FULL RECOMMENDATION
PARTIES : MR CHRIS CARROLL DIVISION :
SUBJECT: 1.Appeal Of Adjudication Officer Decision No. ADJ-00023574, CA-00028893-003, CA-00028893-004 This is an appeal on behalf of Mr Chris Carroll (‘the Respondent’) and a cross-appeal by Ms Patricia Young (‘the Complainant’) from a decision of an Adjudication Officer (ADJ-00023574/CA-00028893-004, dated 21 May 2020) under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (‘the Regulations’). The Court heard the within appeal in Dublin on 25 May 2022 in conjunction with a related appeal and cross-appeal from a second decision of the same Adjudication Officer (ADJ-00023574/CA-00028893-003, also dated 21 May 2020) under the Unfair Dismissals Act 1977. The Court’s determination in the latter appeal bears reference number UD/20/131. The Adjudication Officer held that both complaints were well-founded. She awarded redress (by way of reinstatement) under the Unfair Dismissals Act 1977 only. The Complainant’s appeal is confined to the matter of the form of redress only. The Factual Matrix The Complainant was employed as an assistant in the local post office in Kiltimagh, County Mayo, by Ms Marion Dunne for some twenty-one years until Ms Dunne ceased trading on Friday, 12 April 2019. The Respondent opened a post office in a dedicated area within a Londis store he runs with members of his family on Monday, 15 April 2019. The Londis store is located approximately one hundred metres from the premises in which Ms Dunne had operated her post office business, on the same street. The Complainant was on long term sick leave from her employment with Ms Dunne in the period immediately prior to the cessation of Ms Dunne’s business as she was recuperating from an accident in which she badly damaged her femur. However, she was – she says – contracted to work two days per week at that time and her agreed weekly rate of pay was €175.00 per week. She had previously worked a three-day week for Ms Dunne. The Complainant’s employment ceased on Ms Dunne’s last trading day, 12 April 2019. The Complainant did not receive any notice period or payment in lieu of notice from Ms Dunne as the latter was of the view that the Complainant’s employment would transfer to the Respondent pursuant to the Regulations. Likewise, the Complainant did not receive payment from Ms Dunne for her accrued annual leave of eight days or for six public holidays outstanding to her. Written Submissions of the Parties The Complainant submitted that she had been assured by Ms Dunne that there would be a transfer or her employment to the Respondent’s business. She also told the Court that she had had one meeting with the Respondent. That meeting took place on the morning of 12 April 2019 when Mr Carroll, on his own initiative, called to the Complainant’s home and advised her that he would not be employing her as his understanding was that there would be no transfer of undertaking from Ms Dunne’s business to his. No assets or employees transferred from Ms. Dunne to the Respondent; When the Respondent’s post office commenced trading on 15 April 2019 the staff employed there comprised the Respondent (as postmaster), the Respondent’s wife along with a third member of staff, ‘CC’; CC had never worked in Ms. Dunne’s post office; There was no transfer of premises: the Respondent’s post office operates from an entirely different location i.e. from within his existing Londis store and not the premises from which Ms. Dunne’s post office previously operated; The Respondent paid for all materials, labour, electrical and security services required for the construction of the dedicated post office space within his Londis store in accordance with specifications provided to him by An Post; The bespoke premises comprises the primary asset necessary for the conduct of the business of a post office; There are reduced monetary benefits for new postmasters by comparison to the arrangements that would have been in place with postmasters and post mistresses historically. For instance, the commission on transactions (which is the primary source of a post master’s income) has reduced. This means there is a lot more focus on sales in the Appellant’s post office than there would have been or would have needed to be in the post office operated under the historical arrangement Ms. Dunne had the benefit of. This translates into much more active selling of all An Post services and in particular of An Post Insurance and An Post credit card services by both the Appellant himself and his staff and this is a key focus in the Appellant’s business All assets and equipment required by the Respondent to open a fully functioning post office were either procured and paid for by the Respondent himself or provided to the Respondent by An Post; those provided by An Post were not leased by the Respondent and remained at all times the property of An Post; The equipment provided to the Respondent by An Post included: two computer screens, two cheque teller machines, a “main safe” (i.e the safe in which much of the monies were to be stored), a “working safe” (i.e. the safe for day-to-day operations), two key pads, two electronic signing pads, two weighing scales, two franking machines, the external signage, the window graphics, the internal point of sale merchandise and the que management system; There was no transfer of any assets or equipment between Ms. Dunne and the Appellant although some of the equipment received by the Respondent from An Post had been in use in Ms Dunne’s premises; any such equipment previously used by Ms Dunne was ancillary to the most important items of equipment necessary for the conduct of business in a post office premises; that equipment was at all times wholly owned by An Post; No information in relation to individual An Post account holders was transferred from Ms Dunne to the Respondent as the model under which An Post operates is that individual post offices do not automatically have access to customer account information; such information is held on An Post’s central server and can only be accessed by a postmaster/postmistress when a customer presents with, for example, their post office book; the bar code on the customer’s post office book is then scanned which allows the postmaster/postmistress in question temporary access to that account to carry out whatever transaction the customer requires; The Respondent has different opening and closing times from those operated by Ms Dunne; The Appellant operates a very different business model involving co-location whereby the post office and the Londis convenience store co-exist side by side within the same premises under the same general management with a view to maximising footfall to both businesses; this business model involves reliance on cross-purchasing e.g. someone collecting a pension or posting a letter in the post office may buy groceries from Londis while at the premises; The Respondent enjoys a less favourable compensation package for providing post office services than those which applied historically to operators of post offices on behalf of An Post, including Ms Dunne; as a result of this change, the Respondent and those in a similar position must - in order to make their business financially viable - proactively engage in encouraging customers to avail themselves of other financial products offered by An Post. Evidence The Court heard evidence both from the Complainant and from the Respondent. Legal Authorities relied on by the Respondent The Respondent’s submission cites several seminal and well-known judgments of the Court of Justice of the European Union interpreting the so-called Acquired Rights Directives, includingJMA Jozef Maria Antonius Spijkers v Gebroeders Benedik Abattoir CV et Alfred Benedik en Zonen BV[1986] ECR119;Suzen v. Zehnacker Gebaudereinigung GmBH(Case C13/95) [1997] E.C.R.1259;Hidalgo and Others v Asociation de Servicios Aser and Sociedad Cooperativa Minerva(C-173/96);Horst Ziemann Sicherheit GmbH and Horst Bohn Sicherheitdienst(C-247/96);Oy Liikenne AB v Liskojarvi and Juntunen[2001] IRLR 171 (EC|J);Hernandez Vidal SA v Perez[1999] I.R.L.R. 132 andCLECE SA v Valor[2011] I.R.L.R. 251. Discussion and Decision Counsel for the Respondent told the Court that there was no transfer of significant operational assets from the Complainant’s former employer to the Respondent. She submitted, for example, that the “most significant assets required to undertake the role of a post office-the customer’s data, files or records were not transferred to the Appellant”. On the basis of the foregoing, she requested the Court to distinguish the within appeal from the facts ofMinister for Employment Affairs and Social Protection v The Labour Court and Dunne[2019] IEHC 634, a decision of the High Court in which the Labour Court’s determination that a transfer of undertaking had taken place in circumstances where the files and records of social welfare customers were relocated from a local, independently operated social welfare office to the Department’s nearby ‘Intreo’ centre. The Respondent’s evidence to the Court is that he was provided access to the centrally-held database of An Post account holders on commencement of his post office business. It is clearly the case that this is one and the same database that Ms Dunne would likewise have had access to when operating her post office business. It follows, in the Court’s view, that no meaningful distinction can be drawn between the facts of the instant case and the facts ofDunnein this regard: the Respondent in both cases had access to the relevant records previously available to the respective Complainant’s original employer. It appears to the Court that, although customer records and some other significant operational assets required to operate the post office business in Kiltimagh did not transfer directly from Ms Dunne to the Respondent, the Respondent had equivalent access to Ms Dunne to those records on an ‘as needs’ basis via An Post’s central database. Likewise, although only a limited number of physical items of equipment may have moved from Ms Dunne’s premises to the Respondent’s, the Respondent was provided with several key operational assets, including safes, weighing scales and franking machines, the equivalents of which had undoubtedly also been provided by An Post to Ms Dunne and were equally essential to her post office business. The Respondent did state that the ‘small safe’ previously used by Ms Dunne was moved from her premises to his on the afternoon of 12 April 2019 and that it contained cash, stamps, lotto tickets and foreign currency. In its seminal decision inSuzen 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 Court that the post office businesses operated by both Ms Dunne and the Respondent 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 neither Ms Dunne nor the Respondent could have run a post office business on behalf of An Post unless they had respectively 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. That being the case, this Court finds that the reasoning of the Court of Justice inAbler v Sodexhocan be applied to the facts of the within case. A central plank of the Respondent’s legal submission turns on the following interpretation of the judgment of the Court of Justice inCLECE SA v Valor[2011] I.R.L.R. 251 advanced by Counsel at paragraphs 88 to 89 of her written submission to the Court: “88. The necessity for intangible assets to transfer, alongside tangible assets, in order for the Directive to apply was propounded by the European Court of Justice inCLECE SA v Valoras follows: "In order to assess whether an economic entity within the meaning of the Directive has been transferred, not only the tangible assets but also intangible assets which may have been provided by the original employer with a view to carrying out the activity, are important." 89. Therefore even if it is accepted that tangible assets were transferred from Ms Dunne to the Appellant (which is denied), the fact that no intangible assets were transferred is determinative of the issue and no economic entity was transferred.” It appears to this Court that Counsel is reading into the judgment of the Court of Justice something which is simply not there. The Court of Justice - neither in the passage quoted by Counsel nor in the judgment taken as a whole - did not assert that there must be a transfer of both tangible and intangible assets in order to give rise to a transfer of undertaking in an asset reliant business context. What the Court of Justice does say in the above passage is that it is necessary to examine the possible transfer of both tangible and intangible assets in that context before arriving at a decision as to whether or not a transfer of undertaking has occurred. 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 Court to assume that the Respondent potentially had access to at least the same pool of customers for postal services that Ms Dunne had had previously. Counsel makes much of the fact that the Respondent was effectively required to provide an additional range of services, including upselling of additional financial and insurance products to his customers, something which it appears was not as important in the context of Ms Dunne’s business. However, it cannot be inferred from this that the needs of the local population to access those services – including postal services and social welfare payments - that have been traditionally offered by their local post office somehow ceased on the relocation of the post office business previously operated by Ms Dunne to the Respondent’s premises. It is noted by the Court that Counsel for the Respondent submitted that An Post customers are not tied to any particular post office and it was open to Ms Dunne’s former customers to take their business elsewhere and not to avail themselves of the services offered by the Respondent. However, this is most likely to be the case in many situations where a business transfers in circumstances that are within scope of the Regulations. The Court is aware that those who avail themselves of certain social welfare services via An Post are tied to a particular post office they have nominated for that purpose but that they can chose to nominate a different post office or receive their payment directly into a bank account. There was no evidence before the Court to confirm or otherwise whether some or any of those customers who had previously received their social welfare payments at Ms Dunne’s post office chose to relocate their business on or after 12 April 2019 to a post office other than the Respondent’s. While it is true that a person who wishes merely to purchase stamps, post a letter or engage in any other routine postal-related transaction is, in principle, free to do so in any An Post outlet, the vast majority of people in practice will seek to do so at a location that is nearby and convenient. In this case, the Respondent’s business is located no more than 100 metres from the location from which Ms Dunne had operated, and on the same street. The Court cannot accept that any significance should be attached – in the context of this appeal under the Regulations - to the fact that consumers of postal services were not formally tied to availing themselves of the Respondent’s office. 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 Court finds that that is what occurred in this instance: the business of providing postal and ancillary services previously operated by Ms Dunne as an agent of An Post transferred to the Respondent on 15 April 2019. The Complainant was entitled by virtue of the Regulations was entitled to continuous employment with the Respondent on no less favourable terms than she had enjoyed up to that date with Ms Dunne. The appeal, therefore, fails and the decision of the Adjudication Officer is upheld in all respects. The Court so determines.
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