Yet another interesting case sent by the Employment Appeals Tribunal on Friday 20th July. The case of Kevin Carroll v SR Technics Ireland Limited UD1419/2010, MN 1364/2010, WT 585/2010 highlights the ongoing difficulties many employers experience with the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003. Although a lengthy post, it is worth reading the case in full also. Separately the issue of the top 10 problems faced by employers with “TUPE” transfers will be the subject of a separate blog coming soon!
The Respondent in this case was suffering severe losses and publicly announced redundancies on 12th December 2008. The Claimant worked in line maintenance and in April 2009 there were 205 employees in this area. When the first stage of redundancies took place 600 employees were made redundant (which did not include the Claimant or anyone in the Claimant’s area of work). The Claimant was not made redundant until 18th December 2009.
The selection criteria and formula used throughout the redundancy process and in respect of the Claimant was established at the first stage of redundancies in April 2009. In April 2009 there were over 1199 people in a number of divisions.
Between April and September 2009 a union forum was established and the Respondent informed the forum that the line maintenance operations were expected to be dissolved in August which was subsequently changed to October 2009. During this time the union forum was kept updated of all developments. Three companies expressed an interest in taking over the line maintenance operations and one potential buyer emerged, ALT.
On 7th August 2009 the Union forum informed the Respondent that it was their view that the line maintenance workers were covered by the Transfer of Undertaking Regulations (“the Regulations”) and had a natural right to transfer to a new service provider should the company successfully outsource the line maintenance operations.
ALT told the Respondent that they were already overmanned by 650 people and required employees with certain qualifications to transfer. The Respondent informed the union forum of this on 12th November 2009. ALT wanted 82 technical engineering staff with B1/B2 and Cat A or higher qualifications. The Claimant possesed an A qualification. The Claimant stated that he was not given the proper training so he could obtain the technical skills which ALT required. The Claimant did not transfer to ALT because of the qualifications he possessed. The requirements had been satisfed earlier by people with higher qualifications than the Claimant and also people with the same qualifications as the Claimant but longer service. The Claimant was notified that he was to be made redundant and ultimately appealed the decision of the Respondent not to grant him an appeal hearing. No appeal hearing took place.
Determination of the Employment Appeals Tribunal
The Tribunal determined that the key question was whether the Claimant was protected under and had the right to transfer under the Regulations. In the Tribunal’s opinion, the fact that the Claimant did not receive the appropriate training to make it on to the transfer list to ALT was not relevant nor was the fact of the limited appeals mechanism being offered to the Claimant.
The Tribunal firstly considered Clause 3(1) of the Regulations which determines their applicability i.e. The Regulations apply to “any transfer of an undertaking, business or part of a business from one employer to another as a result of a legal transfer….or merger” and Clause 3(2) which defines a “Transfer” as the “transfer of an economic entity which retains its identity”.
The Tribunal determined that the Regulations applied to the transfer of the line maintenance section under Clause 3(1) as it was “part of a business” being transferred to ALT. They also determined that there was a “transfer” of the line maintenance section as it retained its economic entity.
In looking at Clause 4(1) which states that the “Transferor’s rights and obligations arising from a contract of employment existing on the date of transfer shall by reason of such transfer be transferred to the Transferee”, the Tribunal determined that there was a clear breach here as the Claimant was made redundant on the same day 82 of his colleagues were transferred to ALT (the transferee).
Clause 5(1) of the Regulations provides that the transfer of an undertaking, business or part of a business cannot itself constitue grounds for dismissal and such a dismissal is prohibited subject to Clause 5(2) which provides that “Nothing in this Regulation shall be construed as prohibiting dismissals for economic, technical or organisational reasons which entail changes in workforce”.
The Tribunal stated that Clause 5(1) is designed to prevent the dismissal of the Claimant where as the Respondent had argued that nothing in the Regulations prevented the Respondnet from reducing its workforce prior to dismissal and then transfer the “slimmed down” business which would satisfy ALT’s requirements. The Tribunal stated that to accept such a position would mean reversing the order of Clause 5 so that Clause 5(2) would be read first and then the transfer would not fall foul of Clause 5(1) as there were no dismissals. The Tribunal said if the legislature had intended this, the clause would have been drafted accordingly but noted that post transfer the Regulations don’t prohibit dismissals for economic, technical or organisational reasons.
The Tribunal also clearly stated that ALT as the transferee cannot only take employees with certain qualifications and not take other employees pursuant to Clause 9(1) which states “A provision in any agreement shall be void in so far as it purports to exclude or limit the application of any provision of these regulations or is inconsistent with any provision of the Regulations”.
The Tribunal also stressed that an employee’ right to transfer is automatic as demonstrated by a series of caselaw including Rostart de Hertaing V J Benoidt SA (in liquidation) and Another Case C305/94 where the Court stated inter alia
“The contracts of employment and employment relationships existing on the date of the Transfer of the undertaking were automatically transferred by the mere fact of the transfer of the undertaking, despite any contrary intention on the part of the transferor or transferee and despite any such refusal by the transferee to fulfill his obligations. The transfer of such contracts and relationships took place on the date of the Transfer of the undertaking and could not be postponed to another date at the will of the transferor or the transferee”.
The Tribunal noted here that both parties could not pick and choose the dates to suit their particular purposes. On 18th December 2009 a number of redundancies took place but it was also the date ALT took over the 82 employees it wanted.
The Tribunal finally concluded that the Regulations apply to a single employee and referred to the case of Christel Schmidt V Spar und Leihkasse der fruheren Amter Bordesholm, Kiel und Cronshage (Case C-392/92) that stated “the protection afforded by the Directive *Regulations) extended to all staff and had therefore to be guaranteed even where only one employee was affected by the transfer”.
The Tribunal determined that the dismissal of the Claimant was unfair and re-instatement ordered.