to a redundancy lump sum based on her service from 8 August 2005 to 18 June 2018, calculated on the basis of her gross weekly income of €130.00
CA-00020526-003 - Minimum Notice claim
I find in the Complainant’s favour in relation to her complaint under the Minimum Notice and Terms of Employment Acts and award her the sum of €780, calculated on the basis of a notice entitlement to six weeks gross pay.
Dated: 16th December 2019
Workplace Relations Commission Adjudication Officer: Ray Flaherty
Transfer of Undertaking