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Retaining the identity of the old business constitutes a ‘transfer’ within the meaning of regulations.

Facts: The Complainant was employed by Playside Limited in 2015, which held the license to sell alcohol, run a restaurant and host functions, as a chef/kitchen worker. Playside Limited leased a bar restaurant premises in Donegal which was taken back by the landlord company, Danbar Properties Limited. Due to closure of business, the Complainant received a redundancy notice in February 15, 2018 from Playside Limited, under which she was paid the statutory redundancy payment. The property was then re-let to An Clochán Liath Pub Limited, which reopened on March 30, 2018. The Complainant claimed that the termination was an unfair dismissal. The Complainant further argued that the closing of Playside Limited was not a court supervised liquidation and that ‘Redundancy cannot be used as a cloak’ for getting rid of employees.  The Adjudication Officer found that the since there was an intention to reopen the business, although  under a different company, a transfer of undertaking took place and the Complainant’s termination was not a redundancy but  an unfair dismissal and awarded €15,000. Noting that all 3 companies had Mr. David Harvey as the sole owner of the shareholding, the Adjudication Officer held that there was a transfer of business somewhere between February 15, 2018 and March 30, 2018. An Clochán Liath Pub Limited appealed  the decision to the Labour Court. .

Findings: Although the Respondent argued that the new business was marketed different and was for a much younger clientele, the Labour Court observed that the principal business of both entities were the same and it was a ‘transfer of undertaking’ within the meaning of the EC (Protection of Employees on Transfer of Undertakings) Regulations 2003 (the “Regulations”). The Court further added that the forfeiting or transfer of lease constitutes a transfer for the purpose of the Regulations, where the business is intrinsically linked to the property and continued same or similar business under different hands. The Labour Court referred to the CJEU decision in the case of Foreningen AF Arbejdsledere I Danmark v. Daddy Dance Hall A/S C-324/86 in which the court held that the Directive did not require there to be a contract between the transferor and transferee for it to apply. The Labour Court held that regardless of the fact that the lease was surrendered back to the original landlord before being re-leased out to the Respondent, it was satisfied that the functions of Playside Limited and the Respondent were same/similar activities to retain its identity.  It held that when the Respondent entered into the lease arrangement with the landlord on 22nd March 2018 a transfer of undertakings within the meaning of the Regulations took place.  . Based on the above, the Labour Court upheld the WRC Decision that the termination of the Complainant’s employment was an unfair dismissal. The Labour Court, however reduced the award to €10,000 based on the Complainant’s efforts made by the Complainant to mitigate her losses.

 Note to Employers: Employers must note that a transfer of undertaking within the meaning of the Regulations may occur where there is no direct transfer of assets from the transferor to the transferee, in circumstances where the business maintains in essence its identity after the change has occurred. In this case, no actual transfer of ownership of business was required but the mere change in the team responsible for running the business from one legal entity to another was sufficient for the Regulations to apply.

https://www.workplacerelations.ie/en/cases/2019/august/udd1943.html

1st August 2019

Anne O’Connell Solicitors

Fitzwilliam Hall

Fitzwilliam Place

Dublin 2.

www.aocsolicitors.ie

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