ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00023574
Post Office Worker
Post Office Operator
Complaint/Dispute Reference No.
Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under Section 8 of the Unfair Dismissals Act, 1977
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: 13/01/2020
Workplace Relations Commission Adjudication Officer: Janet Hughes
In accordance with Section 8 of the Unfair Dismissals Acts, 1977 - 2015, and/or Regulation 10 of the European Communities(Protection of Employees on Transfer of Undertakings) Regulations 2003, following the referral of the complaint(s)/dispute(s) to me by the Director General, I inquired into the complaint(s)/dispute(s) and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint(s)/dispute(s).
The complainant worked as a post office worker for the same employer A in the same location from 1 December 1997 until her employment was terminated by A on April 12th, 2019 on the basis that she said it transferred to B, the Respondent in this case, under the Transfer of Undertakings Regulations. The complainant had been employed for two days per week at €175 per week. The complainant was out sick at the time when the change occurred. The complaint in respect of a claim for alleged unfair dismissal is directly related to the question as to whether a Transfer of Undertakings occurred when the Respondent B commenced the provision of post office services on April 15th2019. The basis of both complaints is denied by the Respondent.
This Decision can be read in conjunction with ADJ-00023949 which involves the same Complainant with a different Respondent-A in this Decision.
Summary of Complainant’s Case:
The Complainant was employed by A on a two-day week basis until April 2019 when A retired. From June 2018 the Complainant was out sick and while she is hopeful of a recovery in the near future , she suffered an injury which resulted in her continued sick leave. She remained on sick leave at the time of the hearing. She had not indicated at any stage to her previous employer that she would not be returning to work.
In response to a claim by the Respondent that she told him that she would not have done the revised job description specifically a refusal to handle cash, this was denied. As far as she was concerned the work of the post office transferred to the Respondent.
Summary of Respondent’s Case:
The Respondent (B) took over the operation of a post office as Postmaster based on his premises where he operated a supermarket, on 15th April 2019. The previous operator (A) and Postmistress retired and ceased providing a post office at her premises on April 12th, 2019. On March 9th, 2019 A approached B at which time he informed her that if her two staff wanted to apply for jobs with him they could, and he would look favourably on them. A then referred to TUPE and told him to Google it. In the same discussion he contends that A told him she had no contracts of employment with her employees and that the complainant in this case was out sick and most likely would not return.
Respondent B understands that on 11th March, two days after their own meeting, A issued a letter to the two members of her staff informing that on the termination of her provider contract with An Post and that the Respondent B would be the complainant’s new employer and would contact the complainant in due course. Such an position was never agreed between B and A. On April 11th A went to see Respondent B and tried to give him employee details for her two employees. Respondent B refused to take the documents and gave A a letter in which he said that TUPE did not apply in this situation and that he would not be taking over the staff working with A.
Subsequently there were some discussions between Respondent B and another former employee of A on the basis of a new employment relationship with new terms and conditions. These new terms were not agreed with the former employee and she did not commence employment with Respondent B. Regarding the complainant in this case, Respondent B went to her house on April 12th, 2019 and gave her a letter during a brief and friendly encounter. In that letter, he stated that due to a change in the business requirements, he had decided not to take on any employees and that as no assets were transferring from A to Respondent B, TUPE did not apply. In their brief encounter, the complainant mentioned that she had seen the job description for the role (presumably from her former colleague who had engaged with Respondent B regarding work), remarking that it was a completely different role and that she would not have been agreeable to the requirement to handle cash.
Non-application of TUPE in this case.
The following is the summary of the facts set out on behalf of the Respondent.
No assets or employees transferred from the former Postmistress to the Respondent.
There was no transfer of premises or lease from the previous Post Office Postmistress to the Respondent. He provides the premises for the Post Office at his own premises.
All assets and equipment required to operate the post office were provided by the Respondent. Certain equipment previously used by the previous Postmistress were provided to the Respondent i.e. computer screens, electronic weighing scales, electronic keypads, signing pads and the working safe. However, these were provided to the Respondent by An Post and not transferred by the previous Operator. The rest of the equipment supplied by An Post had never been used by the previous Operator.
Account holder records were not transferred from the previous Operator. The information for each individual account holder or customer can only be accessed in a post office when the customer presents for example their post office book. The same principle applies to customers of AIB who can use the services of the post office. At no time was there a transfer of customer files/data as all of that information is held on the An Post central server.
Nothing owned or previously owned by the previous Operator transferred to the Respondent.
The Respondent operates the post office differs significantly from the previous Operator. It is at a different premises, the management and staff are completely different, the opening hours are different, and the business model is different with the Respondent relying on a significant level of cross purchasing between the supermarket and the post office. Commission on sales has reduced and there is now a greater focus on sales of An Post Insurance and An Post credit card services than there was or needed to be under the previous Operator.
In an extensive written submission, Counsel for the Respondent cited and gave detailed reasons why precedent decisions should apply in this case in support of the contention that a transfer of undertakings did not apply to the Respondent.
Suzen;Spijkers;ADJ00004491-A Medical Practice Nurse v A General Practitioner; Ryan v O’Flaherty UD354/2003;Marai Scanlon v Edwina Kelly UD 134/2004;Cannon vs Noonan Cleaning Ltd and CPS Cleaning RP327/98;Sicherheit and Sicherheitdienst-C-247/96;Liikenne v Liskojarvi and Juntunen and copies of the Decisions/Determinations relied on were provided at the hearing and the arguments related to the individual precedents cited were set out in the submission at the hearing as were relevant sections of the Regulations.
Following the hearing, a further submission was requested of the Respondent by the Adjudicator in seeking a view as to why the Labour Court Determination in the case of Mary Dunne and the Department of Social Protection and Family Affairs upheld by the High Court in no. 173 MCA should not apply in the current case with particular reference to the case of Stitching v Bartol and Others C-29/91. An extensive written submission was received on setting out the differences between the two sets of circumstances. Paragraph 141 in concluding the submission stated:
‘The Respondent reiterates and relies on Paragraph 77 of the Respondents previous submission and submits that on that basis of the Respondent’s Previous Submission as a whole and this additional submission and in accordance with the principles first set out by Spijker and expanded by Suzen, TUPE has no application in this case.’
Paragraph 77 of the submission at the hearing is as follows:
‘In light of the above it is respectfully submitted that whether the business in question here is a labour intensive or an asset reliant business and/or a combination of both, no transfer pursuant to TUPE arose as there was no transfer whatsoever of any employees, or any assets, or any significant assets.’
The core of the Respondents case is captured in paragraph 77 to the effect that there was no transfer of assets or employees as between Respondent A and the Respondent in this case taking account of the attendant points set out in the Facts.
Findings and Conclusions:
The extent and detail of the submissions on behalf of the Respondent are commendable and have provided much to consider in terms of whether this was in fact a TUPE. Ultimately as reflected in the conclusion to the second submission at paragraph 141 in reference to paragraph 77 of the initial submission, the Respondent hangs their hat on two elements which are commonly considered as part of the examination of the factors in determining whether a TUPE has occurred. Those two factors at paragraph 77 are : a denial of a transfer of assets or any significant assets and no transfer of employees. These two factors require examination. However, these are not the only factors which require exploration, relying on the very extract from Spijkers cited by the Respondent at paragraph 56 of the submission at the hearing:
‘Each claim that a TUPE has not occurred is to be examined not by reference to a factors or factors chosen by one party or the other but by reference to the Regulations which are largely a mirror of the originating EU Legislation and the segmentation of the factors which were developed in that same Spijkers Decision provide a readily accessible set of issues to be considered as part of ‘an overall assessment’ and not in ‘isolation’.
The seven tests set out by Spijkers are as follows and conclusions are set in respect of the application of each one to the current case.
1. Was the undertaking a stable undertaking, with an ongoing life of its own?
An Post is a State company operating among other services a network of retail outlets through which several of its services and the core purpose of its business are provided. The Company provides services for others such as banking, the collection of fees for TV and dog licences and the distribution of certain social welfare payments. The retail outlets operate the commercial aspect of the core business of An Post, the provision of a postal service. It is understood that each retail outlet operates on a standalone basis. Some of the outlets are operated directly by An Post, the remainder and majority are operated by individuals with whom An Post enters into a contract to provide the service such as the Respondent in this case and the Respondent in the related case. Each person with whom An Post enters into a contract takes on the title of Postmaster of Postmistress as the case may be. Each contracted operator is required to provide their own premises and their own staff.
It is public knowledge that An Post will decide from time to time to reduce the number of their retail operations, that such services have diminished in terms of the number of locations and the volume of transactions in the postal service. It is common knowledge that the Company has engaged with a number of other commercial entities to enable the use the network of post offices to provide their services to ensure the future of the overall economic entity through expanding the range of services provided in post offices.
The conclusion in this case is that the Respondent has all of the characteristics of a franchisee, in this case enabled by and in contract with, An Post. One definition of a franchise is that it is a type of licence that a franchisee acquires to allow them to have access to a business’s proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under the business’s name. Once this definition is applied to the business operated by the Respondent, then the stability of the undertaking must be seen in the context of the decision of An Post to offer the contract for the franchise to another operator in the same town notwithstanding the retirement of the previous franchisee. And the Respondent who is a business owner took over the franchise in order to operate two very different businesses on the one premises as a business proposition. Essentially, the Respondent is operating a part of a business in his capacity as a franchisee. Accepting that the franchisee does not entirely control the stability of the undertaking the concept of the franchise as part of the business of An Post does have a life of its own and has a stability stemming from a large corporate business. The franchisee, as in franchise operations, does not have the authority or capacity to operate independently of An Post and to this extent does not meet the definition set in the Spikers case where it is required that it would have an ongoing life of its own. However, it is can be viewed as a stable undertaking within the context of the current contract and given the decision of An Post to reissue that contract as recently as 2019 when it is a matter of public knowledge that many of the contracts for operating post offices were not renewed on the retirement or redundancy of thefranchisee in other locations on commercial grounds where the operation was no longer viable on the basis of footfall.
2. Has the entity retained its identity?
Unequivocally what was post office continues to be a post office and what is understood by a post office and the services provided by a post office under the previous operator continue with Respondent B.
3. Have some or all of the staff been taken over by the new employer?
No. From the information available to the hearing one of the employees was offered a position by the Respondent on reduced and different terms and conditions of employment. The Respondent in this case was not offered any employment and therefore could not be taken over by the new employer. If it is decided that there was a transfer of undertakings, then it follows that the Complainant was dismissed by the Respondent. He specifically refused to take her into his employment, and it would be wholly disproportionate to allow for his refusal to take on the Complainant to defeat the purpose of the transfer of undertakings. It is important to stress that this Respondent was on notice from the previous franchisee or employer of his obligations under the transfer of undertakings, yet he made a conscious decision that those Regulations did not apply to him and equally consciously decided not to take on the Complainant. In the context of the overall set of facts allied the facts as they apply to the case, the absence of applicability of this element of the Spikers decision cannot be justifiably used to defeat the Complaint.
4. Has the customer base transferred?
The Respondent will say that a number of customers did not transfer to him and chose to do their post office business elsewhere. Nonetheless, it is well recognised that the main customer based for any post office lies within its geographical area and there is no reason to believe that the overwhelming majority of those who availed of the post office service provided by previous operator in one part of the town on a Friday did not then follow the service to the new operator from the following Monday or at some point thereafter. It is reasonable to conclude that a significant proportion of the customer base transferred and in arriving at this conclusion, it is understood that the post office operated by the Respondent is the only post office in the particular geographical location.
5. Are the activities post-transfer similar to those carried out before the transfer?
Yes. Consistent with the transfer of the identity and the conclusion that it is a franchised operation, a post office provides the range of service dictated by the An Post. The Respondent’s contention that the emphasis on different products and the location of the service, i.e. within a supermarket distinguished his operation from that of the previous operator, does not alter the fundamental activities of a post office albeit there may be a different emphasis or a different approach by an individual operator in different towns depending on the location.
6. Has there been any interruption of activity?
No, except to the extent that the previous operator did not open on Saturday 10th April 2019. This amounts to a difference of approximately a half day of interruption of the activity. This amounts to a negligible interruption of the activity.
7. Has there been a transfer of assets?
By definition a franchisee receives assets from a franchiser. In this case the franchisee was provided with access to the proprietary knowledge, processes and trademarks of the franchiser in order to enable the operation by the Respondent of the An Post service, including the logos, assets for sale in the form of stamps, licences and all of the paraphernalia which is required to provide the postal and ancillary services delivered through the An Post retail network. It is argued by the Respondent that the physical assets in the form of the premises of the previous operator or would be transferor did not transfer to the Respondent. However, the premises in individual contracted post offices does not form part of the An Post business and is not part of the asset base of that business. The operator or franchisee is required to provide the building and therefore there was no physical asset of this nature to transfer.
In contending that the decision of the Labour Court in Mary Dunne v The Minister for Employment Affairs and Social Protection did not apply by way of a precedent, the Respondent contends that the transfer of client files in that case which were deemed to be an asset, marks a significant distinction between the basis of the Labour Court Determination and a significant distinction between the facts in the two cases in defining an asset. It is accepted that hard customer files did not transfer between the previous franchise operator and the Respondent. It is accepted that the small amount of hard assets and come stamps and other documentation which did transfer to the Respondent do not represent a significant asset transferring as between the previous operator and the Respondent. However, the asset in any situation where a private operator is contracted to provide a service on behalf of An Post is access to the central server and system of An Post through which most of the services operate and without which the range of services operated by An Post cannot be provided. The equipment transferred, and any additional equipment and physical assets provided to the Respondent were provided to him by An Post, consistent with the conclusion that this was a transfer by An Post of part of its business from the previous franchisee to the new franchisee, the Respondent in this case. The conclusion is that there was a transfer of assets from one part of the business operated by An Post to the Respondent as a franchisee and the terms of the test set in question 7 of Süzen is deemed to have been met.
Regulation 3 of the Transfer of Undertakings Regulations 2003 is found to apply to this case wherein it is stated at section (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.”
While not perfectly meeting all of the tests set by Spijkers, the overwhelming conclusion is that there was a transfer of undertakings as defined by the Regulations at section 3(2) of the Regulations from the previous post office operator in the same geographical location, the transferor, to the Respondent in this case as the transferee. This was a transfer where the term second generation transfer applies.
Based on the conclusion that the Complainant was comprehended by the Transfer of Undertakings Regulations and that her employment transferred from her previous employer as the transferor to the Respondent as the transferee with effect from 12th April 2019 the decisions that are required are whether the Respondent breached the Transfer of Undertakings Regulations, whether the Complainant was dismissed and whether that dismissal was unfair.
The complaints under the Transfer of Undertakings Regulations and the complaint under the Unfair Dismissals Act 1977 are interlinked in that the complaint under the regulations is one of dismissal related to a transfer.
The relevant sections of the transfer of undertakings regulations for the purposes of this Decision are at section 5:
‘5(1) The transfer of an undertaking, business or part of an undertaking or business shall not in itself constitute grounds for dismissal by the transferor or transferee and such a dismissal, the grounds for which are such a transfer, by transferor or a transferee is prohibited.
5(4) If a dismissal of an employee in contravention of paragraph(1),constitutes dismissal within the meaning of the Unfair Dismissals Acts 1977 to 2001(amended to 2016) relief may not be granted to the employee in respect of that dismissal both under these Regulations and under those Acts.’
Given the conclusion that there was a transfer of undertakings from the previous post office operator in the same geographical location on the closing of one entity and the opening of the entity operated by the Respondent, it follows that the employment of the Complainant did, or ought to have, transferred from the transferor, her previous employer, to the Respondent as the transferee. Instead her employment was terminated by the Respondent when he informed her would not be employing her and that TUPE did not apply. The Complainant was dismissed by the Respondent based on his erroneous interpretation of the Regulations and his decision that they did not apply in his case or to the Complainant. He did not consult the Complainant or give her any say in the matter-he simply served notice of his position on her at her house. The dismissal of the Complainant was unfair as there were no grounds to justify it, substantial or otherwise and it could be regarded as an attempt by the Respondent to avoid the transfer of previous employment practices and conditions from the transferor to the transferee given that there was a discussion with one employee of the previous post office operator regarding a change in her conditions of employment.
As specified under Regulation 5 relief cannot be provided in respect of an unfair dismissal both under the Regulations and under the Unfair Dismissals Act. Relief in this instance is provided under the Unfair Dismissals Act 1977.
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to thecomplaint(s)/dispute(s) in accordance with the relevant redress provisions of that Act.
Section 10 of the Transfer of Undertakings Regulations 2003 requires that I make a decision in accordance with the relevant redress provisions of that Act.
Section 8 of the Unfair Dismissals Acts, 1977 – 2015 requires that I make a decision in relation to the unfair dismissal claim consisting of a grant of redress in accordance with section 7 of the 1977 Act.
The complaint brought by the Complainant under the Transfer of Undertakings Regulations S.1. No. 131/2003 is well founded.
Relief is provided under the Unfair Dismissals Act 1977.
Unfair Dismissals Act 1977-2016
The complaint brought by the Complainant under the Unfair Dismissals Act is well founded.
The Complainant is to be reinstated by the Respondent with effect from 12 April 2019 without any break in service or diminution of her terms of employment as were in place with her previous employer until April 10th, 2019. This remedy is preferred as the complainant was out sick at the time of the transfer and for a separate reason at the time of the hearings. The potential losses arising from her dismissal could not be compensated to any appropriate degree by application of the compensation element of the Unfair Dismissal Act. There is no good reason for restoring the employment relationship by way of re-engagement which could result in a detriment to the Complainant.
Workplace Relations Commission Adjudication Officer: Janet Hughes
Transfer of Undertakings/Related Complaint Unfair Dismissal