Industrial Tribunals Northern Ireland Decisions

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URL: http://www.bailii.org/nie/cases/NIIT/2014/300_11IT.html
Cite as: [2014] NIIT 300_11IT, [2014] NIIT 00300_11IT

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THE INDUSTRIAL TRIBUNALS

CASE REF: 300/11

CLAIMANT: Catherine Claire Grainger

RESPONDENTS: 1. Lough Erne Hotel Ltd

2. Department of Employment and Learning

3. Castle Hotels NI Ltd

DECISION ON A PRE-HEARING REVIEW

1. The decision of the tribunal is that there was a relevant transfer, pursuant to the Transfer of Undertakings (Protection of Employment) Regulations (Northern Ireland) 2006, from Markville Trading Limited to ACEC Enterprises Ltd on or about 30 April 2010/1 May 2010.

2. In light of the foregoing, it was not necessary and/or relevant for the tribunal to determine the further preliminary issues, which were the subject-matter of this pre-hearing review.

3. A further Case Management Discussion will require to be arranged to consider what further case-management directions/orders, if any, are required to be made by the tribunal, in light of its determination of the preliminary issue, as set out above, for the determination by the tribunal of the claimant’s claim against the respondents and each of them.

Constitution of Tribunal:

Chairman (sitting alone): Mr N Drennan QC

Appearances:

The claimant was represented by Mr M O’Brien, Barrister-at-Law, instructed by Patrick Fahy & Company, Solicitors.

The first respondent was represented by Mr M McAllister, Accountant with ASM Howarth, Accountants.

The second respondent was represented by Mr P McAteer, Barrister-at-Law, instructed by The Departmental Solicitors’ Office.

The third respondent was represented by Mr A Castle, the Managing Director of the third respondent.

Reasons

1.1 Following a series of Case Management Discussions, it was agreed by the parties that the tribunal would determine agreed preliminary issues in respect of the claims of the following ‘lead’ claimants, namely:-

Catherine Grainger (Case Reference No: 300/11);

Kathleen Doherty (Case Reference No: 1093/13); and

Ann Smith (Case Reference No: 2459/10)

These ‘lead’ claimants were claimants in a ‘multiple claim’, known as Irvine and Others (Case Reference No: 2456/10 & Others).

However, at the commencement of this pre-hearing review, it was agreed by Mr M O’Brien, who was the representative of all the claimants in the said multiple and, in particular, of the said ‘lead’ claimants, and the representatives of the respondents that, having regard to the preliminary issues, which now required to be determined by the tribunal, as set out below, and the overlap of the said legal and factual issues arising in relation to the all claims of the said ‘lead’ claimants, that the tribunal, having regard to the terms of the overriding objective, would now determine, at this pre-hearing review, the said issues in respect of the claim of Catherine Claire Grainger and no longer required to determine these said issues at this hearing in respect of the claims of Ms Doherty and/or Ms Smith. As a consequence, the title of the pre-hearing review is as set out above, with the claimant being named as Catherine Claire Grainger.

1.2 The preliminary issues, as finalised by the representatives at this hearing, which required to be determined by the tribunal were as follows:-

“(1) Was there:-

(a) a relevant transfer of undertakings, as defined in Regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations (Northern Ireland) 2006 from Markville to ACEC?; or

(b) a relevant transfer from Markville to Lough Erne followed by a subsequent transfer to ACEC and, if so, on what date did that transfer occur?

(2) What was the date of such transfer or the date of the first part of any transaction forming part of each such transfer?

(3) Was the claimant dismissed in and about April/May 2010?

(4) If so:-

(a) On what date was she dismissed?

(b) Was she dismissed after the date of any transfer from Markville to ACEC or Lough Erne, or after any transaction forming part of that transfer?

(c) Was she employed immediately before the transfer or immediately before any transaction forming part of that transfer?

(d) Was the sole or principal reason for the dismissal the transfer itself or a reason connected with the transfer that was not an economic, technical or organisational reason entailing changes in the workforce?”

1.3 The reference in the said issues to ‘Markville’ is a reference to Markville Trading Ltd; and the reference in the said issues to ‘ACEC’ is a reference to ACEC Enterprises Ltd. Both said companies were initially respondents to the claim made by the claimant; but, following their liquidation, the tribunal, by consent, dismissed the said companies as respondents to the claimant’s claim on 25 April 2013, following withdrawal by the claimant. Their precise involvement in this matter, despite the said dismissal, will be further referred to and considered in the following paragraphs of this decision. The reference in the said issues to Lough Erne is to the first respondent.

1.4 In light of the tribunal’s decision of the said preliminary issue, at this pre-hearing review, as set out above, it will be necessary for a further Case Management Discussion to be arranged to consider what further case-management directions/ orders, if any, are required to be made by the tribunal for the determination by the tribunal of the claimant’s claim against the respondents and each of them.

In due course, it will also be necessary for the tribunal to arrange a Case Management Discussion to consider the way forward, in light of the said decision at this pre-hearing review, for the determination of the claims of Ms Smith and Ms Doherty, but also the other claimants who form part of this multiple, against the respondents and each of them.

Relevant legislation

2.1 Under the Transfer of Undertakings (Protection of Employment) Regulations (Northern Ireland) 2006 (‘TUPE Regulations’) it is provided:-

“1. Citation, commencement and extent –

...

(3) These Regulations shall extend to Northern Ireland, except where otherwise provided.

...

3. A relevant transfer –

(1) These 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;

...

(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.

...

(6) A relevant transfer –

(a) may be effected by a series of two or more transactions; and

(b) may take place whether or not any property is transferred to the transferee by the transferor.

4. Effect of relevant transfer on contracts of employment

(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

(b) any act or omission before the transfer is completed, of or in relation to the transferor in respect of that contract or a person assigned to that organised grouping of resources or employees, shall be deemed to have been an act or omission of or in relation to the transferee.

(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 the transfer, or who 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. Dismissal of employee because of relevant transfer

(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 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) This paragraph applies where the sole or principal 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 Section 98(4) of the 1996 Act (test of fair dismissal), the dismissal shall, for the purposes of Sections 98(1) and 135 of that Act (reason for dismissal), be regarded as having been for redundancy where Section 98(2)(c) of that Act 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.

(4) The provisions of this Regulation apply irrespective of whether the employee in question is assigned to the organised grouping of resources or employees that is, or will be, transferred.

...

(6) Paragraph (1) shall not apply in relation to a dismissal of an employee if the application of Section 94 of the 1996 Act to the dismissal of the employee is excluded by or under any provision of the 1996 Act, the 1996 Tribunals Act or the 1992 Act.”

3.1 The tribunal heard oral evidence from the claimant, Mr Michael McAllister (the representative of the first respondent) and Mr Alan Castle (the representative of the third respondent). The second respondent did not call any evidence. Having considered the evidence given to the tribunal by the witnesses, as set out above, the documents contained in the ‘trial bundles’, as amended, to which I was referred during the course of the hearing, the relevant legal authorities, together with the oral/written submissions by the representatives of the parties, which were made by each of them at the conclusion of the evidence, I made the following findings of fact, as set out in the following sub-paragraphs, insofar as necessary and relevant for the determination of the said preliminary issues relating to the claimant’s claim.

3.2 The claimant commenced employment in or about 1985 at the Lough Erne Hotel (‘the Hotel’) as a receptionist, being promoted to senior receptionist from in or about 2007. In or about 2006, Ivan Jobb and Michael McAllister, the representative of the first respondent, and a senior partner in the accountancy firm of ACM Howarth, purchased the hotel ‘under the vehicle’ of Lough Erne Hotel Ltd (‘Lough Erne’), the first respondent. Mr Jobb and Mr McAllister were directors of Lough Erne. Their intention, when purchasing the hotel, which at the time was making a modest profit, was to run it as a hotel for a short period until planning permission had been obtained by them for some potential development lands at the rear of the hotel; and, after planning permission had been obtained, to sell the hotel and for them to develop the said development lands. There was no intention, at any time, for Mr Jobb and/or Mr McAllister to run the hotel business on a long-term basis. Planning permission was obtained for the development lands in or about 2008; but, this was at the time the property crash occurred and the recession was beginning to bite. These events changed the plans of Mr Jobb and Mr McAllister to develop the said development lands. However, they were not in a position to run the hotel themselves and to be on the premises full-time, due to their other professional commitments. They therefore decided Lough Erne would lease the business to a lessee, who would be ‘hands-on’ and would, hopefully, be able to run a successful and thriving business at the hotel, providing it with a rental income. By this time, Mr Jobb and Mr McAllister were having to invest considerable sums of their own money, to cover essentially the trading losses of the hotel.

3.3 After some negotiation, Lough Erne entered into an agreement with Markville Trading Ltd (‘Markville’). The sole or principal director of Markville was Mr Gary Rogerson. A business transfer agreement, in relation to the transfer of the business from Lough Erne to Markville, was entered into in or about 1 December 2008. The agreement was long and detailed and provided, inter alia, for Markville to obtain a leasehold interest in the hotel and all its fixtures and fittings, a license to use the name Lough Erne Hotel; and there was also provision for transfer to Markville of the relevant liquor and entertainment licenses for the hotel and also for the transfer of staff, which included the claimant.

3.4 I am satisfied the claimant, as the senior receptionist and also senior member of staff, worked closely with Mr Rogerson in the running of the hotel and, in particular, in the running of the office including the day-to-day payments to suppliers etc and the operating of payroll systems for the payment of wages to staff. Mr Rogerson was not there continually and considerable responsibility therefore fell on the claimant in his absence. By early 2010, Markville was in financial difficulties. The claimant became aware, at this time, given her involvement with the payroll and the office, that wages were not being paid to staff on time and suppliers were having to look for payment of accounts submitted by them. As a consequence, by March 2010, few suppliers were prepared to do business ‘on account’ and most suppliers would only do business with Markville on a ‘cash basis’. In or about early March 2010, Mr Rogerson informed the claimant he was going to Belfast and he was going to get some money as there were supplies for the bar and kitchen of the hotel which needed to be paid for. However, Mr Rogerson never again physically returned to the hotel.

3.5 On or about 10/11 March 2010, Mr Jobb contacted the claimant, as the senior member of staff, and informed her that he had received a phone call from Mr Rogerson that he would not be returning to the hotel. Markville was subsequently dissolved on 17 December 2010; and, after it was subsequently restored to the Companies Register, it was finally liquidated on 7 June 2012.

3.6 It was agreed by the representatives that, for the determination of the said preliminary issues, what happened in the period from or about 10/11 March 2010 to on or about 1 May 2010 was of particular relevance. In brief, during that period, the hotel continued to operate, as it had previously, until 12 April 2010 when the ‘hotel closed its doors’ (see later). It re-opened on 1 May 2010 to be run by ACEC Enterprises Ltd (‘ACEC’), whose sole or principal director was Mr Tom Boyd. ACEC entered into an agreement with Lough Erne for the lease of the premises from Lough Erne from 1 May 2010 and continued to operate it as a hotel. Subsequently, on or about 10 November 2011, Lough Erne entered into an agreement with Castle Hotels NI Ltd (‘Castle’) for the lease . It was not disputed there was a relevant transfer, pursuant to the TUPE Regulations for ACEC to Castle. The claimant, as set out above, worked as senior receptionist for Lough Erne and then Markville. Under ACEC, the claimant was promoted to manageress and she continued to work in that position with Castle. For the purposes of this pre-hearing review, and the determination of the said preliminary issues, it was not necessary for the tribunal to consider further the reasons for the subsequent termination of the claimant’s employment with Castle.

3.7 On the instructions of Mr Jobb, following his telephone call to the claimant, referred to above, the claimant subsequently contacted Mr McAllister by telephone later on 10/11 March 2010 to inform him of what had happened; although, by that time, it appears Mr McAllister was fully aware from Mr Jobb of what had taken place. The claimant also made Mr McAllister aware of the difficulties for the hotel arising out of the actions of Mr Rogerson in failing to physically return to the hotel, as she had been left with no monies in hand by Mr Rogerson to pay suppliers. In particular, at that time, there were insufficient bar/drinks supplies in the hotel and minimal food supplies. She informed Mr McAllister that the bar/drink supplies, which had been previously ordered, were not going to be delivered, without an ‘upfront’ payment to the relevant supplier. I am satisfied that, given what had occurred, Mr McAllister agreed to pay the bar/drinks supplier directly to the supplier for the drinks previously ordered by Markville and to send, via Mr Jobb’s daughter, £1,000.00 to enable food supplies to be bought for use in the kitchen. I am satisfied that Mr McAllister emphasised to the claimant that these payments were a ‘loan’ to keep the hotel running due to the immediate financial crisis that had arisen by the failure of Mr Rogerson to return to the hotel, in circumstances where both he and the claimant knew that the hotel had guests booked in and functions organised over the coming days which would clearly require the hotel to be fully stocked with drink and food in order to cater for them. I am satisfied that he referred to these payments as a ‘loan’, to make clear to the claimant that he did not intend the payments as a gift by him or that he had any responsibility for the payment for these supplies; but they had been made by him, as a gesture of goodwill in the clear hope that, when the position of the lease of the hotel could be resolved following Mr Rogerson’s failure to return to the hotel, he would somehow be able to get his money back. How that was to come about, or indeed from whom any such monies would be repaid, was not discussed or further considered by either of them. I am also satisfied it clearly was not intended by Mr McAllister to be a loan to the claimant in her personal capacity. There was no evidence of any enforceable loan agreement made between Mr McAllister and the claimant, on behalf of Markville, or indeed between Mr McAllister and Mr Rogerson, on behalf of Markville. Both the claimant and Mr McAllister knew that Mr Rogerson was no longer at the hotel. I am not therefore satisfied that, in such circumstances, the claimant had any relevant authority, in the circumstances, to bind Markville to any such loan agreement, if any such agreement had been made, in her capacity as the senior receptionist/senior member of staff. I noted that, in the event, no monies were repaid to Mr McAllister at any time. I am satisfied that, from on or about 10/11 March 2010 until 12 April 2010, the hotel continued to operate, using the takings from hotel’s continuing function and bar trade, in particular, to enable the hotel to continue to function as a hotel and to pay wages to the staff, including the claimant. The sums paid by Mr McAllister, as set out above, allowed the hotel to get over the immediate financial crisis and the hotel to thereafter continue to operate and fund the business, as set out above. The claimant, but also most, if not all, of the staff who had been employed by Markville continued to carry out their duties in the same way as they had done previously throughout this period until 12 April 2010. I am satisfied that guests using the hotel in the period from 10/11 March 2010 until 12 April 2010 would have noticed no relevant or significant difference in the running and operation of the hotel by the said staff, from the period prior to 10/11 March 2010, when it was operated by Markville.

3.8 Given the unusual circumstances that had arisen, I accept it may have been understandable the claimant remained somewhat uncertain about her precise employment position in this period following the events of 10/11 March 2010. Indeed, I have little doubt this uncertainty led her to state, inter alia, in her claim form to the tribunal, albeit I suspect with an element of hindsight, since her claim form was not presented to the tribunal until 5 June 2013, on the advice of her legal representatives, following the termination of her employment with Castle:-

“It is unclear whether or not I continued to be an employee with Markville Trading Ltd or whether at that point an employee of Lough Erne Hotel Ltd.”

I have no doubt that Mr McAllister was, during this period, in regular telephone conversation with the claimant but, in my judgment, his only direct financial involvement was the payment of the monies for the drink and food, as stated previously. Neither he nor Mr Jobb took any part in the operation and running of the hotel, which continued as before with the claimant continuing to act as the senior receptionist and senior member of staff. In particular, she continued to run the office, the day-to-day payment of suppliers and the operation of the payroll as she had previously done for Markville. During these conversations, Mr McAllister, who is an accountant by profession, tried to be as helpful as he could to the claimant who found herself, in essence, in ‘day-to-day charge’ of the hotel, after Mr Rogerson left. As director of Lough Erne and the relevant lessor of the hotel, he had no legal responsibility for the running of the hotel and/or its staff, including the claimant, even though he clearly recognised, as did the claimant, that the chances of obtaining a new tenant would be enhanced if the hotel could be seen to be continuing to run as a ‘going concern’. Both recognised for this to happen was in their interests, both financially and otherwise. In these circumstances, I am satisfied that Mr McAllister, occasionally, warned the claimant that, although she was continuing to carry out her duties as she had done before under Markville, she should be careful not to be seen to be running the hotel in such a way as to suggest she had become the owner of the said business and therefore the relevant employer of the staff with all the implications and consequences of same. I consider this was in the nature of friendly advice to the claimant; but was not to suggest this is what had in fact occurred. I am in no doubt that, during this period the claimant was anxious to keep the hotel running as before, to retain the jobs of herself and the other staff and to enable her and the other staff to receive their wages; and she did so without any consideration by her of her precise employment position. In continuing to do so, I am in no doubt she was fully aware, because she was so informed by Mr McAllister during many of their conversations during this period, that Mr McAllister, as director of Lough Erne, was making every effort to find a new party to lease the hotel in succession to Markville. As indicated previously, the claimant; but also Mr McAllister, fully understood that his task would be easier if the hotel was operating as a ‘going concern’ and any ongoing goodwill attached to the hotel could be retained.

3.9 I am satisfied that in the period from 10/11 March 2010, Mr McAllister immediately and actively began to look for a new lessee of the hotel, in succession to Markville and that, in doing so, he approached at least three persons, including the claimant, to take over the lease of the hotel. The claimant was not in a position to financially and/or willing to take on the lease and so informed Mr McAllister. One of the persons approached, during this period, was Mr T Boyd, the director of ACEC, who, as shall be seen later, ultimately did take on the lease. However, unfortunately, by 12 April 2010 none of these approaches had produced any agreement to take on the lease of the hotel. However, I am satisfied Mr McAllister continued to remain confident; and he so informed the claimant, in his said telephone conversations with her, that he believed a new lessee, in succession to Markville, would be found given some more time.

3.10 On 12 April 2010, the claimant was contacted by another receptionist, as she was on leave, who informed her that Northern Ireland Electricity had arrived at the hotel to turn off the electricity supply to the hotel, because of an outstanding bill of £5,000.00. There then followed, later that day, a telephone conversation between Mr McAllister and the claimant. It is clear Mr McAllister was not prepared to pay the outstanding bill, which was owed by Markville and not by him and/or Lough Erne. Equally, the claimant was neither willing or in a position to do so. Nor was she legally obliged to pay the bill. Mr McAllister was not prepared to pay it as a gesture in the same way as he had previously paid the drinks/bar bill, which it must be noted was comparatively small in comparison. Both recognised that, without electricity the hotel could not function and therefore the hotel could not continue to operate as it had been doing since Mr Rogerson left, since without electricity no income could be generated to pay suppliers and/or to pay wages. I am satisfied that Mr McAllister, during the course of this conversation, told the claimant that, in the circumstances, “I don’t know what option you have but to close the hotel”. However, I do not accept the claimant’s evidence that Mr McAllister told the claimant he [tribunal’s emphasis] was closing the hotel and I consider the remarks made by him to her, as set out above, were merely a reflection of the reality of what had happened. The claimant continued to be fully aware that, despite this setback, Mr McAllister was continuing to look for a new tenant, and that he was confident he could obtain one in the near future and the closure of the hotel, in the circumstances, would hopefully be temporary, provided a new tenant could be found. I have little doubt that the suggestion by Mr McAllister to the claimant to put up a sign on the door of the hotel “closed for renovation” was done by him to enhance the chances of obtaining the transfer of the business of the hotel to a new tenant, but was also to emphasis that the closure was only temporary and was an attempt by him, insofar as possible, to retain the goodwill attached to the hotel.

3.11 During the telephone call, in relation to the closure because of the absence of electricity, referred to above, Mr McAllister told the claimant that the staff, including herself, would be required to fill in a P45 in order to claim unpaid wages. However, I am satisfied he did not order, as she sought to suggest in evidence, the claimant to complete a P45. As he made clear, in the course of his evidence, which I accept, he was aware, as an accountant, that a P45 would be necessary on a TUPE transfer; which he still hoped could be arranged whenever a new tenant had been found.

3.12 I further accept the evidence of Mr McAllister that he believed, correctly in my view, upon any lease entered into by a new tenant, continuity of employment would be preserved for the claimant (and indeed any other relevant employee), upon such a transfer, pursuant to the TUPE Regulations. However, I also accept the evidence of Mr McAllister that he also believed, at the relevant time in March 2010 – May 2010, incorrectly in my view, that any such transfer to a new tenant would be an ‘insolvent transfer’ and, as a consequence, liability for past arrears of wages, holiday pay for staff, including the claimant, would not pass to the new tenant. It was not disputed by the representatives that Mr McAllister was incorrect in his view, as set out above. Further, I accept his evidence that his mistaken view, at that time, arose out of his misunderstanding of the precise definition for insolvency set out under the Insolvency Order (see further Wiener v Department of Employment and Learning [2013] NIIT 00679/12), which he had not properly understood at that time. Indeed, consistent with the matters set out above, I note that in a Record of Proceedings, dated 25 May 2011, of a Case Management Discussion, relating to this multiple claim, it is recorded by the Chairman that the representative of Lough Erne (Mr McAllister) and of ACEC (Mr Boyd), both of whom were present, ‘take the position that this was a transfer on insolvency and whilst continuity of employment is recognised, liability for unpaid wages and unpaid holiday pay did not transfer to [ACEC]’. I think this mistaken view was expressed by Mr McAllister to Mr Boyd, during the negotiations for the lease to ACEC, and led to Mr Boyd repeating this view at the Case Management Discussion but also at the time he took over the lease on behalf of ACEC, on 1 May 2010, during a meeting he held with staff at the time of the said takeover (see later). There was no serious challenge by the claimant’s representative that any transfer, which took place at the relevant time was a solvent transfer. Lough Erne has remained solvent at all times and Markville did not enter into liquidation until some time later.

3.13 In the period following 12 April 2010, negotiations continued between Mr McAllister on behalf of Lough Erne and Mr T Boyd on behalf of ACEC to enable ACEC to take over the tenancy of the hotel. At some date, near to the end of April 2010, Mr McAllister informed the claimant of Mr Boyd’s serious interest in ACEC taking over the tenancy of the hotel and he asked her to show him around the hotel. She did this and, after making relevant enquiries at Mr Boyd’s request, she was able to inform Mr Boyd most, if not all, relevant staff, including herself, were available to resume their duties, which they had been carrying out at the hotel up to 12 April 2010. As a result, all the said staff, including the claimant, resumed working at the hotel on or about 1 May 2010, following a meeting Mr Boyd held with the said staff on 29 April 2010. At the meeting I am satisfied he explained that ACEC was taking over the lease from on or about 1 May 2010. I have no doubt that at all times Mr Boyd was fully aware and accepted that, pursuant to the TUPE Regulations, the continuity of employment of the claimant, and the other relevant staff, was preserved upon ACEC taking over the lease. However, consistent with what Mr McAllister had told him during the negotiations and the position subsequently set out by both of them, at the Case Management Discussion, referred to above, I am satisfied Mr Boyd, because he believed at that time any such transfer was an insolvent transfer, did state, albeit incorrectly, that ACEC was not therefore responsible for any past arrears of pay and/or holiday pay owed to staff. In this context, but not any other, there may have been some reference by him to the staff being ‘new’ employees for the purposes of such arrears, as suggested, in evidence, by the claimant.

3.14 All the staff, with the exception of the claimant, resumed the positions in the hotel they had previously carried out prior to 12 April 2010. The claimant was promoted to manageress; albeit I think this was merely a formal reflection of which she had actually been doing under Markville and in the period between 10/11 March 2010 and 12 April 2010. All ongoing previous bookings and deposits were honoured by ACEC. The hotel, in essence, operated in exactly the same way as it had before 12 April 2010, when ACEC took over when it entered into a lease with Lough Erne on 1 May 2010 to run the hotel from that date, following the period of temporary closure between 12 April 2010 and 1 May 2010. No person visiting the hotel before or after those dates would have seen any difference, with the same staff, in essence, doing the same jobs. Indeed, the claimant stated, in her evidence that, when working for ACEC, “we were all doing the roles we knew. In her claim form she expressly confirmed “all employees have been kept on in the same jobs”. Given that Mr Rogerson had left the hotel, it was not surprising Lough Erne formally entered into a new lease with ACEC and there was therefore not a transfer of the remaining period of the previous lease between Markville and Lough Erne.

3.15 Following the commencement of the lease on 1 May 2010 by ACEC, Mr Boyd required the claimant to issue P45s, in respect of the employment of the staff, including herself, with Markville to facilitate the said transfer of their employment to ACEC. In her P45, dated 4 May 2010, the claimant stated her employment with Markville ended on 30 April 2010. A P45 is a form which requires to be completed for Tax/PAYE purposes by HMRC when an employee leaves a particular employment. As seen in London Borough of Newham v Ward [1985] IRLR 509, a P45 has nothing whatever to do with the date on which employment terminates. It is only when the employment has terminated that the employee has the right to require the employer to hand over his P45. The question of when employment in fact terminates is governed by both statute and case law.

4.1 All the representatives of the parties referred, to a greater or less extent, to the guidance of Lindsay J in the case of Cheesman & Others v R Brewer Contracts Ltd [2001] IRLR 144, in which he summarised relevant European and domestic case law as to whether there was an economic entity for the purposes of the TUPE Regulations.

In particular, in Paragraph 10 of his judgment, insofar as relevant and material, he emphasised the following:-

“(1) There needs to be found a stable economic entity whose activity is not limited to performing one specific works contract, an organised grouping of persons and of assets enabling (or facilitating) the exercise of an economic entity which pursues a specific objective.

(2) In order to be such an entity it must be sufficiently structured and autonomous but will not necessarily have significant assets either tangible or intangible.

(3) In certain sectors such as cleaning and surveillance the assets are often reduced to their most basic and the activity is essentially based on manpower.

(4) An organised grouping of wage-owners who are specifically and permanently assigned to a common task may, in the absence of other factors of production, amount to an economic activity.

(5) An activity of itself is not an entity – the identify of an entity emerges from other factors such as its workforce, management staff, the way in which its work is organised, its operating methods, and where appropriate the operational resources available to it.”

Lindsay J also set out relevant guidance, in Paragraph 11 of his judgment, the test of whether there has been a relevant transfer. Insofar as relevant and material to the determination of the said preliminary issues, he stated:-

“(i) As to whether there is any relevant sense a transfer, the decisive criterion for establishing the existence of a transfer is whether the entity in question retains its identity, as indicated, inter alia, by the fact that its operation is actually continued or resumed.

(ii) In a labour-intensive sector it is to be recognised that an entity is capable of maintaining its identity after it has been transferred where the new employer does not merely pursue the activity in question but also takes over a major part, in terms of their numbers and skills, of the employees specifically assigned by his predecessors to that task. That follows from the fact that in certain labour-intensive sectors a group of workers engaged in the joint activity on a permanent basis may constitute on economic entity.

(iii) In considering whether the conditions for existence of a transfer are met it is necessary to consider all the facts characterising the transaction in question but each as a single factor and not to be considered in isolation ... However, whilst no authority so holds it may, presumably, not be an error of law to consider the ‘decisive criterion in (i) above in isolation; that surely, is an aspect of its being ‘decisive’, although as one sees from the ‘inter alia in (i) above, ‘the decisive criterion’ is not itself said to depend on a single factor.

(iv) Amongst the matters thus falling for consideration are the type of undertaking, whether or not its tangible assets are transferred, the value of its intangible assets at the time of transfer, whether or not the majority of its employees are taken over by the new company, whether or not its customers are transferred, the degree of similarity between the activities carried on before and after the transfer, and the period, if any, in which they are suspended.

(v) In determining whether there has been a transfer, account has to be taken, inter alia, of the type of undertaking or business in issue and the degree of importance to be attached to the several criteria will necessarily vary according to the activity carried on.

(vi) Where an economic entity is able to function without any significant tangible or intangible assets, the maintenance of its identity following the transaction being examined cannot logically depend on the transfer of such assets.

(vii) Even where assets are owned and are required to run the undertaking, the fact that they do not pass does not preclude a transfer.

…

(x) The absence of any contractual link between transferor and transferee may be evidence that there has been no relevant transfer but it is certainly not conclusive as there is no need for any such direct contractual relationship.

…

(xii) The fact that the work is performed continuously with no interruption or change in the manner or performance is a normal feature of transfers of undertakings but there is no particular importance to be attached to a gap between the end of the work by one sub-contractor and the start by the successor.”

Lindsay J further stated at Paragraph 12 of his judgment:-

“More generally the cases also show:-

(i) The necessary factual appraisal is to be made by the National Court ...

(ii) The Directive applies where, following the transfer, there is a change in the natural person responsible for the carrying on of the business who, by virtue of that fact, incurs the obligation of an employer vis à vis the employee of the undertaking, regardless of whether or not ownership of the undertaking is transferred ...

(iii) The aim of the Directive is to ensure continuity of employment relationships within the economic entity irrespective of any change of ownership ... and our domestic law illustrates how readily the Courts will accept a purposive construction to consider avoidance ... .”

The guidance in Cheesman illustrates the width of potential factors which can apply in any particular situation but also how any one factor is unlikely to be conclusive. However, in this context, it is to be noted in Adi (UK) Ltd v Willer [2001] IRLR 542, May LJ emphasised:-

“The decisions stress that the decisive criterion for a transfer is whether the business in question retains its identity, and an important consideration is whether the operation is continued by the new employer with the same or similar activities.”

4.2 Further, a suspension of relevant activities at or around the time of the putative transfer can be relevant (see Spijkers v Gebroeders Benedik Abattoir CV [1986] ECR 1119 ECJ); but it has been held, in a series of cases, an interruption to a relevant activity will not necessarily avoid there being a transfer of an undertaking for the purposes of Regulation 3(1)(a) of the TUPE Regulations. It is crucial will be to ascertain why the suspension occurred and whether that had an impact on the retention (or otherwise) of the relevant operation of its entity (see further P Bork International A/SS v Foreningen Af Danmark [1989] IRLR 41 and Daddy’s Dance Hall [1988] IRLR 315, which were both cases of the ECJ.

In Allen v Amalgamated Construction Company Ltd [2000] IRLR 119, the ECJ emphasised no particular importance can be attached to the lack of contemporaneity in relation to transfer and, in particular it held:-

“Moreover, even if a temporary suspension of the undertakings activities does not itself preclude the possibility that a transfer has taken place ... but the fact that the work was performed continuously with no interruption or change in the manner of performance, is none the less a normal feature of transfers of undertakings.”

In Wood v Caledon Social Club Ltd [UKEAT/0528/09] the Employment Appeal Tribunal considered the issue whether the economic entity, referred to in Regulation 3(1)(a) of the TUPE Regulations, had to retain its identity on the transfer date or whether it was sufficient that the operation resumes at some later date. It was held a temporary cessation of operation at the putative transfer date did not prevent a relevant transfer. It was recognised, however, that each case would depend on its own particular facts, In the particular case, it meant that a temporary cessation of the bar operation at the premises did not prevent a relevant transfer, because the transferee always intended to open the bar and operate it in precisely in the way it had been previously once the licence difficulties had been overcome. In doing so the EAT applied guidance of Lindsay J in Cheesman to the effect that an indication that an entity retains its identity is the fact that its operation is actually continued or resumed. On the facts of the particular case, the resumption of the activities in question was crucial to the finding of a relevant transfer, especially since the resumption was already planned when the original operator ceased to have control over the premises.

5.1 In light of the facts, as found by me, and after applying the guidance in the legal authorities, referred to in the previous paragraphs of this decision, I have reached the following conclusions, as set out in the following sub-paragraphs.

5.2 The first issue to be determined by the tribunal was, as set out previously:-

“(1) Was there:-

(a) a relevant transfer of undertakings, as defined in Regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations (Northern Ireland) 2006 from Markville to ACEC?; or

(b) a relevant transfer from Markville to Lough Erne followed by a subsequent transfer to ACEC and, if so, on what date did that transfer occur?

5.3 In determining these issues, I was satisfied it was first necessary for me to consider whether there was a relevant and sufficiently identifiable economic entity and, if so, was there a relevant transfer of any such entity (see further Whitewater Leisure Management Ltd v Barnes [2000] IRLR 456). I have no doubt there was at all material times, such an entity, namely the business operated at the hotel, initially by Lough Erne and then Markville. Indeed, this was not seriously challenged during the course of this hearing. The central issue related to whether there was a transfer of this entity from Markville and, if so, to whom and when. I have no doubt, as set out in Paragraph 3 of this decision, for all intents and purposes, the operation of this hotel business prior to 10/11 March 2010 by Markville was no different to the operation of the hotel business from 1 May 2010 by ACEC. The same staff were carrying out the same roles, including, in particular, for the purpose of this decision, the claimant. I do not accept the contentions of the claimant’s representative that the operation of the hotel by Markville and ACEC was materially different. Indeed, I am satisfied no member of staff, or indeed guest, would have seen any material difference. I am further satisfied, despite the departure of Mr Rogerson on 10/11 March 2010, the operation of the business continued as before, until it had to close on 12 April 2010 due to the absence of funds to pay the electricity. However, following the departure of Mr Rogerson, Mr McAllister, to the knowledge of the claimant, was intending to fund a new lessee. Clearly, both would have hoped a new lessee could have been found quicker and, in particular, before the closure on 12 April 2010. In my judgment that closure was always intended to be temporary as Mr McAllister was always hopeful of finding a new lessee for the business. Whilst, it is normally expected, pursuant to the TUPE Regulations, the operation of the entity will continue, upon transfer, without interruption or change in the manner or performance, I am satisfied there can be a gap/an interruption in circumstances where it was always intended to obtain a new lessee of the entity (see Cheesman and Caledon). Clearly, if such a gap/interruption is lengthy, different issues might arise but, in this particular case, the gap/interruption was less than a month and the search for a new lessee was active throughout the said period. In the circumstances, I was therefore satisfied there was a relevant transfer, pursuant to the TUPE Regulations, of the said entity.

5.4 As identified by the representatives, in the first issue, if I was satisfied there was a transfer of such an entity, pursuant to the TUPE Regulations, which I am, it was then necessary for me to determine whether the transfer of the entity was from Markville to ACEC directly or from Markville to Lough Erne, followed by a subsequent transfer to ACEC.

In this context, it has to be noted, as set out in Cheesman, that the absence of any contractual link between transferor and transferee may be evidence that there has been no relevant transfer but it is certainly not conclusive as there is no need for any such direct contractual relationship (see further Sanchez Hidalgo and others v Asociacion de Servicios Aser and Sociedad Cooperativa Minerva [1999] IRLR 136). Thus the absence of any contractual link between Markville and ACEC did not, in my judgment, prevent such a transfer in the circumstances of this case.

I am not satisfied that the claimant, on the facts as found by me has established that she was dismissed by Markville. There was a P45 completed by her on 4 May 2010. Firstly, she completed it and she stated the leaving date from her employment with Markville was on 30 April 2010. I am satisfied she did so in order to facilitate the transfer from Markville to ACEC, pursuant to TUPE. Such a P45 was always required to be completed upon such a transfer and was completed only after the transfer to ACEC had taken place (see further London Borough of Newham v Ward). Indeed, when the P45 was completed by her the claimant was fully aware the lease had been taken out by ACEC with Lough Erne, with all the staff, including herself, resuming in all material respects the role that they had each fulfilled under Markville and, indeed, had continued to do so during the period from 10/11 March 2010 to 12 April 2010. I do not consider that her formal promotion to manageress under ACEC has any relevance to these issues, since she had, in reality, been fulfilling this role both under Mr Rogerson and in the subsequent period from 10/11 March 2010 to 12 April 2010. The claimant continued to work on during this period in the clear hope and expectation a new lessee could be obtained by Mr McAllister, whilst the hotel continued to operate ‘as a going concern’. It was clearly unfortunate that the hotel had to close on 12 April 2010 for lack of electricity; but this was only a temporary closure and in the circumstances, in my judgment, did not alter the situation that there was still no dismissal of the claimant by Markville at that time. The reference by Mr Boyd and Mr McAllister at the time of the takeover by ACEC that ACEC was not responsible for post-arrears of wages, holiday pay, etc, as now recognised, was based on a wrong assumption by Mr McAllister that there was an insolvent transfer, whereas it was always a solvent transfer. Understandably this mistake led, in the circumstances, to some confusion in the mind of the claimant, as seen in her claim form, about the transfer; but both Mr McAllister and Mr Boyd, at all material times, confirmed the continuation of the claimant’s employment, and that of the staff, upon the transfer to ACEC. Such continuation, as emphasised in Cheesman, is at the centre of the TUPE Regulations and any transfer thereunder. I am satisfied, Mr McAllister, as a director of Lough Erne, by his financial assistance in relation to the supplies for the bar and food, did not take on the employment, either personally or on behalf of Lough Erne, of the claimant, or any of the staff, in the period after 10/11 March 2010. He emphasised this by referring to such assistance as a loan. It was also apparent that throughout this period between 10/11 March 2010 and 1 May 2010, his efforts were to obtain a new lessee to replace Markville and not for Lough Erne to resume the operation of the business, as it had done prior to Markville. Certainly he gave encouragement/advice to the claimant about keeping the business going, as before for as long as possible; but this was in the context of Mr McAllister searching for a new tenant for the hotel, which both of them recognised would be easier to achieve with the hotel continuing to operate as a ‘going concern’.

In my judgment, as set out above, I do not consider during the period between 10/11 March 2010 and 1 May 2010 there was any dismissal of the claimant by Markville. For the reasons and in the circumstances, referred to above, I am not satisfied therefore there was any intervening transfer from Markville to Lough Erne. I am further satisfied there was a relevant transfer, pursuant to the TUPE Regulations, for Markville to ACEC, on or about 30 April 2010/1 May 2010. Upon such transfer, pursuant to the TUPE Regulations, all the rights, obligations and liabilities under the claimant’s contract of employment with Markville transferred to ACEC. In light of my said decision, it was not necessary or relevant for me to determine, in the circumstances, the further issues, the subject-matter of this pre-hearing review.

Chairman:

Date and place of hearing: 24 – 25 October 2013; and

20 November 2013, Belfast

Date decision recorded in register and issued to parties: