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In a recent decision of the Employment Appeals Tribunal in case number TU23/11, the employer appealed against the decision oa a Rights Commissioner decision Ref r-101357-tu-10/GC.

Background

The Respondent gave evidence that it had approached a potential client with a view to securing a contract for cleaning on site held by the client in Bray, County Wicklow. The Respondent was aware that the contract was being carried out by a competitor in the contract cleaning market namely NCS. NCS had operated the cleaning contract on site for at least eight years.

The Client was impressed by the Respondent’s package and awarded the cleaning contract to the Respondent. There were no discussions around the contract cleaning staff who had worked on the premises for up to eight years including the Claimant.

NCS were unaware that they had lost the contract and were given one month’s notice to finish up on the Client’s site. A series of correspondence ensued between the two contract cleaning companies (NCS and the Respondent) whereby NCS asserted that this was clearly a situation where a legal transfer of an undertaking or business from one employer to another had taken place and that the protections under the Transfer of Undertaking Directive applied to its workforce.

In her evidence, the Claimant contended that she was given to believe that she would transfer to the new contract cleaning company and that she would have no difficulty with the change in employer.

Determination

The Tribunal noted that NCS had failed to pursue the issue of transferring its employees across to the Respondent and simply acquiesced to the Respondent’s assertion that “TUPE” did not apply and the Respondent did not wish to take on any NCS’s employees. The Claimant ultimately lost her job and was never given comparable work.

The Tribunal stated that it must look at the Respondent’s unilateral decision to declare that the situation was not subject to TUPE and whether the consequent failing by the Respondent to have any regard for the Claimant was correct in law.

The Respondent argued that no tangible or intangible assets were to transfer and by reason of that fact, the Respondent may decide not to take on any of the staff either. The Tribunal referred to correspondence dated 30th April 2010 which in the Tribunal’s view meant that the Respondent was opting out of the Regulations based on their decision not to take on any of the employees.

The Tribunal referred to the landmark decision of Suzen [1997] IRLR 255 and noted

“What is clear from even the landmark Suzen case [1997] IRLR 255 is that there may be a transfer of an undertaking although there has been no transfer of assets and that there may be a transfer where there is no contractual link between the transferor and transferee”.

The Tribunal also noted that a transfer may occur even when the parties had not intended it and referred to the decision of Lord Morrison in ECM v Cox [1998] IRIR 416 where he stated:

“It can be said with confidence that neither the presence nor the absence of any one factor will demonstrate that a transfer of undertaking has or has not occurred. it is a question of looking at the facts and keeping an eye on the purpose of the protection given by the Directive”.

Mr Justice Morrison further stated “The Directive does not act to protect employees from the chill wind of redundancy, it does seek to protect them when the business to which they were dedicated has been transferred and a new employer has come on the scene”.

The Tribunal concluded that this was a situation where the issue of TUPE would have been forcibly applied had NCS taken up the issue. The Tribunal noted that NCS and the Respondent compete for the same work and try to keep their relations on an even keel and stated “….this commercial necessity had a detrimental and negative impact on the employment of this claimant who effectively fell between two stools and lost her long term job at this particular site”.

The Tribunal affirmed and supported the recommendation made by the Rights Commissioner who awarded compensation for breaches of Regulatiosn 4 and 8.

For our readers, Regulation 4 of the Protection of Employees on Transfer of Undertakings) Regulations 2003 (“the Regulations”) deals with the rights and obligations of both the transferor (the old employer) and the transferee (the new employer). In essence it provides that the rights and obligations of an employer under a contract of employement (other than pension rights existing on the date of transfer) are transferred to the new employer on the transfer of the business or part thereof. This also includes terms inserted by collective agreements.

Regulation 8 deals with the information and consultation provisions of the Regulations and provides that both the transferor and transferee must inform and consult with the representatives of the 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.

The Rights Commissioner has the power to award four weeks remuneration where there has been a breach of the information and consultation provisions and two years remuneration in the case of a contravention of any other provision.

In our next series of blog blogs we will look at some of the other issues and questions which arise under the Regulations or “TUPE” as they are commonly known.

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