Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Miller v Colin Glendinning and Michael ... Andor Design Ltd [2011] NIIT 07299_09IT (02 June 2011)
URL: http://www.bailii.org/nie/cases/NIIT/2011/07299_09IT.html
Cite as: [2011] NIIT 07299_09IT, [2011] NIIT 7299_9IT
[New search] [Printable RTF version] [Help]
THE INDUSTRIAL TRIBUNALS
CASE REF: 7299/09
CLAIMANT: Gary George Miller
RESPONDENTS: 1. and 2. Colin Glendinning and Michael Cunningham
T/A Internal Door Systems
3. Andor Design Ltd (in liquidation)
4. Finish Specialist Construction Ltd
DECISION
The unanimous decision of the tribunal is:
(i) the tribunal orders that the title of the first and second respondents and third respondent be amended to that set out above;
(ii) the claimant’s claim against the fourth respondent is dismissed following withdrawal of that claim by the claimant by letter dated 4 February 2011;
(iii) the claimant was unfairly dismissed by the first and second respondents.
(iv) there was a relevant ‘TUPE’ transfer, pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE Regulations’) from the first and second respondents to the third respondent; and by reason of the said TUPE transfer the third respondent is ordered to pay the claimant the sum of £28,022.50 by way of compensation for the said unfair dismissal;
(v) the tribunal makes a declaration that the claimant’s claim of unauthorised deduction of wages is well-founded; and following the TUPE transfer the third respondent is ordered to pay to the claimant, pursuant to the TUPE Regulations, the sum of £3,971.22 in respect of the said wages due and owing to the claimant; and
(vi) the tribunal makes a declaration that the claimant’s claim that the first and second respondents and third respondent failed to consult with the claimant in relation to the TUPE transfer is well-founded and, pursuant to the TUPE Regulations, the first and second respondents and third respondent are jointly and separately liable to the claimant for the said failure and are ordered to pay to the claimant the sum of £2,450.00 by way of compensation.
Constitution of Tribunal:
Chairman: Mr N Drennan QC
Members: Mr J Kerr
Dr D Mercer
Appearances:
The claimant was represented by Ms R Best, Barrister-at-Law, instructed Copeland McCaffrey, Solicitors.
The respondents did not appear and were not represented.
Reasons
1.1 The claimant presented a claim to the tribunal on 21 October 2009, naming as respondents Internal Door Systems and Colin Glendinning and Michael Cunningham. No response was presented to the tribunal by the said respondents. It was accepted by the claimant’s representative, during the course of this hearing, that Colin Glendinning and Michael Cunningham, at all material times, were in partnership trading as Internal Door Systems. The tribunal therefore ordered the title of the first and second respondents to be amended to:-
Colin Glendinning and Michael Cunningham T/A Internal Door Systems
1.2 Following a decision on a pre-hearing review recorded in the Register and issued to the parties on 31 August 2010, Andor Design Ltd, the third respondent, was joined as a respondent to these proceedings; and it entered a response to these proceedings on 28 September 2010. Following the response of Andor Design Ltd, Finish Specialist Construction Ltd, the fourth respondent, was also joined to these proceedings; and it entered a response to these proceedings on 10 November 2010.
1.3 Following a letter dated 4 February 2011 from the claimant’s representative, withdrawing the claimant’s claim against the fourth respondent, Finish Specialist Construction Ltd, the tribunal dismissed the fourth respondent from these proceedings, following the said withdrawal.
1.4 The solicitors, who were on record for Andor Design Ltd informed the tribunal, in writing, by letter dated 2 February 2011 that they were no longer on record for the said respondent. As a consequence, there was no appearance at this hearing by the said respondent.
Following the conclusion of the hearing of this matter by the tribunal; but before this decision was issued, the tribunal was informed, in writing, by letter dated 14 February 2011 that Andor Design Ltd was the subject of a creditors voluntary liquidation.
In light of the foregoing, the tribunal ordered the title of Andor Design Ltd be amended to:-
Andor Design Ltd (in liquidation)
1.5 The tribunal heard evidence from the claimant and also Michael Cunningham, the second respondent, who was called as a witness for and on behalf of the claimant. As Michael Cunningham had not entered a response to the claims made against him, he was not entitled to take part in the proceedings, save as set out in Rule 9(c) of the Industrial Tribunals Rules of Procedure 2005, which allowed him to be called as a witness by another person, namely the claimant.
2.1 The tribunal considered carefully the unchallenged evidence of the claimant but also the second respondent, having particular regard to the fact that the second respondent had not entered a response but yet gave evidence in support of the claimant, together with the documentation referred to by them; and, insofar as relevant and necessary for the determination of the claimant’s claims, on foot of such evidence, the tribunal made the following findings of fact, as set out in the following sub-paragraphs.
2.2 The claimant started employment with the first and second respondents, Colin Glendinning and Michael Cunningham, T/A Internal Door Systems, in or about June 2007 as a joiner. At the date of termination of his employment, on or about 19 August 2009, to which further reference shall be made elsewhere in this decision, the claimant was earning £350.00 net per week and was aged 42 years.
2.3 Internal Door Systems was initially started by Michael Cunningham, the second respondent, in or about October 2005 and Colin Glendinning, the first respondent, joined him as a partner in the said business in or about August 2007. Internal Door Systems (namely the partnership of the first and second respondents) made, inter alia, internal door sets, some of which were approved by the Association of Chief Police Officers, together with work surfaces for hygienic purposes and integrated panel systems for use with toilet cubicles/vanity units.
2.4 In or about early 2009, Internal Door Systems was in certain financial difficulties and for some time, on the advice of their accountants, the first and second respondents were investigating ways in which to obtain new investment/finance in the business in order to avoid the closure of the business. In or about July/August 2009, a new investor for the business was identified, namely Mr Barry Boylan, who at that time was working for a company, which was a competitor of Internal Door Systems. Negotiations about the nature of his involvement and investment took some time; but by on or about 19 August 2009, it was agreed by Mr Barry Boylan with the first and second respondents that the business of Internal Door Systems would be transferred to a new limited liability company, which would be incorporated by Mr Boylan as soon as possible thereafter. At a meeting on 19 August 2009 the employees of the first and second respondents, including the claimant, were informed by the first respondent at a meeting of the workforce that ‘a new investor was coming on board’; but the tribunal is satisfied the details, in relation to the above transfer, as referred to above, were not explained to the workforce at the meeting. Although the agreement had been reached by the date of the meeting on 19 August 2009, the new company, Andor Design Ltd, the third respondent, was not able to be formally incorporated, until there was completion of some necessary paperwork; with the result the incorporation of the third respondent, as agreed, did not take place until 3 September 2009. Mr Boylan became the managing director of Andor Design Ltd.
During the period 19 August 2009 and 3 September 2009 some work was carried out by the joiners previously employed by Internal Door Systems, finishing work on orders, in particular the provision of toilet seats in various schools, which orders had previously been obtained by Internal Door Systems. Payment for the work so completed was paid for by the customers to Andor Design Ltd and not to Internal Door Systems. Indeed, the tribunal is satisfied Internal Door Systems were not trading from the date of the meeting; because, although they were not formally insolvent, the first and second respondents had no relevant finance to operate their business and their banks, during this period, had withdrawn their credit lines.
2.5 Following the incorporation of Andor Design Ltd:-
(i) Andor Design Ltd traded from the same premises previously used by Internal Door Systems.
(ii) The vast majority of those who had been previously employed by Internal Door Systems prior to 19 August 2009 continued as employees of Andor Design Ltd.
(iii) Andor Design Ltd used stock previously acquired by Internal Door Systems.
(iv) Andor Design Ltd completed and fulfilled orders previously obtained by Internal Door Systems and were paid full monies obtained on completion of such orders.
(v) Andor Design Ltd were given by Internal Door Systems, and Andor Design Ltd used, the customer base of Internal Door Systems, which consisted of a considerable number of customers who had previously provided repeat orders to the business of Internal Door Systems.
(vi) Andor Design Ltd bought and used the vast majority of the assets and equipment previously used by Internal Door Systems, including plant, IT equipment, office furniture, together with relevant transfers to Andor Design Ltd from Internal Door Systems of relevant licences/ certificates, previously in the name of Internal Door Systems.
(vii) The Comac CNC machine, which had been the subject of a financial hire agreement taken out by Internal Door Systems, and used in its manufacturing process as a cutting machine, continued to be used for a period by Andor Design Ltd, with the agreement of the financial company who owned the machine, following its formal repossession from Internal Door Systems.
(viii) Andor Design Ltd carried out the same and/or similar work to that previously carried out by Internal Door Systems. Indeed the tribunal, in this context, noted the similarity of the contents of the advertisement material/brochures used by Internal Door Systems and Andor Design Ltd, following incorporation, in relation to apartment entrance door sets.
(ix) The first and second respondents were offered and accepted positions in Andor Design Ltd, following its incorporation. The first respondent was offered and accepted a position in production and the second respondent was offered and accepted a position in sales. In or about mid-October 2009, the second respondent left Andor Design Ltd and was subsequently made bankrupt on 22 October 2009. The first respondent was also subsequently made bankrupt.
2.6 The claimant, following the said meeting, was not employed by the first and second respondent trading as Internal Door systems and was not transferred to Andor Design Ltd, unlike most of the other joiners who had been previously employed by the first and second respondents. The tribunal is satisfied, on the unchallenged evidence from the second respondent, the failure to transfer the claimant to Andor Design Ltd, following the said meeting, arose because of personality differences between the claimant and the first respondent, who transferred, as set out above, to Andor Design Ltd in a production position; but also because the claimant was in receipt of a higher salary than the other joiners. It appeared that this was because he had some additional supervisory responsibilities. In the period between 19 August 2009 and 3 September 2009, the claimant was sent to do some work by the first respondent in Dublin, fitting Internal Door Systems products. He was accompanied by other Internal Door Systems joiners and he drove the van previously used by Internal Door Systems. The work was for customers, who were not normally customers of Internal Door Systems but were believed by the claimant to be customers of the company for whom Mr Boylan then worked, prior to the incorporation of Andor Design Ltd. It was unclear to the tribunal, on the evidence before it, who had paid the claimant for this work and/or on whose behalf it was paid; but the tribunal was satisfied he was not paid by Internal Door Systems and/or Andor Design Ltd.
2.7 Neither the first and second respondents and/or Andor Design Ltd consulted with the claimant about the transfer of Internal Door Systems to Andor Design Ltd.
2.8 At the date of the termination of the claimant’s employment on 19 August 2009, the sum of £3,971.22 was due and owing to the claimant in respect of wages for work done by him prior to that date on behalf of Internal Door Systems. This was not disputed in evidence by the second respondent.
3.1 The Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘the Regulations’), insofar as relevant and material, provides as follows:-
“3(1) These Regulations apply to –
(a) the 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;
…
(2) In this Regulation ‘economic entity’ means an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.
(4)(1) Except where objection is made under Paragraph (7), a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee.
(2) Without prejudice to Paragraph (1), but subject to Paragraph (6), and Regulations 8 and 15(9), on the completion of a relevant transfer –
(a) all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this Regulation to the transferee; and
…
(3) Any reference in Paragraph (1) to a person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to a relevant transfer, is a reference to a person so employed immediately before this transfer, or would have been so employed if he had not been dismissed in the circumstances described in Regulation 7(1), including, where the transfer is effected by a series of two or more transactions, a person so employed and assigned or who would have been so employed and assigned immediately before any of those transactions.
…
(7) Paragraphs (1) and (2) shall not operate to transfer the contract of employment and the rights, powers, duties and liabilities under or in connection with it of an employee who informs the transferor or the transferee that he objects to becoming employed by the transferee.
(7)(1) Where either before or after a relevant transfer any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of [Part XI of the Employment Rights (Northern Ireland) Order 1996] (unfair dismissal) as unfairly dismissed if the sole or principle 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) This paragraph applies where the sole or principle reason for the dismissal is a reason connected with the transfer that is an economic, technical or organisational reason entailing changes in the workforce of either the transferor or the transferee before or after a relevant transfer.
(3) Where Paragraph (2) applies –
(a) Paragraph (1) shall not apply;
(b) without prejudice to the application of [Article 130(4) of the 1996 Order] (test of fair dismissal), the dismissal shall for the purposes of [Article 130(1)] and [Article 170(1) of that Order] (reason for dismissal), be regarded as having been for redundancy where [Article 130(2)(c) of that Order] applies, or otherwise for a substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held.
…
(13)(1) In this Regulation and Regulations 14 and 15 references to affected employees, in relation to a relevant transfer, are to any employees of the transferor or the transferee … who may be affected by the transfer or may be affected by measures taken in connection with it; and references to the employer shall be construed accordingly.
(2) Long before a relevant transfer to enable the employer of any affected employees to consult the appropriate representatives of any affected employees, the employer shall inform those representatives of –
(a) the fact that the transfer is to take place, the date or proposed date of the transfer and the reasons for it;
(b) legal, economic and social implications of the transfer for any affected employees;
(c) the measures which he envisages he will, in connection with the transfer, take in relation to any affected employees or, if he envisages that no measure will be so taken, that fact; and
(d) if the employer is the transferor, the measures, in connection with the transfer, which he envisages the transferee will take in relation to any affected employee who will become employees of the transferee after the transfer by virtue of Regulation 4 or, if he envisages that no measures will be so taken, that fact
(3) For the purposes of this Regulation the appropriate representatives of any affected employees are –
(a) if the employees are of a description in respect of which an independent trade union is recognised by their employer, representatives of the trade union; or
(b) in any other case, whichever of the following employee representatives the employer chooses –
(i) employee representatives appointed or elected by the affected employees otherwise then for the purposes of this Regulation, who, (having regard to the purposes for, and the method by which they were appointed or elected) have authority from those employees to receive information and to be consulted about the transfer on their behalf;
(ii) employee representatives elected by any affected employees, for the purpose of this Regulation, in an election satisfying the requirements of the Regulation 14(1).
(4) The transferee shall give the transferor such information at such a time as will enable the transferor to perform the duty imposed on him by virtue of Paragraph (2)(d).
(6) Employer of an affected employee who envisages that he will take measures in relation to an affected employee, in connection with the relevant transfer, shall consult the appropriate representatives of that employee with a view to seeking their agreement to the intended measures.
13(11) If, after the employer has invited any affected employees to elect representatives, they fail to do so within a reasonable time, he shall give to any affected employees the information set out in Paragraph (2).
Regulation 14 deals with the election of employee representatives and places obligations in that regard on the employer.
(15)(1) Where an employer has failed to comply with the requirement of Regulation 13 … a complaint may be presented to an [industrial tribunal] on that ground –
…
(d) in any other case, by any of his employees who are affected employees.
(2) If on a complaint under Paragraph (1) a question arises whether or not it was reasonably practicable for an employer to perform a particular duty or as to what steps he took towards performing it, it shall be for him to show –
(a) that there was special circumstances which render it not reasonably practicable for him to perform the duties; and
(b) that he took all such steps towards his performance as were reasonably practicable in those circumstances.
(7) Where the tribunal finds a complaint against a transferee under Paragraph (1) well-founded he shall make a declaration to that affect and may order the transferee to pay appropriate compensation to such descriptions of affected employees as may be specified in the award –
(a) where the tribunal finds a complaint against a transferor under Paragraph (1) well-founded it shall make a declaration to that effect and may –
(a) order the transferor, subject to Paragraph (9), to pay appropriate compensation of such descriptions of affected employees as may be specified in the award; or
…
(9) The transferee shall be jointly and severally liable with the transferor in respect of compensation payable under Sub-paragraph (8)(a) or …
16(3) ‘Appropriate compensation’ in Regulation 15 means such sum not exceeding 13 weeks pay for the employee in question as the tribunal considers just and equitable having regard to the seriousness of the failure of the employer to comply with his duty.”
3.2 Substantial changes to the law of unfair dismissal were introduced following the commencement in April 2005 of the Employment (Northern Ireland) Order 2003 (‘the 2003 Order’); and the Employment (Northern Ireland) Order 2003 (Dispute Resolution) Regulations (Northern Ireland) 2004 (‘the 2004 Regulations’). The 2003 Order and the 2004 Regulations introduced, inter alia, statutory procedures to be complied with when dealing with matters of discipline and/or dismissal.
3.3 Under the statutory procedures, introduced under the said legislation, employers, subject to certain exemptions, which are not applicable in this case, are required to follow a specific procedure when subjecting employees to disciplinary action or dismissal. In this case, there was no attempts whatsoever by the third respondent to comply with the statutory dismissal and disciplinary procedures (DDP), as set out in the 2003 Order.
3.4 Under Article 130A of the 1996 Order, it is provided:-
“(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if –
(a) one of the procedures set out in Part I of Schedule 1 to the Employment (Northern Ireland) Order 2003 (dismissal and disciplinary procedures) applies in relation to the dismissal;
(b) the procedure has not been completed; and
(c) the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements.
(2) Subject to Paragraph (1) failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of Article 130(4)(a) as by itself making the employer’s action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure.
… .”
3.5 Thus, if an employer fails to comply with the applicable DDP when dismissing an employee, the dismissal will be automatically unfair (Article 130A of the 1996 Order).
3.6 Failure to comply with the relevant DDP may impact on compensation in relation to any finding of unfair dismissal by a tribunal, resulting in an adjustment upwards (in the case of default by the employer) or an adjustment downwards (in the case of default by the employee). Under Article 17(2) and 17(3) of the 2003 Order, the adjustment must be at least 10% and, if the tribunal, considers it just and equitable up to 50%. However, under Article 17(4) of the 2003 Order, a tribunal can apply no adjustment (or an adjustment of less than 10%) if there are exceptional circumstances making a 10% adjustment unjust or inequitable. Any potential uplift or reduction is limited to the compensatory award only; and there is no provision in an unfair dismissal claim to uplift the compensatory award beyond the statutory maximum (Article 158A of the 1996 Order).
3.7 Decisions of the Employment Appeal Tribunal, whose many decisions are persuasive and appropriate for this tribunal to follow, in the absence of any relevant decisions of the Court of Appeal in Northern Ireland, have given the tribunal a wide discretion in relation to any issue of uplift or reduction of any compensatory award (see further Cex v Lewis [UKEAT/0031/07]. In Virgin Media Ltd v Seddington & Another [UKEAT/0539/08] Underhill J confirmed that (if not the) primary factor required to be taken into account when exercising the discretion to apply an uplift related to how culpable the failure to employ the statutory procedure was. A failure to follow the procedures might, he suggested, speak for itself. In addition, he said that the issue of uplift should not be approached too mechanistically, as occurred in the particular facts of that case. In Davies v Farnborough College of Technology [2008] IRLR 4, Burton J suggested a maximum uplift could apply where there had been ‘a complete and deliberate breach of any procedures’.
3.8 Article 130A(2) of the 1996 Order, referred to above, has no application where the statutory DDP has been complied with but there is a breach of procedures other than the statutory procedures. In light of the tribunal’s decision in this matter, it was not necessary to consider further the provisions of Article 130A(2) of the 1996 Order. In addition, in the absence of any evidence from the third respondent, the tribunal was not in a position to further consider, and did not do so, the application of the principles set out in the well-known House of Lords decision in the case of Polkey v AE Dayton Services Ltd [1988] ICR 344, relating to whether any compensation should be reduced by a percentage to reflect the chance the employee would still have lost his employment if the relevant procedures had been complied with.
3.9 There has been considerable judicial authority in relation to whether there has been a relevant transfer pursuant to Regulation 3(1)(a) and Regulation 3(2) of the TUPE Regulations, as set out above.
It has long been held that whether an undertaking has been transferred for the purposes of Regulation 3(1)(a) is an employment test and not a corporate property or conveyancing test (see Kelman v Care Services Ltd [1995] ICR 260, Paragraph 268A) and can arise where there is a change of responsibility for or of management of the relevant undertaking. It is also of interest to note that, unlike the 1981 TUPE Regulations, there is no provision in the 2006 TUPE Regulations, requiring the transfer to be effected by sale or by some disposition or by operation of law; and thus there is no need for a formal legal agreement to achieve the transfer of an undertaking (see also Jouini v Princess Personal Service [2007] IRLR 1005).
There has also been some considerable judicial authority in relation to what is meant by the transfer of an economic entity, a central requirement of Regulation 3(1)(a), and as defined in Regulation 3(2). In the well-known case of Spijkers v Gebroeders Benedix Abattoir [1986] ECR 1119, the European Court of Justice made it clear the economic entity must retain its identity and identified a number of potential relevant factors when deciding the issue. No one factor is said to be conclusive. In particular, it identified:-
(i) the type of undertaking or business concerned;
(ii) whether tangible assets, such as buildings and moveable property are transferred;
(iii) whether or not the majority of the employees assigned to the undertaking are taken over by the new employer;
(iv) whether or not the customers of the business are transferred;
(v) the degree of similarity between the activities carried on before and after the transfer;
(vi) the period, if any, for which the activities of the undertaking are suspended in connection with the alleged transfer.
In the context of the facts of this case, it is significant to note that a suspension of relevant activities at or around the point of the putative transfer is a factor identified in the Spijkers case.
In a recent decision of the Employment Appeal Tribunal in the case of Woods v Caledon Social Club Ltd (Debarred) & Another [UKEAT/0528/09], the Employment Appeal Tribunal considered the issue whether the economic entity referred to in Regulation 3(1)(a) of the 2006 TUPE Regulations had to retain its identity on the transfer date or whether it was sufficient that the operation resumes at some late date. HH Judge Clarke held a temporary cessation of operation at the putative transfer date did not prevent a relevant transfer. It was recognised by the Appeal Tribunal that each case would depend on an analysis of its own particular facts. In that case, the Employment Tribunal held that a relevant transfer took place on X date; and, although there was an economic entity in existence before that date, it did not retain its identity at the date of transfer because, on that date, an essential element of the operation was missing, namely a premises licence certificate issued by a Council. However, the Appeal Tribunal held there was a temporary cessation of the bar operation at the premises. It concluded that by X date, the transferee intended to obtain a fresh premises licence certificate and re-open the bar area and operate it precisely as it had been operated by the transferor. The bar had re-opened, following the obtaining a few weeks later of the relevant premises licence certificate. The Employment Appeal Tribunal therefore held there had been a relevant transfer at X date. (See further the European Court of Justice cases of Bork [1989] IRLR 41 and Daddy’s Dance Hall [1988] IRLR 315. In Blackstones Guide to the New Transfer of Undertakings Legislation, Paragraph 2.45, it is stated:-
“ … An interruption to the relevant activity will not necessarily avoid there being a transfer of an undertaking. The ET or court will look at why the suspension occurred and whether that had any impact on the retention (or otherwise) by the relevant operation of its identity.”
The date of transfer must be established by the tribunal since, as seen in the case of Astley & Others v Celtec Ltd [2005] IRLR 647, it was confirmed that the date of transfer is a particular moment when the responsibility as an employer for carrying out the business and/or the undertaking transferred, moves from the transferor to the transferee. The timing of the transfer is of importance since it is relevant to the determination when the transferee commences employment obligations but also in relation to the timing of the consultation and information obligations imposed under the Regulations.
3.10 Pursuant to Regulation 7 of the Regulations, a dismissal for which the reason is a relevant transfer or which is connected with the relevant transfer for which there is no ‘economic, technical, or organisational’ reason (‘ETOR’) justifying the dismissal is automatically unfair.
However, if the dismissal is transfer-related but is nonetheless for an ETOR, the dismissal is potentially unfair but subject to the usual test for unfair dismissal, pursuant to the Employment Rights (Northern Ireland) Order 1996 (‘the 1996 Order’).
Whether the transfer or a connected reason is the sole or principle reason for the dismissal is essentially a question of fact for the tribunal to determine. There is no statutory definition of the term ETOR but Government guidance in Great Britain suggested it was likely to include:-
(a) a reason relating to the profitability or market performance of the transferor’s business (ie an economic reason);
(b) a reason relating to the nature of the equipment or production processes which the transferee operates (ie a technical reason);
(c) a reason relating to the management or organisational structure of the transferee’s business (ie an organisational reason).
In the case of BSG Property Services v Tusk [1996] IRLR 134, it was confirmed that the relevant reason for the dismissal to be assessed for its potential unfairness (whether automatic or otherwise) is that of the employer who dismisses the employee in question. If the dismissal is not automatically unfair, for example, because there is an ETOR, the normal unfair dismissal principles may still be applied, including, where appropriate, compliance with the statutory DDP under the 2003 Order and the 2004 Regulations.
3.11 As set out previously, Regulation 13, as supplemented by Regulations 14 and 15 of the TUPE Regulations placed obligations on transferors and transferees with regard to the provision of information to, and the conduct of the consultation with, representatives of an employee affected by a relevant transfer. The provisions are complex, but on the facts of this case, it is not necessary to consider them in detail, as in this case, there was, as seen above previously in Paragraph 2 of this decision, no attempt by either the first and second respondents and/or the third respondent to carry out their relevant obligations under the said Regulations. An important change made by the 2006 TUPE Regulations was that breach of the requirements now imposes under Regulation 15(9) of the TUPE Regulations joint and several liability on the transferor and the transferee. The penalty for failure to comply is an award of up to 13 weeks pay per affected employee (see further Regulation 16(3)).
In the case of Todd v Strain & Others [UKEATS/0057/10] the transferor gave limited information to the employees about the impending transfer but failed to arrange an election of appropriate representatives as required under the Regulations and did not therefore give information to or consult with any such representatives. The Employment Appeal Tribunal concluded it would be wrong in principle to award maximum compensation in circumstances where some (although inadequate) information had been given and the measures requiring consultation were of very limited significance. It was also confirmed that, pursuant to Regulation 15(9) of the TUPE Regulations, there is joint and several liability for both transferor and transferee, where a tribunal finds a complaint under Regulation 15(1) is well-founded.
In the case of Zaman v Kozee Sleep Products Ltd [UKEAT/0312/11] the Employment Appeal Tribunal has confirmed that, for the purposes of compensation under Regulation 15(8) for breach of the information and consultation obligations, the cap on a week’s pay, as seen in the 1996 Order, does not apply to such awards of compensation, as defined under Regulation 16(3).
3.12 In the case of Howard v Millrise Ltd & Another [2004] UKEAT/0658/06, it was held that an employer does have an obligation to initiate an election for representatives and, if an election process fails to produce employee representatives to inform and consult with employees directly in order to comply with the obligations in relation to information and consultation under the TUPE Regulations, then an individual, in such circumstances, can bring a claim under Regulation 15 for breach of Regulation 13 of the TUPE Regulations (see further Regulation 13(11)). In the recent case of Hickling t/a Imperial Day Nursery & Others v Marshall [2010] UKEAT/0217/10, the case of Howard was followed. The Employment Appeal Tribunal confirmed that a claim under Regulation 15 of the TUPE Regulations for breach of Regulations 13(2) and 13(6) of the said Regulations can be brought by an individual employee, where there are no employee representatives.
4.1 The tribunal having found the facts, as set out in Paragraph 2 of this decision, on the basis of the evidence before it, came to the following conclusions, in light of the legislative provisions and case law, as set out in Paragraph 3 of this decision.
4.2 In particular, the tribunal was satisfied applying the facts so found, that on 19 August 2009, there was a relevant transfer, pursuant to Regulation 3 of the TUPE Regulations from the first and second respondent’s business, Internal Door Systems, to Andor Design Ltd. On the basis of the decision in the case of Woods v Caledon Social Club Ltd (Debarred) & Another [UKEAT/0528/09], the tribunal concluded that since the agreement to transfer the business from Internal Door Systems to the new company (Andor Design Ltd) when it could be formally incorporated, had been reached by 19 August 2009, the temporary cessation of activity during the period between the date of the agreement and the date of formal incorporation on 3 September 2009 was not sufficient to prevent the said transfer. The tribunal noted that, in this period, the claimant did some work but not for Internal Door Systems and was not paid for this work by either Internal Door Systems or Andor Design Ltd. The work was also done for customers who were not normally customers of Internal Door Systems. The formality of incorporation of Andor Design Ltd was always intended to take place on foot of the said agreement to transfer and was, in essence, a necessary formal technical step. As a consequence there had to be the temporary cessation of operations during the said period to enable that step to take place and Andor Design Ltd to formally commence trading.
The tribunal was further satisfied having regard to the particular facts as found at Paragraph 2.5 of this decision that what took place was a relevant transfer of a stable economic entity, as defined in Regulation 3(2) of the TUPE Regulations, and interpreted in the Spijkes decision of the European Court of Justice.
4.3 On the evidence before it the tribunal was satisfied the claimant was dismissed on 19 August 2009 by the first and second respondents. He was not employed at any time thereafter by either Internal Door Systems or Andor Design Ltd; whereas the majority of the other employers of Internal Door Systems continued to be employed by Andor Design Ltd. The unchallenged evidence of the second respondent was the claimant was dismissed on 19 August 2009 because of the personality difference between the first respondent but also because the claimant was in receipt of a higher salary than the other joiners. This was because he had additional supervisory responsibilities. In these circumstances the tribunal was satisfied the said dismissal of the claimant related to the transfer and was not an economic technical or organisational reason. There was no evidence before the tribunal to show that the higher salary enjoyed by the claimant was such to establish an ETOR reason. Indeed, the tribunal would have required much more evidence relating to the impact on the new business of the claimant’s higher salary before it could have considered this issue further and was satisfied such additional supervisory duties would still be required at Andor Design Ltd, who continued to employ a number of joiners. Such evidence was not forthcoming to the tribunal by the third respondent.
4.4 In the circumstances, the tribunal was satisfied that, pursuant to Regulations 4 and 7 of the TUPE Regulations, the claimant was automatically unfairly dismissed by the first and second respondents; and, on foot of the relevant transfer under the TUPE Regulations, the third respondent became liable to pay to the claimant the compensation payable to him for the said unfair dismissal.
Further, on the facts as found by the tribunal, there was no attempt by the first and second respondents, when dismissing the claimant, to have any regard to the statutory dismissal and disciplinary procedures under the 2003 Order and the 2004 Regulations. In the circumstances, the tribunal was satisfied the claimant was entitled to an uplift on the compensatory award payable for his said unfair dismissal. Having regard to the tribunal’s wide discretion and taking account of the fact that the greater concentration at the relevant time by the first and second respondents was on the transfer and ‘saving the business’, it decided an uplift of 25% was appropriate in the circumstances.
4.6 There was no dispute, on the evidence, that, at the date of the dismissal the claimant was due and owed monies by the first and second respondents and/or the subject of unauthorised deductions by the first and second respondents in the sum of £3,971.22; which sum following the relevant transfer under the TUPE Regulations was therefore required to be paid by the third respondent.
4.7 Again, there was no dispute, on the evidence, that the claimant was not properly consulted by either the first and second respondents and/or the third respondent, as required under the TUPE Regulations. There were no employee representatives and, in the circumstances, the claimant was entitled to bring a claim (see further Paragraph 3.12 of this decision). In the circumstances, the first and second respondents were jointly and severally liable to pay to the claimant compensation pursuant to Regulation 15 of the TUPE Regulations. In the circumstances, the tribunal considered an award of seven weeks pay was appropriate. The tribunal did not consider it necessary and appropriate to exceed the statutory cap on a week’s pay (see Zaman v Kozee Sleep Products Ltd [UKEAT/0312/11]).
Remedy
5.1 In relation to the claimant’s claim of unfair dismissal, the tribunal assessed the compensation to be paid by the third respondent to the claimant as follows:-
(a) Basic award
2.5 x £350.00 (taking account of statutory cap) £ 875.00
(b) Compensatory award
(i) Loss of earning from date of
dismissal on 19 August 2009
to 4 July 2010
45 x £350.00 £15,750.00
(ii) Loss of earnings from 5 July 2010 to
6 February 2011 at £106.00 per week –
31 x £106.00 £ 3,286.00
(iii) Loss of earnings from 7 February 2011 to
8 July 2011 at £106.00 per week –
22 x £106.00 £ 2,332.00
£21,368.00
(iv) Loss of statutory rights £ 350.00
£21,718.00
Add 25% uplift £ 5,429.50
Total compensatory award £27,147.50
Total compensation to be paid by the third respondent
to the claimant for unfair dismissal
(basic award plus compensatory award) £28,022.50
5.2 Compensation payable by first and second respondents jointly and severally with third respondent pursuant to Regulation 15 of the TUPE Regulations –
£350.00 x 7 £ 2,450.00
5.3 Monies due and/owing to the claimant and/or the subject of unauthorised deductions by the first and second respondents and to be paid by the third respondent to the claimant following the TUPE transfer pursuant to the TUPE Regulations - £ 3,971.22
6.1 This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.
6.2 The Employment Protection (Recoupment of Jobseekers Allowance and Income Support) Regulations (Northern Ireland) 1996 apply to the decision. Your attention is drawn to the attached Recoupment Notice which forms part of the decision of the tribunal.
Chairman:
Date and place of hearing: 7 – 8 February 2011, Belfast
Date decision recorded in register and issued to parties:
CASE REF: 7299/09
CLAIMANT: Gary George Millar
RESPONDENTS: 1.
and 2. Colin Glendinning and Michael Cunningham
T/A Internal Door Systems
3. Andor Design Ltd (in liquidation)
4. Finish Specialist Construction Ltd
ANNEX TO THE DECISION
OF THE TRIBUNAL
STATEMENT RELATING TO THE RECOUPMENT OF
JOBSEEKER’S
ALLOWANCEIINCOME SUPPORT
The following particulars are given pursuant to the
Employment Protection
(Recoupment of Jobseeker’s Allowance and Income Support) Regulations (Northern
Ireland) 1996; The Social Security (Miscellaneous Amendments No 6)
(Northern Ireland 2010.
£
(a) Monetary award 28,022.50
(b) Prescribed element 19,036.00
(c) Period to which (b) relates: 19.8.2009 - 7.2.2011
(d) Excess of (a) over (b) £8,986.50
The claimant may not be entitled to the whole
monetary award. Only (d) is payable forthwith; (b) is the amount awarded for
loss of earnings during the period under (c) without any allowance for
Jobseeker’s Allowance or Income-related Employment and Support Allowance or
Income Support received by the claimant in respect of that period; (b) is not
payable until the Department for Social Development has served a notice (called
a recoupment notice) on the respondent to pay the whole or a part of (b) to the
Department (which it may do in order to obtain repayment of Jobseeker’s
Allowance or Income-related Employment and Support Allowance or Income Support
paid to the claimant in respect of that period) or informs the respondent in
writing that no such notice, which will not exceed (b), will be payable to the
Department. The balance of (b), or the whole of it if notice is given that no
recoupment notice will be
served, is then payable to the claimant.
2. The Recoupment Notice must be served within the period of 21 days after the conclusion of the hearing or nine days after the decision is sent to the parties (whichever is the later), or as soon as practicable thereafter, when the decision is given orally at the hearing. When the decision is reserved the notice must be sent within a period of 21 days after the date on which the decision is sent to the parties, or as soon as practicable thereafter.
3. The claimant will receive a copy of the recoupment
notice and should inform the Department for Social Development in writing
within 21 days if the amount claimed is disputed. The tribunal cannot decide
that question and the respondent, after paying the amount under (d) and the
balance (if any) under (b), will have no further liability to the claimant, but
the sum claimed in a recoupment notice is due from the respondent
as a debt to the Department whatever may have been paid to the claimant and
regardless of any dispute between the claimant and the Department.