Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REFS:  2769/10

282/11

590/11

541/11

         

 

 

 

CLAIMANT:                      1. Martin Gerald Morgan

                                        2. Laurence Martin

 

 

 

RESPONDENT:                1. Firecrest Compartmentation Ltd

                                        2. Firecrest (NI) Ltd

                                        3. Department for Employment and Learning

 

 

 

DECISION

In the Morgan cases (2769/10, 282/11 and 590/11), the unanimous decision of the tribunal is as follows:

 

(A)                   None of the claimant’s claims against Firecrest Compartmentation Ltd (“the old employer”) is well-founded.  Accordingly, all of those claims are dismissed.

(B)                   All of the claimant’s claims against Firecrest (NI) Ltd (“the new employer”) are well-founded and:

(i)              it is ordered that the new employer shall pay to the claimant the sum of £348 in respect of holiday pay;

(ii)             it is ordered that the new employer shall pay to the claimant the sum of £1,135 in respect of notice pay;

(iii)           the claimant’s claim for unfair dismissal is well founded and the amount of any unfair dismissal compensatory award will be decided upon at a further hearing; and

(iv)           it is declared that the claimant is entitled to receive a redundancy payment of £1,850 from the new employer.

(C)                   Pursuant to Article 205 of the Employment Rights (Northern Ireland) Order 1996 (“the 1996 Order”) we have decided that, in October 2010, the new employer became liable to make a redundancy payment of £1,850 to the claimant.

(D)                   The claimant’s Article 233 complaint (the complaint regarding the refusal of the Department for Employment and Learning to make any payment to him pursuant to the application which he had made pursuant to Article 227 of the 1996 Order) is not well-founded; accordingly, it is dismissed.

 

The unanimous decision of the tribunal in respect of the Martin proceedings (541/11) is as follows:

(A)                   None of the claimant’s claims against the old employer (Firecrest Compartmentation Ltd) is well-founded.  Accordingly, all of those claims are dismissed.

(B)                   All of the claimant’s claims against the new employer  (Firecrest (NI) Ltd) are well-founded and:

(i)              It is ordered that the new employer shall pay to the claimant the sum of £1,154 in respect of wages;

(ii)             It is ordered that the new employer shall pay to the claimant the sum of £841 in respect of holiday pay;

(iii)           It is ordered that the new employer shall pay to the claimant the sum of £3,354 in respect of notice pay;

(iv)           The claimant’s claim in respect of unfair dismissal is well founded and the amount of any  unfair dismissal compensatory award will be decided upon at a further hearing;

(v)            It is declared that the claimant is entitled to receive a redundancy payment of £5,070 from the new employer.

(C)               Pursuant to Article 205 of the 1996 Order, we have decided that, in October 2010, the new employer became liable to make a redundancy payment of £5,070 to the claimant.

(D)               The claimant’s Article 233 complaint is not well-founded; and accordingly, it is dismissed.

 

Constitution of Tribunal:

Chairman:              Mr P Buggy

Members:              Mr S Pyper

                              Ms T Madden

 

         

Appearances:

Each of the claimants appeared in person.

 

The old employer was not entitled to be represented in these proceedings, because it had not presented a response.

 

The new employer was not represented.

 

The Department for Employment and Learning (“the Department”) was represented by Mr A Sands, instructed by the Departmental Solicitor’s Office.

 

 

REASONS

1.              At the end of the main hearing of these cases, we issued our decision orally.  At the same time, we gave reasons orally in respect of that decision.  Accordingly, what follows is by way of summary only.

 

2.              It was agreed by all the parties who were entitled to participate in the Morgan and Martin proceedings, and we decided, that the Martin case and all of the Morgan cases should be heard together.  This is our decision in respect of the Morgan and Martin proceedings.

 

3.              The cases which are the subject of this Decision are part of a multiple (or group) litigation.  The old employer, the new employer and the Department are all respondents in all of the cases which comprise that multiple.

 

4.              All of the claimants in this multiple were employed by Firecrest Compartmentation Ltd until October 2010.  Some of the claimants in this multiple were subsequently offered employment with Firecrest (NI) Ltd.  That is why we refer to Firecrest Compartmentation Ltd as the “old employer” and to Firecrest (NI) Ltd as the “new employer”.

 

The claims and the appeals

 

5.              An industrial tribunal has jurisdiction to entertain claims for breach of contract which are made by ex-employees of a respondent.  The claims for wages, holiday pay and notice pay in the present cases (the Morgan and Martin cases) are claims for breach of contract.

 

6.              The tribunal’s jurisdiction to entertain claims in respect of unfair dismissal is conferred by Article 145 of the 1996 Order.

 

7.              Article 170 of the 1996 Order imposes a requirement upon an employer to pay a redundancy payment to any of its employees, if that employee is dismissed by that employer by reason of redundancy.  Article 198 of the same Order provides that any question arising under that Order as to the right (as against an employer) of an employee to a redundancy payment is to be referred to and determined by an industrial tribunal.  In these proceedings, the redundancy pay claims against the employers are brought under Article 198.

 

8.              In these proceedings, Mr Martin makes claims against the employers in respect of wages; and both claimants make claims against the employers in respect of holiday pay, notice pay, unfair dismissal and redundancy pay.

 

9.              The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPER”) were intended to implement the requirements of the EU Acquired Rights Directive of 2001 (Directive 2001/23).  All the parties who are entitled to participate in these proceedings accept that, if there was a relevant transfer (from the old employer to the new employer), in the sense in which the term “relevant transfer” is used in the context of TUPER, the effect upon the contract of employment of any assigned employee (any employee who was assigned, or who was deemed to have been assigned, at the time of the relevant transfer, to the transferred entity) is as follows.  (1) The transfer does not have the effect of automatically terminating that employee’s contract of employment.  (2) In connection with any such contract, any liability which the transferor had (prior to the relevant transfer) becomes the legal liability of the transferee.

 

10.           The Department for Employment and Learning (“the Department”) is the statutory guarantor in respect of certain employment debts.

 

11.           First, if an employer cannot or will not make a payment in respect of an employee’s redundancy pay entitlement, that employee can apply to the Department, in the Department’s role as statutory guarantor, for a payment in respect of that debt.  (Any such application is made under Article 201 of the 1996 Order).  In certain situations, the Department is under an obligation to make a payment in response to such an application.  However, any such requirement does not arise unless the relevant employee is entitled (as against an employer) to receive a redundancy payment.

12.           Article 205 of the 1996 Order provides that, where an Article 201 application is refused by the Department, there shall be referred to an industrial tribunal any question as to the liability of the relevant employer to pay the redundancy payment.

13.           Both of these claimants (both Mr Morgan and Mr Martin) made an Article 201 application.  In each instance, that application was unsuccessful.  In the present proceedings, each of these two claimants makes an Article 205 “reference” (appeal) in respect of that refusal.

 

14.           Secondly, the Department may also have a role as the statutory guarantor in respect of the payment of other employment debts (including wages debts, holiday debts, and notice pay debts).  In respect of those other employment debts, the Department only has a role as statutory guarantor if the relevant employer is “insolvent” within the meaning of the relevant provisions of the 1996 Order.  In this particular case, neither of the employers is “insolvent” in that sense.

15.           The Department’s statutory guarantor role, in relation to those “other” employment debts, arises when an application is made to the Department pursuant to Article 227 of the 1996 Order.  In these cases, each claimant did make such an application.  In each instance, that application was unsuccessful.

 

16.           If the Department refuses an Article 227 application, that refusal can be the subject of an appeal.  Any such appeal is made by way of complaint pursuant to Article 233 of the 1996 Order.  In these proceedings, each of the claimants complains (appeals) in respect of the refusal of Article 227 application.

 

The course of the proceedings

 

17.     Rule 27 of the Industrial Tribunals Rules of Procedure (“the Rules”) provides that, if a party fails to attend or to be represented (for the purpose of conducting that party’s case at the main hearing) at the time and place fixed for the main hearing, the tribunal may dismiss or dispose of the proceedings in the absence of that party, or may adjourn the hearing to a later date.

 

18.     The new employer was not represented at this hearing.  However, it sent a bundle of documents to the tribunal.  That bundle includes a letter which contained the following information:

 

“We only received your letter dated 16 May 2011 today, 5 June 2011.  (See faxed date at bottom of those letters).

 

Therefore we have been left with very little time to respond.

 

It appears the letter has been sent to the incorrect address.  The correct address is [an address which is specified in the letter].

 

We are unable to attend the hearing for this reason.  However, please find enclosed our written submissions as evidence to the hearing”.

 

19.           The notice of hearing was indeed sent to the wrong address.  However, Mr Simon Shirlow, of the new employer, was at the Case Management Discussion (“CMD”), at which it was decided, with the agreement of all present, that the Morgan and Martin hearings were to take place from 6-8 June 2011 inclusive.   Therefore, we have concluded that the error in relation to the sending of the formal notice of hearing (regrettable though that error is) has had no impact upon the ability of the new employer to effectively and promptly defend itself.  Accordingly, we decided to go ahead with the hearing, while taking careful note of the contents of the new employer’s bundle.

 

20.           In the record of proceedings in respect of the Case Management Discussion (“CMD”) which took place on 21 April 2011, Mr Martin is recorded as having withdrawn his claim for unfair dismissal against the old employer.  That record was produced by the chairman of this tribunal).  However, as Mr Martin subsequently correctly pointed out, the reality is that he did not in fact withdraw his claim for unfair dismissal against the old employer, either during the course of that CMD, or at all.

The facts and our conclusions (General)

 

21.           We received oral testimony from Mr Morgan and from Mr Martin.

 

22.           We are satisfied as to the following matters.  Both Mr Morgan and Mr Martin were employed by the old employer for several years until 22 October 2010.  On that date, and with effect from that date, the old employer purported to dismiss each of the two claimants.   In each instance, the ostensible reason for the purported dismissal was redundancy.  The old employer ceased to trade with effect from  October 2010.  At that time, both of the claimants had accrued holiday pay entitlements.   Notice of dismissal was not given to either of the claimants. 

 

23.           Within a few days after 22 October 2010, the new employer had begun trading.  The claimant Mr Morgan was never offered employment with the new employer.  The claimant Mr Martin was offered, and accepted, employment with the new employer.  He started work for the new employer on 8 November 2010.  His employment with the new employer came to an end in March 2011.  At that time, he was dismissed by the new employer, without notice.  He was dismissed because of redundancy.  At that time, in respect of the period from 23 October 2010 until March 2011, Mr Martin was due payment in respect of wages and in respect of accrued holiday pay entitlements.

 

24.           Each of the claimants accepts that his Article 233 complaint must be dismissed because the Department only has power to make payments pursuant to an Article 227 application if there is a formal “insolvency” (an insolvency which falls within the scope of the special definition of insolvency which is provided for, in the context of Article 205, in the 1996 Order; it is accepted by the claimants that neither of the employers is “insolvent” in that sense).

 

25.           Accordingly, in respect of the proceedings of each claimant, that leaves the following matters to be determined:

 

(1)             the relevant claimant’s claims against the old employer;

(2)             the relevant claimant’s claims against the new employer; and

(3)             the relevant claimant’s Article 205 reference (in respect of which only the Department is a respondent).

 

26.           All concerned accept that, in determining whether the old employer is liable, and in determining whether the new employer is liable, in respect of the various claims which are made against those employers by the claimants, the crucial question is whether or not, for the purposes of TUPER, there has been a relevant transfer.  (It is obvious that, if there was such a transfer, then each of these claimants will have been assigned to the transfer entity to make the relevant time of the transfer).

27.           We have decided that in late October or early November 2010, there was indeed a relevant transfer, from the old employer to the new employer.  We are also satisfied that, at that time, each of these two claimants was assigned to the transferred entity.

28.           In arriving at those conclusions, we have had regard to the classic test for determining whether there is a relevant transfer, which is contained in paragraphs 12 and 13 of the judgment in Spijkers v Gebroeders Benedik Abbatoir CV [1986] ECR 1119.  In that case, the Dutch Government submitted that, in the context of transfer of undertakings law, the term “transfer” implies “… that the transferee actually carries on the activities of the transferor as part of the same business”.  At paragraph 11 of its judgment, the Court endorsed that view, adding the following comment:

 

                    “It follows that the decisive criterion for establishing whether there is a transfer for the purposes of the Directive is whether the business in question retains its identity”.

 

29.           At paragraph 12 of that judgment, the Court declared that the implication of that decisive criterion is that a relevant transfer, within the meaning of the legislation, does not occur merely because the assets of a particular business are disposed of; instead, according to the Court, what really matters is whether or not the business was disposed of as a going concern.  (In other words, what really matters is whether or not, in the hands of the putative transferee, the business has retained its identity).

30.           In the same paragraph of the Spijkers judgment, the Court pointed out that one relevant indicator (one indicator that the business was disposed of as a going concern and had thus retained its identity) would be provided by the fact, if indeed it be the fact, that (1) the business’s operation was actually continued or resumed by the new employer and (2) it was continued or resumed with the same or similar activities. 

31.           At paragraph 13 of the same judgment, the Court made the point that there had to be an overall assessment on the key question (on the question of whether or not the business had been disposed of to the putative transferee as a going concern).  In the same paragraph, the Court drew attention to certain factors would could properly be taken into account in arriving at that overall assessment, whilst stressing that those factors were only appropriate for consideration as part of an overall assessment and that “… they cannot therefore be considered in isolation”.

32.           The factors to which the Court drew attention at paragraph 13 of Spijkers were as follows:

 

(1)            The court or tribunal was to pay regard to the type of undertaking of business which is involved.

 

(2)            Were the business’s tangible assets, such as buildings and moveable property, transferred to the transferee?

 

(3)            What was the value of the intangible assets (such as goodwill) of the business at the time of the transfer?

 

(4)            Were the majority of the employees of the business taken on by the new employer?

(5)            Were the customers of the old employer transferred to the new employer?

(6)            How similar were the activities carried on before and after the putative transfer?

(7)            Were those activities suspended for any period?

 

33.           In this case, we were satisfied that the activities which were carried out by the new employer after the alleged transfer were practically identical to those which had been carried out by the old employer prior to the alleged transfer.  We were also satisfied that the new employer began to operate nearly immediately after the old employer ceased to operate.  We were satisfied that there was a considerable overlap between the customer-base of the old employer and the customer-base of the new employer.  We noted that 50% of the “front-line” employees of the old employer were offered and accepted employment with the new employer.  We noted that in the pre-October 2010 era, the operatives of the old employer had used company vehicles to get about in the course of their employment, and that one of those company cars was made available to the operatives of the new employer, post-October 2010.  We were satisfied that the work base of the old employer and the work base of the new employer (premises at Wardborough Avenue) were the same.  We noted that the tools of the operatives were relatively inexpensive, and were personally owned tools.

 

34.           We have decided that the claimant Mr Morgan was dismissed with effect from 22 October 2010.  We are satisfied that the purported dismissal of the claimant Mr Martin in October 2010 was ineffective and that in reality, he continued to be employed, in the same entity, until March 2011.

 

The facts and our conclusions (Mr Morgan)

 

35.           We were satisfied that Mr Morgan’s gross weekly pay was £370 and that he was entitled to net weekly pay of £292.

 

36.           We were satisfied that, at the date of his dismissal, he had accrued entitlement to six days’ holiday pay.

 

37.           We were satisfied that, at the date of his dismissal, Mr Morgan had been employed by the respondent for five complete years.  Therefore, he was entitled to five weeks’ notice.  We were satisfied that he did not obtain any alternative (post-dismissal) employment during his notice period.  However, he did claim Job Seekers Allowance of £65 per week.  Therefore, he is entitled to notice pay calculated on the basis of £227 per week.

 

38.           Mr Morgan’s redundancy pay entitlement is based on five years’ completed service, all of which was done at a time whenever he was under the age of 41.

39.           Clearly, there was no consultation prior to, or in respect of, the October 2010 dismissal of Mr Morgan.  Accordingly, the Morgan claim of unfair dismissal must be upheld.

 

The facts and our conclusions (Mr Martin)

 

40.           Obviously, Mr Martin’s wages claim, his holiday pay and his notice pay are all based on net wages, as distinct from gross wages.  During the relevant period,
Mr Martin was entitled to £346 net pay per week.  That was the amount of net pay to which he was entitled immediately prior to the relevant transfer.  (Although the new employer did not pay him that full amount, that was the amount to which he was entitled).  Therefore, his net pay, in respect of all periods after the relevant transfer, must be calculated on the basis of £346 per week (the amount to which he was entitled, as distinct from the amount which he was actually being paid by the new employer).

 

41.           Because Mr Martin’s employment is deemed to have continued throughout October and November 2010 (during the period beginning when the old employer purported to dismiss him until the time when the new employer purported to begin a contract of employment with him) he is entitled to wages in respect of the intervening period.  By March 2011, the new employer had also failed to pay Mr Martin some wages which had by then become due to him (in respect of the period from November 2010 onwards).  The claimant is entitled to wages calculated in the following manner.  We calculate that the claimant was entitled to £542 net pay in respect of the October/November period and that he is entitled to £612 net pay in respect of unpaid wages during the post-November 2010 period.

 

42.           By 11 March 2011, Mr Martin had accrued untaken holiday pay entitlement of 13 days (6 days for the period prior to the purported dismissal and 7 days during the period from November onwards).  That holiday pay entitlement has to be calculated on the basis of a net daily rate of £69.

 

43.           By the time of his dismissal in March 2011, the claimant had worked for the relevant entity (the entity which was the subject of the relevant transfer) for more than
12 years.  However, under Article 118 of the 1996 Order, he can claim only in respect of 12 weeks notice.

 

44.           He did not obtain any employment during the notice period.  However, he was entitled to social security benefits (at the rate of £65 per week for three weeks during the notice period, and at the rate of £67 for 9 weeks during the notice period.  Accordingly, he is entitled to notice pay on the basis of £281 per week for three weeks of the notice period and at the rate of £279 for the remaining 9 weeks of that period.

45.           The claimant’s gross pay was £390 per week.  By March 2011 (the date of the claimant’s dismissal by the new employer) the maximum weekly pay in respect of redundancy was set at £400 per week.  Therefore, the claimant is entitled to  redundancy pay calculated at £390 per week.  He is entitled to a redundancy payment calculated on the basis of a multiplier of 13.

 

46.           Clearly, there was no meaningful consultation in connection with, or prior to, the dismissal of Mr Martin in March 2011.  Accordingly, Mr Martin’s claim of unfair dismissal must be upheld.

 

Next steps

 

47.           Any unfair dismissal remedies hearing, (for the purpose of establishing the extent of any unfair dismissal compensatory award which might be due to Mr Morgan and/or Mr Martin, or to both of them) would involve a relatively lengthy process.  Furthermore, it might be a pointless process from a practical point of view, if the claimants were ultimately unable to enforce any such award against the new employer.  (The Department has no power, in any relevant circumstances, in its role as statutory guarantor, to pay anything in respect of any unfair dismissal compensatory award). 

 

48.           Against that background, both of the claimants agreed that it was appropriate to defer any unfair dismissal remedies hearing (any hearing for the purpose of determining the amount, if any, due to either or both of the claimants in respect of an unfair dismissal compensatory award).  Our understanding is that each claimant will decide, in light of his experience in seeking to enforce the amounts which are now being awarded, whether to proceed with any request for the holding of an unfair dismissal remedies hearing.

 

49.           Each claimant should write to the Secretary of the tribunals, by 6 September 2011, to inform the Secretary as to whether or not each claimant intends to pursue a claim for a compensatory award (or whether at that point, the relevant claimant considers it to be appropriate, on practical grounds, to withdraw any such claim).

 

Interest

 

50.     This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

 

 

 

 

 

Chairman:

 

 

Date and place of hearing:  6 June 2011, Belfast              

 

 

Date decision recorded in register and issued to parties: