Industrial Tribunals Northern Ireland Decisions

 
THE INDUSTRIAL TRIBUNALS

CASE REF: 01955/07

CLAIMANT: Veronica Kealey

RESPONDENTS: 1. Dungiven Community Resource Centre Ltd

2. Glenshane Community Developments Ltd

DECISION

The unanimous decision of the tribunal is that the claimant was not unfairly dismissed for a reason in connection with the transfer of an undertaking between the respondents on 31 December 2007. Alternatively, she was not unfairly dismissed by the first-named respondent on 9 November 2007 and her claims before the tribunal against both respondents are therefore dismissed.

Constitution of Tribunal:

Chairman: Mr S A Crothers

Panel Members: Mr J Nicholl

Mr J Lyttle

Appearances:

The claimant was represented by Mariam Lockhart.

The respondents were represented by Mairead McCormick.

THE CLAIM

1. The claimant claimed that she had been unfairly dismissed as being unfairly selected for redundancy. The respondents denied her allegations.

THE ISSUES

2. The issues before the tribunal, as agreed by the parties were as follows:-

(1) Was there a transfer of an undertaking between the respondents on 31 December 2007 and, if so, was the claimant unfairly dismissed for a reason connected with that transfer?

(2) Alternatively, was the claimant unfairly dismissed by the first-named respondent?

3. With the consent of the parties, the Management Committee – Dungiven Community Resource Centre Ltd, (the second respondent), was dismissed from the proceedings. The title of the proceedings was amended accordingly to that shown above. The first-named respondent is hereinafter referred to as "the Dungiven Company" and the second-named respondent as "the Glenshane Company".

SOURCES OF EVIDENCE

4. The tribunal heard evidence from the claimant and, on the respondents' behalf, from Mary McNicholl, Company Secretary and a Director in both companies, John McNicholl, Chairman and Company Director in both companies, Mr Michael Coyle, Treasurer of the Dungiven Company and Mary Halsey, Manager in the Dungiven Company. The tribunal was also presented with documentation from the parties.

FINDINGS OF FACT

5. Having carefully considered the evidence in so far as same was relevant to the issues before it, the tribunal found the following facts proven on the balance of probabilities:-

(i) The Dungiven Company was formed in 1996. The Glenshane Company was formed in 1989. Both companies were registered as Companies Limited by guarantee with charitable status. The tribunal was shown copies of the Memoranda and Articles of Association of both companies and heard evidence pertaining to the activities of both, which it accepted.

(ii) The Dungiven Company began to experience financial difficulties in or about August 2006 and negotiated an extended overdraft with the Ulster Bank in February 2007. A meeting of Directors was then arranged for 18 June. The tribunal is satisfied that a decision was made at that point to make a member of staff redundant. A further meeting was held with the Ulster Bank on 25 June 2007. At the same time Mary McNicholl and Michael Coyle met with the Labour Relations Agency to discuss the situation in general and to consider criteria for making an individual redundant. The tribunal was not presented with any criteria in written form but is satisfied that the Dungiven Company sought to follow the advice given by the Labour Relations Agency and met with all three members of staff on 11 July 2007 regarding the ongoing financial difficulties.

(iii) The Dungiven Company depended for its operation on grants from various sources. Mary Halsey had applied for a Lottery grant and informed those attending the meeting on 11 July 2007 that the application had been unsuccessful. Mrs Halsey had also written to the Department of Social Development requesting financial help. A reply was received to her correspondence ultimately on 17 October 2007 indicating that contact was being made with the Local Council to see if the advice service provided by the Company could continue. Ultimately, in December 2007, the Dungiven Company was informed that a grant of £15,000 would be made by the Council to support the salary costs of the advice worker.

(iv) The tribunal is satisfied that the Dungiven Company (which had a considerable number of company directors in common with the Glenshane Company, and had the same company secretary) considered the job descriptions for the Community Development Officer (the management post occupied by Mary Halsey), the Advice/information Worker post, and the Administration Worker post held by the claimant. All three posts were in a genuine sense, specialised. However, in the circumstances faced by the Dungiven Company, a decision was made on 14 August 2007 to subsume the claimant's administration duties within the roles preformed by the two more senior employees. Already, on 19 July 2007 individual consultations had been held with these three members of staff. Voluntary redundancy had also been discussed with the three employees but none responded favourably in that direction. The claimant alleged that she had been placed under pressure to follow the voluntary redundancy route. However, the tribunal is not persuaded that pressure was exerted to the extent she alleges.

(v) Following the decision on 14 August 2007 to make the claimant's post redundant, a letter was sent to her on 17 August 2007 informing her of this decision and advising that she could contact the Chairman of the Dungiven Company's Management Committee should she wish to meet with the committee to discuss the decision to make her redundant. An appeal against the Dungiven Company's decision was received by it on 31 August 2008. The appeal hearing was held on 4 September 2007. The outcome was that the decision to make the claimant redundant was confirmed. The tribunal finds that her effective date of termination was 9 November 2007. The claimant also received a redundancy payment.

(vi) Subsequently, the Dungiven Company considered the possibility of selling their premises at 114 Main Street, Dungiven, which was the subject of a mortgage. A meeting of the Directors of the Glenshane Company took place on 18 October 2007. The tribunal carefully considered the evidence regarding what took place at this meeting and is satisfied that a suggestion was made after the meeting by John McNicholl's cousin, Colum McNicholl (a Director in the Glenshane Company), that consideration should perhaps be given to the Glenshane Company taking over the Dungiven Company. This was to be discussed at a further management committee meeting of the Dungiven Company. This meeting took place on 24 October 2007 and it was agreed to invite Gerry Heaney, Accountant from Claremont Associates for both companies to address the feasibility of this suggestion at a joint meeting of the directors of both Companies.

(vii) Mary Halsey calculated the claimant's redundancy payment in the offices of Dungiven Company although the actual computation was typed out using office facilities provided by the Glenshane Company. John McNicholl and Sean McElhinney, Accountant from Claremont Services, met with the Ulster Bank on 8 November 2007 to discuss loan payments and unpaid wages. Subsequently, in order to ease the critical situation which had developed, and with the approval of all relevant directors, a loan of £5,200 was organised by the Glenshane Company in favour of the Dungiven Company to meet the immediate financial contingencies.

(viii) The tribunal is satisfied, having carefully examined the claimant's allegations and the evidence given on behalf of the respondents, that it was not until 29 November 2007 at a joint meeting of both companies, that there was a firm agreement for the Glenshane Company to take over the Dungiven Company. Mr Heaney, Accountant also attended and his advice assisted the Glenshane Company in arriving at its decision.

(ix) The tribunal was shown copies of resolutions passed by both companies on 5 December 2007, when a further joint meeting of the respective boards was held. The effect of these resolutions was that as from 31 December 2007 the assets and liabilities of the Dungiven Company as reflected in the company's books and records on that date, were to be transferred to the Glenshane Company and the Dungiven Company was then to cease all charitable activities. Furthermore, from 1 January 2008 the Glenshane Company was to be responsible for carrying out the charitable activities previously delivered by the Dungiven Company. The matching resolution by the Glenshane Company referred to it acquiring all the assets and liabilities of the Dungiven Company on 31 December 2007 and from 1 January 2008 onwards carrying out the charitable activities previously delivered by the Dungiven Company.

(x) In considering the foregoing matrix of circumstances and facts, the tribunal carefully weighed the claimant's evidence regarding the alleged unfairness of the redundancy selection procedure, the absence of written criteria or communication of any criterion to her, and her claim that, since it was clear that the Dungiven Company would have to close down anyway, the jobs of all three employees should have been equally considered and that she should not have been singled out for redundancy selection. Furthermore, it considered her evidence that the Dungiven Company did not consider reduced working hours and other ways of avoiding a redundancy situation, including alternative employment.

THE LAW

6. (1) The law in relation to transfer of undertakings is contained in the Transfer of Undertakings/Protection of Employment (Regulations) 2006 ("TUPE"). Regulation 3(1) states that the regulations apply to -

"(a) a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity;"

Regulation 7(1) states as follows:-

"where either before or after a relevant transfer, any employee of the transfer or transferee is dismissed, that employee shall be treated for the purposes of Part X of the 1996 Act (Unfair Dismissal) as unfairly dismissed if the sole or principal reason for his dismissal is –

(a) the transfer itself; or

(b) a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce".

(2) The tribunal also considered relevant case law including the principles set out in Kerry Foods Ltd v Creber [2000] IRLR 10 EAT, Litster & Others v Forth Dry Dock Engineering Company Ltd [1989] IRLR 161 HL, Wilson & Others v St Helen's Borough Council, British Fuels Ltd v Backendale and Meade [1998] IRLR 706 HL, Thompson v SCS Consulting Ltd [2001] IRLR 802 EAT and Whitehouse v Chas A Blatchford & Sons Ltd [1999] IRLR 492 CA.

(3) The law in relation to unfair dismissal is contained in the Employment Rights (Northern Ireland) Order 1996, Articles 126 – 130A. The tribunal also considered the general guidance for redundancies set out in the case of Williams & Others v Compair Maxam Ltd [1982] IRLR 83 EAT (although a case involving Union representations, together with the cases of Buchanan v Tilcon Ltd [1983] IRLR 417 CS, British Aerospace Plc v Green & Others [1995] IRLR 433 CA, John Brown Engineering Ltd v Brown & Others [1997] IRLR 90 EAT, and BL Cars Ltd v Lewis [1983] IRLR 58 EAT. In the latter case the question to be asked was – "Was the selection one which a reasonable employer could have made?" This involves considering the criteria adopted and whether the employers have demonstrated that they fairly applied those criteria to the particular redundancy. In general terms, the tribunal has to look at the unit to which any selection criteria were applied. This is usually referred to as a pool for selection. Furthermore the tribunal has to decide whether the criteria themselves are reasonable and finally examine the manner in which the criteria were applied and the redundancy dismissal implemented. The case of Thomas & Betts Manufacturing Ltd v Harding [1980] IRLR 255, CA shows that where there is no customary arrangement or agreed procedure to be considered, employers have a good deal of flexibility in defining the pool from which they select employees for dismissal. They need only show that they have applied their minds to the problem and acted from genuine motives. However, the tribunal still has to be satisfied that the employer acted reasonably.

(4) The tribunal found Judge Peter Clark's judgment in the case of Langston v Cranfield University (1998) IRLR 172 EAT, to be of considerable assistance. In paragraphs 30 – 35 he states as follows:-

"(4) Where an applicant complains of unfair dismissal by reason of redundancy we think that it is implicit in that claim, absent agreement to the contrary between the parties, that the unfairness incorporates unfair selection, lack of consultation and failure to seek alternative employment on the part of the employer.

(5) Because there is now no onus on either party to establish the reasonableness or unreasonableness of the dismissal under s.98(4) it is for the industrial tribunal to determine that question 'neutrally'.

(6) In these circumstances we think it is incumbent on the industrial tribunal to consider each of the three questions mentioned in (4) above, … it is desirable that at the outset of the hearing the live issues are identified by the industrial tribunal.

(7) Normally, an employer can be expected to lead some evidence as to the steps which he took to select the employee for redundancy, to consult him and/or his trade union and to seek alternative employment for him.

(8) We would normally expect the industrial tribunal to refer to these three issues on the facts of the particular case in explaining its reasons for concluding that the employer acted reasonably or unreasonably in dismissing the employee by reason of redundancy".

SUBMISSIONS

6. The tribunal carefully considered the written submission made on behalf of the respondents and the oral submissions made on behalf of the claimant.

CONCLUSIONS

7. The tribunal, having carefully considered the evidence together with the relevant authorities and the submissions from both parties, concludes as follows:-

(1) There was a transfer of an undertaking on 31 December 2007 between the Dungiven Company and the Glenshane Company.

(2) The tribunal is not satisfied on the facts as found, that the claimant was unfairly dismissed for a reason connected with the transfer referred to at (1) above.

(3) The tribunal has also concluded, in light of the facts as found, and the relevant authorities, (including the three tests referred to in the Langston case (Supra)), that the first respondent acted reasonably in dismissing the claimant by reason of redundancy. The claimant was therefore not unfairly selected for redundancy and was not unfairly dismissed on 9 November 2007.

In coming to this conclusion, the tribunal is sympathetic with the claimant in the circumstances in which she finds herself but is unable to uphold her claims which are therefore dismissed.

Chairman:

Date and place of hearing: 19 and 20 August 2008, Belfast.

Date decision recorded in register and issued to parties: