Preserved Rights
Cases
Symantec Ltd -v- Leddy
[2009] IEHC 256 Edwards J.
Legal Submissions
“Both sides have filed helpful written legal submissions for which the Court is grateful. Both sides principally rely on same two decisions of the European Court of Justice in support of their respective positions. These are the cases of Katsikas v. Konstantinidis (conjoined with Schroll v PCO Stauereibetrieb Paetz & Co Nfl GmbH) [1992] ECR I 6577 and Merckx & Neuhuys v. Ford Motor Co of Belgium [1996] ECR I – 1253, both of which considered the purpose and correct interpretation of Directive 77/187/EEC on the transfer of undertakings. Its successor Directive is 2001/23/EC. Counsel on both sides have also provided the Court with useful comparative law references.
The Plaintiff/Appellant’s Submissions
It was submitted on behalf of the Plaintiff/Appellant that the purpose of Directive 77/187/EEC and its successor Directive 2001/23/EC (hereinafter “the Directive) is to safeguard the rights of workers in the event of a change of employer by making it possible for them to continue to work for the new employer under the same conditions as those in place with the transferor.
It was submitted that as the Defendants/Respondents contracts of employment were in being at the date of the transfer then by virtue of Regulation 4(1) of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 the obligations and liabilities thereunder are the responsibility of the transferee Corporate Occupier Solutions (Ireland) Limited and not of the Plaintiff/Appellant.
They say that the European Court of Justice (hereinafter the ECJ) accepted in the case of Berg v Besselen [1998] ECR 2559 that the first subparagraph of Article 3 (1) of the Directive (the equivalent of Regulation 4(1) of the 2003 Regulations) must be interpreted as meaning that after the date of transfer and by virtue of the transfer alone, the transferor is discharged from all obligations arising under the contract of employment or the employment relationship, even if the workers employed in the undertaking did not consent or if they object, subject however to the power of the Member States to provide pursuant to the second subparagraph of Article 3(1) of the Directive for the joint liability of the transferor and the transferee for obligations arising under the contract of employment before the date of the transfer. This power has not been taken up in this jurisdiction. They say it must be presumed that the legislature in promulgating the said regulations and in particular Regulation 4 (1) was lending clarity to the position of employees directly affected by a transfer. It was not simply repeating the words of the Directive to no effect.
The Katsikas Case
In Katsikas v. Konstantinidis (conjoined with Schroll v PCO Stauereibetrieb Paetz & Co Nfl GmbH) [1992] ECR I 6577 the ECJ was asked, by means of Article 177 references from the Courts of Bamburg and Hamburg respectively, to consider the interpretation of Article 3 (1) of the Directive. Article 3 (1) provides:
“The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer within the meaning of Article 1(1) shall, by reason of such transfer, be transferred to the transferee.
Member States may provide that, after the date of transfer within the meaning of Article 1(1) and in addition to the transferee, the transferor shall continue to be liable in respect of obligations which arose from a contract of employment or an employment relationship.”
In both the Bamburg and the Hamburg references the prospective employees refused to transfer to the employment of the transferee. The Bamburg Court referred the following question (inter alia) to the ECJ for a preliminary ruling:
“Is it possible under Article 3(1) of the Council Directive of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses (Directive 77/187/EEC) for an employee of the transferor at the date of transfer within the meaning of Article 1(1) of Directive 77/187/EEC to object to the transfer of rights and obligations from the transferor to the transferee, with the result that the transferor’s rights and obligations are not transferred to the transferee?”
At paragraphs 31 – 36 inclusive of its judgment the ECJ held :
“31 Whilst the directive, which effects only partial harmonization in the area in question (see the judgment in Case 105/84 (Foreningen af Arbejdsledere i Danmark v Danmols Inventar [1985] ECR 2639), cited above, paragraph 16), allows the employee to remain in the employ of his new employer on the same conditions as were agreed with the transferor, it cannot be interpreted as obliging the employee to continue his employment relationship with the transferee.
32 Such an obligation would jeopardize the fundamental rights of the employee, who must be free to choose his employer and cannot be obliged to work for an employer whom he has not freely chosen.
33 It follows that Article 3(1) of the directive does not preclude an employee from deciding to object to the transfer of his contract of employment or employment relationship and hence deciding not to take advantage of the protection afforded him by the directive.
34 However, as the Court has held (judgment in Berg v Besselsen, cited above, paragraph 12), the purpose of the directive is not to ensure that the contract of employment or employment relationship with the transferor is continued where the undertaking’s employees do not wish to remain in the transferee’s employ.
35 It follows that, in the event of the employee deciding of his own accord not to continue with the contract of employment or employment relationship with the transferee, the directive does not require the Member States to provide that the contract or relationship is to be maintained with the transferor. In such a case, it is for the Member States to determine what the fate of the contract of employment or employment relationship should be.
36 The Member States may, in particular, provide that in such a case the contract of employment or employment relationship must be regarded as terminated either by the employee or by the employer. They may also provide that the contract or relationship should be maintained with the transferor.”
The Merckx Case
In the case of Merckx & Neuhuys v. Ford Motor Co of Belgium [1996] ECR I – 1253 the Court of Appeal in Belgium had referred a question to the ECJ for its consideration in relation to the existence of a transfer of undertakings. The ECJ held that Article 3 (1) of the Directive did not preclude an employee employed by the transferor at the date of a transfer of an undertaking from objecting to the transfer to the transferee of the contract of employment or the employment relationship.
The question that had been asked by the Belgian Court is set out at para 14 of the judgment of the ECJ and was reformulated by the ECJ as a two part query which is set out at para 15 of the judgment. We are only concerned with the second part of the reformulated question. Paras 14 and 15 are as follows:
“14. Having regard to the foregoing, the Cour du Travail, Brussels, decided to stay the proceedings and to refer the following question, drafted in the same terms in both cases, to the Court of Justice for a preliminary ruling:
“Is there a transfer of an undertaking within the meaning of Directive 77/187 of 14 February 1977 if an undertaking which has decided to discontinue its activities on 31 December 1987 dismisses most of its staff, keeping only 14 out of a total of over 60, and decides that those 14 persons, while retaining their acquired rights, must work from 1 November 1987 for an undertaking with which that first undertaking has no formal agreement, but which has since 15 October 1987 held the dealership previously held by the first undertaking, and if the first undertaking has not transferred any of its assets to the second?”
15. That question seeks essentially to ascertain, first, whether Article 1(1) of the Directive must be interpreted as applying where an undertaking holding a motor vehicle dealership for a particular territory discontinues its business and the dealership is then transferred to another undertaking which takes on part of its staff and is recommended to customers, without any transfer of assets. Secondly, having regard to the facts in the main proceedings and in order to provide a helpful response to the national court, it is necessary to establish whether Article 3(1) of the Directive precludes an employee of the transferor at the date of transfer of the undertaking from objecting to the transfer of his contract of employment or employment relationship to the transferee.” (my emphasis)
The second part of the reformulated question was answered in paras 33 – 39 inclusive of the ECJ’s judgment:
“33. As regards the second part of the question as reformulated above, the Court held in Case 105/84 Foreningen af Arbejdsledere i Danmark v Danmols Inventar [1985] ECR 2639, paragraph 16, that the protection which the Directive is intended to guarantee is redundant where the person concerned decides of his own accord not to continue the employment relationship with the new employer after the transfer.
34. It also follows from the judgment in Joined Cases C-132/91, C-138/91 and C-139/91 Katsikas and Others v Konstandinidis [1992] ECR I-6577, paragraphs 31 and 32, that, whilst the Directive allows the employee to remain in the employ of his new employer on the same conditions as were agreed with the transferor, it cannot be interpreted as obliging the employee to continue his employment relationship with the transferee. Such an obligation would jeopardize the fundamental rights of the employee, who must be free to choose his employer and cannot be obliged to work for an employer whom he has not freely chosen.
35. It follows that, in the event of the employee deciding of his own accord not to continue with the contract of employment or employment relationship with the transferee, it is for the Member States to determine what the fate of the contract of employment or employment relationship should be. The Member States may provide, in particular, that in such a case the contract of employment or employment relationship must be regarded as terminated either by the employee or by the employer. They may also provide that the contract or employment relationship should be maintained with the transferor (judgment in Katsikas and Others, cited above, paragraphs 35 and 36).
36. Mr Merckx and Mr Neuhuys claimed, moreover, that in the case in point Novarobel refused to guarantee to maintain their level of remuneration, which was calculated by reference, in particular, to the turnover achieved.
37. In the light of that submission, it should be noted that Article 4(2) provides that if the contract of employment or the employment relationship is terminated because the transfer within the meaning of Article 1(1) involves a substantial change in working conditions to the detriment of the employee, the employer is to be regarded as having been responsible for termination.
38. A change in the level of remuneration awarded to an employee is a substantial change in working conditions within the meaning of that provision, even where the remuneration depends in particular on the turnover achieved. Where the contract of employment or the employment relationship is terminated because the transfer involves such a change, the employer must be regarded as having been responsible for the termination.
39. Consequently, the answer to the second part of the question as reformulated must be that Article 3(1) of the Directive does not preclude an employee employed by the transferor at the date of the transfer of an undertaking from objecting to the transfer to the transferee of the contract of employment or the employment relationship. In such a case, it is for the Member States to determine what the fate of the contract of employment or employment relationship with the transferor should be. However, where the contract of employment or the employment relationship is terminated on account of a change in the level of remuneration awarded to the employee, Article 4(2) of the Directive requires the Member States to provide that the employer is to be regarded as having been responsible for the termination.”
The Plaintiff/Appellant’s central contention
It was submitted on behalf of the Plaintiff/Appellant that it is clear that it has been accepted by the ECJ in both Katsikas and in Merckx that an employee of the transferor is entitled to object to the transfer and cannot be obliged to work for the transferee. It was further submitted that the fact that an employee is not so obliged does not mean that his contract of employment is not transferred automatically to the transferee by virtue of the transfer itself. Article 4 (1) of the 2003 Regulations reflects this in as much as it provides for the unqualified automatic transfer of an employee’s contract of employment at the date of the transfer of the undertaking.
It was submitted that in the circumstances the EAT erred in finding that the Defendants/Respondents were entitled to lump sum redundancy payments under the Redundancy Payments Acts 1967 – 2003. The Court was specifically referred to the definition of redundancy in s. 7(2) of the Redundancy Payments Acts 1967 (as amended) which states:
“….an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly to—
( a ) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, or
( b ) the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish, or
( c ) the fact that his employer has decided to carry on the business with fewer or no employees, whether by requiring the work for which the employee had been employed (or had been doing before his dismissal) to be done by other employees or otherwise, or
( d ) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done in a different manner for which the employee is not sufficiently qualified or trained, or
( e ) the fact that his employer has decided that the work for which the employee had been employed (or had been doing before his dismissal) should henceforward be done by a person who is also capable of doing other work for which the employee is not sufficiently qualified or trained.”
The Plaintiff/Appellant says: First, the EAT’s determinations are unsupported by authority. Secondly, there is no legal basis for the finding of redundancy within the meaning of the Redundancy Payments Acts 1967 – 2003. Thirdly, it is self evident that the Transfer Regulations had application and it was open to the Defendants/Respondents to challenge the transferee that in fact (and in law) their positions were redundant but it is not open to them to challenge the transferor in that regard. Its obligations are complete at the time of transfer.
The Defendants/Respondents’ submissions
As previously stated the Defendants/Respondents also rely on the decisions of the ECJ in Katsikas and in Merckx respectively. They contend those decisions in fact support their case.
The Defendants/Respondents’ central contention
Their central contention is contained at paragraphs 11 and 12 respectively of their written submissions and it is this. They say that in light of the fact that the Katsikas and Merckx cases, respectively, were opened before the Tribunal it is difficult to understand how the Plaintiff/Appellant’s argument is being maintained. They say that in circumstances where the court is dealing with a statutory instrument which implements a provision of European law the court must find that Regulation 4 (1) of the 2003 Regulations has the same effect as the ECJ has ascribed to article 3 (1) of the Directive. They say that if that is correct then the next question is to consider whether the Irish implementing legislation makes any particular provision as to what will occur if employees decide not to transfer. It does not. Accordingly, as determined by the Employment Appeals Tribunal and contrary to the contention made by the Plaintiff/Appellant in these proceedings, the 2003 Regulations had no relevance to the Defendants/Respondents respective claims for redundancy under the redundancy payments Acts 1967 to 2007. The tribunal said:
“The employee is not obliged to accept the new employer, and this is not inconsistent with the directive in relation to the transfer of undertakings.”
It was submitted that this statement is manifestly correct and that, in those circumstances, the Plaintiff/Appellant’s appeal, which is entirely based upon the supposed impact of the 2003 Regulations on the Defendants/Respondents employment, must fail.
Decision
With great respect to the arguments advanced on behalf of the Defendants/Respondents the court disagrees profoundly with their view of the implications for Irish labour law of the ECJ’s judgments in Katsikas and Merckx respectively. The court has no doubt but that the correct view of the matter is that which has been articulated on behalf of the Plaintiff/Appellant. As the Defendants/Respondents have rightly pointed out Irish implementing legislation does not make any particular provision as to what will occur if employees decide not to transfer. However, contrary to their belief, that fact operates against them. It does not follow that if an employee decides not to transfer a situation of redundancy automatically arises vis-à-vis the transferor. It cannot do so because the fact that an employee objects to the transfer does not of itself have the effect of negativing the transfer. It is just that an employee is not obliged to continue his employment relationship with the transferee. However, the transfer still goes ahead unless a member state expressly provides for the contrary in its implementing legislation. That this is so is clear from the judgment of the ECJ in Katsikas. That Court explained that the purpose of the Directive is to allow the employee to remain in the employ of his new employer on the same conditions as were agreed with the transferor. However, he is not obliged to avail of this facility. As the Court said “the directive does not preclude an employee from deciding to object to the transfer of his contract of employment or employment relationship and hence deciding not to take advantage of the protection afforded him by the directive.” However, “the purpose of the directive is not to ensure that the contract of employment or employment relationship with the transferor is continued where the undertaking’s employees do not wish to remain in the transferee’s employ.”
In my view nothing could be clearer. If the Irish legislature had wished the employment relationship with the transferor to continue so as to facilitate the employee in making a claim for redundancy it could have enacted legislation to that effect. It has not done so. This court is completely satisfied that by virtue of regulation 4 (1) it is not possible for the Defendants/Respondents in this case to make a redundancy claim against the Plaintiff/Appellant. In all the circumstances the court is satisfied to allow the appeals in both cases.”
Jackson v Computershare Investor Services Plc
[2007] EWCA Civ 1065 (
Lord Justice Mummery :
“The appeal
The issue in this appeal is whether there was an error of law in the decision of the employment tribunal (ET) upholding a claim by a former employee for breach of contract.
……
The discussion should then move to the part of the CIS contract expressly governing entitlement to enhanced severance pay. On the undisputed factual basis it is plain that, as a matter of their ordinary and natural meaning, the CIS enhanced severance provisions, which apply to the case of Mrs Jackson, are those relating to new entrants post-1 March 2002.
Mr Green submitted that the court should not stop there: it must then move to regulation 5(1) TUPE and interpret the CIS severance terms in the context of the TUPE stipulation that, after the transfer in June 2004, her employment contract with Ci(UK) Ltd “shall have effect …as if originally made” between Mrs Jackson and CIS.
A series of rulings of the Court of Justice on the interpretation of Article 3(1) of the Directive were cited by Mr Green: Molle Kro [1989] ICR 330 at paragraph 25; Daddy’s Dance Hall [1988] IRLR 315 at paragraphs 14 and 15; P Bork International [1989] IRLR 41 at paragraph 13; and Collini and Chiappero v. Telecom Italia spa [2000] IRLR 788 at paragraphs 49 to 51.
Mr Green also adopted the section dealing with Transfer of Undertakings in the most recent edition of the IDS Employment Law Handbook on Transfer of Undertakings (July 2007). The Handbook discusses the current 2006 Regulations. Although they do not apply to this case, the new Regulation 4(1) is in the same terms as the old Regulation 5(1) of TUPE 1981. The Handbook explains how, by a statutory novation, the provisions in the final clause of the Regulation commencing with the word “but”, are intended to override the common law position that an employment contract terminated on a change of employer. In consequence of legislative intervention, rather than of an agreement between the parties, the transferee is substituted for the transferor as one of the original parties to the employment contract. The original employment contract is not transferred: it is extinguished and replaced by another employment contract. The transferee steps into the shoes of the transferor, taking over the rights and obligations of the transferor under the employment contract, as if the transferee had contracted with the employee concerned from the date on which the employee was originally employed by the transferor.
I am unable to see how any of the cases cited or the discussion in the Handbook can assist Mrs Jackson on this appeal. It is not contended by Mr Green that TUPE applies so as to confer directly on Mrs Jackson a right to enhanced severance pay applicable to a pre-1 March 2002 joiner. It was not a right to which she was entitled before the transfer in 2004 and the variation by CIS of its relevant terms of contract.
The submission is rather that the contractual severance terms must be interpreted in the context of TUPE, which applied to the relevant transfer to CIS in 2004. What is that context? The purpose and effect of TUPE and the Directive, as implemented by TUPE, is to safeguard, as a matter of public policy, the existing rights of employees on a transfer of an undertaking and the change of employer by making it possible for an employee to work for the new employer on the same conditions as those agreed with the transferor. The employment relationship and its conditions continue unchanged as if agreed with the transferee. TUPE also enables the length of the employee’s service with the transferor to be used in the determination of certain rights of the employee (e.g calculation of redundancy and severance payments, calculation of length of notice and of qualifying periods).
The TUPE and Acquired Rights provisions aim at preventing the employee in an undertaking from being prejudiced as a result of the transfer of the undertaking: see, for example, Power v. Regent Security Services Ltd [2007] ICR 970 at paragraph 51-52. It is not, however, their objective to confer additional rights on the employee or to improve the situation of the employee: see Viggosdottir v. Islandspostur HF [2002] IRLR 425 at paragraphs 35 to 39.
So, the true effect of the deeming provision in regulation 5(1), on which the ET relied, is not to give a transferred employee access to employment benefits other than those to which the employee was entitled before the transfer of the undertaking. CIS, as transferee, is substituted for Ci(UK) Ltd, as the contracting party, and the prior obligations of Ci(UK)Ltd and the rights of Mrs Jackson continue to have effect after the transfer.
The fact that, when CIS treated Mrs Jackson as a new entrant post-1 March 2002, it calculated her severance pay on the basis of her deemed continuity of service from 1999, is irrelevant to the question whether she is or is not a new entrant within the meaning of the CIS enhanced severance terms. This question (i.e. new entrant or not) is determined by the date when, as a fact, she joined CIS. It is not determined by the direct or indirect application of Regulation 5(1), or by its alleged contextual effects or by Mrs Jackson’s deemed continuity of service from 1999, her previous service with Ci (UK)Ltd having been carried across by TUPE on the relevant transfer to CIS in June 2004.
In brief, I totally reject the attempt to make artificial use of TUPE in a contextual fashion for the purpose of interpreting CIS’s contract for enhanced severance pay terms in a way which displaces ET’s undoubtedly correct finding of fact that Mrs Jackson joined CIS after 1 March 2002 and miraculously transforms her from being a post-2002 new entrant into a pre- 2002 joiner.
Result
There was an error of law in the decision of the ET on Mrs Jackson’s claim for damages for non-payment of enhanced severance pay. The EAT correctly allowed the appeal by CIS. I would dismiss Mrs Jackson’s appeal to this court.”
Werhof
[2006] 2 CMLR 44, [2006] CEC 653, [2006] IRLR 400
“The first question
17 By its first question, the national court asks, essentially, whether Article 3(1) of the Directive must be interpreted as meaning that, where an undertaking is transferred and a contract of employment refers to a collective agreement to which the transferor is a party but not the transferee, the transferee is not bound by collective agreements subsequent to the one in force at the time of that transfer.
Observations submitted to the Court
18 The claimant submits that it follows from the case-law of the Court that, when an individual contract of employment includes a clause referring to collective agreements concluded in a particular sector, that clause must necessarily be “dynamic” and, in accordance with Article 3(1) of the Directive, refers to collective agreements concluded after the date of transfer of the undertaking (see, inter alia, Case C-343/98 Collino and Chiappero [2000] ECR I-6659, paragraph 53, and Case C-4/01 Martin and Others [2003] ECR I-12859, paragraphs 29, 48 and 54). Furthermore, such an interpretation of the Directive follows from its spirit and purpose, namely, the protection of employees in the event of a change of owner of the undertaking and, in particular, the safeguarding of their rights.
19 The defendant and the German Government take the view, on the other hand, that only the collective agreement in force at the time of the transfer is applicable. Otherwise, that is to say if collective agreements which came into force after the date of the transfer were to apply to employers who did not take part in the negotiations, employers” freedom to contract would be hindered, which would equate to expropriation. Moreover, it is important to take account of freedom of association which includes an employer’s right not to join an association or trade federation. Finally, it may be inferred from the objective of the directive and the wording of Article 3(1) thereof that only the transferor’s rights and obligations arising from a contract of employment existing on the date of a transfer are transferred to the transferee.
20 The Commission of the European Communities submits that Article 3(2) of the Directive, which is intended to safeguard the rights of employees acquired under collective agreements and requires employers to preserve employment relationships governed by a collective agreement, contains two requirements which apply in this case.
21 First, under the “parity clause” which makes collective agreements concluded by the transferor applicable to the contract of employment, the transferee’s obligation to continue to pay the claimant the wage which the transferor had agreed on an individual basis and the additional payments then provided for by the collective agreement lasts only “until the date of termination or expiry” of that collective agreement. The Commission takes the view that, with effect from 1 June 2003, the new collective agreement concluded on 23 May 2002 replaced the collective agreement which bound the transferee by reason of the transfer, so that the transferee was no longer bound by that agreement from 1 June 2003.
22 Secondly, since the right, provided for by the second subparagraph of Article 3(2) of the Directive, to limit the period for continued observance of terms and conditions was transposed into German law by the second sentence of Paragraph 613a(1) of the BGB, the defendant was also entitled to free itself from its obligation to observe the collective agreement before the latter expired, at the end of a period of one year from the transfer.
The Court’s answer
23 First, the general point should be made that a contract is characterised by the principle of freedom of the parties to arrange their own affairs, according to which, in particular, parties are free to enter into obligations with each other. Under that principle, and in a situation such as the one in the main proceedings where the defendant is not a member of any employers” association and is not bound by any collective agreement, the rights and obligations arising from such an agreement do not therefore apply to it, as a rule. Otherwise, as the Advocate General noted in point 52 of his Opinion, the principle that contracts cannot impose obligations on third parties would be infringed.
24 However, in respect of the transfer of an undertaking and its consequences on employment relationships, unconditional application of the abovementioned principle could result in erosion of the rights which the employee has under his contract of employment and the collective agreement to which the employer transferring the undertaking was party, but not the transferee. That is why the Community legislature sought to ensure that, on transfer of an undertaking, employees enjoy special protection designed to prevent the erosion which could result from application of that principle.
25 Furthermore, according to the case-law of the Court, the Directive is intended to safeguard the rights of employees in the event of a change of employer by allowing them to continue to work for the new employer on the same conditions as those agreed with the transferor (see, inter alia, Case 324/86 Daddy’s Dance Hall [1988] ECR 739, paragraph 9, Case C-362/89 D’Urso and Others [1991] ECR I-4105, paragraph 9, and Case C-399/96 Europièces [1998] ECR I-6965, paragraph 37).
26 It is also settled case-law that the rules of the Directive must be considered to be mandatory, so that it is not possible to derogate from them in a manner unfavourable to employees (see Martin, paragraph 39). It follows that the contracts of employment and employment relationships existing, on the date of the transfer of an undertaking, between the transferor and the workers employed in the undertaking transferred are automatically transferred to the transferee by the mere fact of the transfer of the undertaking (see, to that effect, D’Urso and Others, paragraph 20, and Case C-305/94 Rotsart de Hertaing [1996] ECR I-5927, paragraph 18).
27 Here, the contract of employment of the claimant in the main proceedings refers, as regards wages, to a collective agreement. That clause in the contract of employment is covered by Article 3(1) of the Directive. By virtue of the Directive, the rights and obligations arising from a collective agreement to which the contract of employment refers are automatically transferred to the new owner, even if, as in the main proceedings, the latter is not a party to any collective agreement. Accordingly, the rights and obligations arising out of a collective agreement continue to bind the new owner after the transfer of the business.
28 In respect of the interpretation of Article 3(1) of the Directive, a clause referring to a collective agreement cannot have a wider scope than the agreement to which it refers. Consequently, account must be taken of Article 3(2) of the Directive, which contains limitations to the principle that the collective agreement to which the contract of employment refers is applicable.
29 First, the terms and conditions under that collective agreement are to continue to be observed only until the date of its termination or expiry, or the entry into force or application of another collective agreement. Thus the wording of the Directive does not in any way indicate that the Community legislature intended that the transferee be bound by collective agreements other than the one in force at the time of the transfer and, consequently, that the terms and conditions be subsequently amended through the application of a new collective agreement concluded after the transfer. Such an assessment is, moreover, consistent with the objective of the Directive, which is merely to safeguard the rights and obligations of employees in force on the day of the transfer. On the other hand, the Directive was not intended to protect mere expectations to rights and, therefore, hypothetical advantages flowing from future changes to collective agreements.
30 Secondly, the Member States may limit the period for observing the terms and conditions arising from a collective agreement, provided that that period is not less than one year. In a way, this limitation is subsidiary, since it is applicable if none of the abovementioned situations, that is, termination or expiry of the existing collective agreement, or entry into force or application of a new collective agreement, arises within a period of one year after the transfer.
31 In addition, although in accordance with the objective of the Directive the interests of the employees concerned by the transfer must be protected, those of the transferee, who must be in a position to make the adjustments and changes necessary to carry on his operations, cannot be disregarded.
32 In this connection, in accordance with the Court’s settled case-law, when interpreting the provisions of a directive account must be taken of the principle of the coherence of the Community legal order which requires secondary Community legislation to be interpreted in accordance with the general principles of Community law (see, to that effect, Case C-1/02 Borgmann [2004] ECR I-3219, paragraph 30).
33 Freedom of association, which also includes the right not to join an association or union (see, to that effect, Eur. Court of H.R., Sigurjónsson v Iceland, judgment of 30 June 1993, Series A, No 264, § 35, and Gustafsson v Sweden, judgment of 25 April 1996, Reports of Judgments and Decisions, 1996-II, p. 637, § 45) is enshrined in Article 11 of the European Convention for the Protection of Human Rights and Fundamental Freedoms signed in Rome on 4 November 1950 and is one of the fundamental rights which, in accordance with the Court’s settled case-law, are protected in the Community legal order (Case C-415/93 Bosman [1995] ECR I-4921, paragraph 79), as is restated in Article 6(2) EU (see Case C-274/99 P Connolly v Commission [2001] ECR I-1611).
34 If the “dynamic” interpretation, supported by the claimant, of the contractual reference clause mentioned in paragraph 18 of this judgment were applied, that would mean that future collective agreements apply to a transferee who is not party to a collective agreement and that his fundamental right not to join an association could be affected.
35 On the other hand, the “static” interpretation, supported by the defendant in the main proceedings and the German Government, makes it possible to avoid a situation in which the transferee of a business who is not party to a collective agreement is bound by future changes to that agreement. His right not to join an association is thus fully safeguarded.
36 In those circumstances, the claimant cannot maintain that a clause contained in an individual contract of employment and referring to collective agreements concluded in a particular sector must necessarily be “dynamic” and refers, by application of Article 3(1) of the Directive, to collective agreements concluded after the date of transfer of the undertaking.
37 It follows from the foregoing that the answer to the first question must be that Article 3(1) of the Directive must be interpreted as not precluding, in a situation where the contract of employment refers to a collective agreement binding the transferor, that the transferee, who is not party to such an agreement, is not bound by collective agreements subsequent to the one which was in force at the time of the transfer of the business.
The second question
38 In the light of the answer given to the first question, there is no need to answer the second question.
Costs
39 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Third Chamber) hereby rules:
Article 3(1) of Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees” rights in the event of transfers of undertakings, businesses or parts of businesses must be interpreted as not precluding, in a situation where the contract of employment refers to a collective agreement binding the transferor, that the transferee, who is not party to such an agreement, is not bound by collective agreements subsequent to the one which was in force at the time of the transfer of the business.
…..
Discussion
It is a powerful argument that employees need to know where they are. It can be said with force that it is for the employers to know what the legal implications are so that the employees can be informed. But in my view it does not follow that the employer must, in effect, warrant the accuracy of the law. The arguments of RMG and their answers to the points made by CWU are, in my view, compelling.
In my view the language of Regulation 13(2) is not the language of strict liability or warranty. The opening paragraph shows the purpose – “Long enough before . . . to enable the employer . . . to consult the appropriate representatives . . . shall inform . . .”. It seems to me a powerful point that it is not simply in relation to “measures” that consultation is contemplated.
If one then goes through each subparagraph and considers the question of strict liability the position is as follows. I take first (a). Would the fact that the transfer did not ever take place give rise to liability? Would the fact that the date was changed give rise to liability? It seems to me that warranty of the accuracy of the subjects of this subparagraph could not have been contemplated. (b) Leaving aside “legal” – “economic” or “social” implications are highly unsuitable aspects to be the subject of some warranty as to accuracy as opposed to matters on which the employer should express a genuine view; (c) and (d) it is common ground are matters for the genuine belief of employers. It seems to me an unlikely construction that only one aspect of one subparagraph should be the subject of a warranty. The fact that a concession has to be made in relation to the language “measures” in (c) and (d) ultimately points in a direction opposite to that contended for by CWU.
I also find persuasive the fact that the subparagraphs are so inter-related. Economic and social implications will depend on the legal implications, and measures will depend on all three. All are to be the subject of interrelated consultation. It would be strange if part of the debate could not relate to the question whether the employer’s view as to the legal implications was right. If it is said “there can be debate”, it would seem stranger still that, if there is genuine disagreement and the employees’ argument ultimately turns out to be right, a penalty can be imposed on the employer, but there is no balancing system of penalty if the employer turns out to be right.
I am not in any way persuaded that to rule as the EAT did makes regulation 13(2)(b) meaningless, or will lead to employers abdicating their responsibility by shutting their eyes to problems. There must be an obligation on the employer to consider the legal implications. If he does not do so, then he will not be able to defend his view as being genuine. What representatives should be informed of is a considered view as to the legal implications and an employer will not be able simply to say without considering the point – “this is what I believed”.
Legal implications can in any event be difficult to be certain about. That, it seems to me, is important for a number of reasons. As RMG have said, a lawyer would not warrant the accuracy of his advice in any area of uncertainty if at all and it would take clear language to impose such a warranty on a non-lawyer. In addition it would seem to me that where consultation and debate is important, it is likely that the directive and regulations would be encouraging openness and allowing for an employer to be able to say the legal implications are not clear, where they are unclear, so that there can be a proper debate about it. An obligation to warrant the accuracy seems to make it impossible for an employer to say that the answer is not clear.
In my view the EAT were correct in their view that the language of Regulation 13(2)(b) obliges the employer to describe what he genuinely believes to be the legal social and economic implications.
There was some suggestion from Mr Reade that a question should be referred to the ECJ. Since I have formed a clear view I would not myself contemplate referring a question.
I would dismiss the appeal.
Collins v Excel Property Services Limited
[1998]
Mrs. Collins and four other employees transferred to a new cleaning contractor. However, they felt that the equipment was not of the same standard as previously provided with the respondent. They terminated their employment and Mrs. Collins claimed redundancy from the respondent. The respondent claimed there was no liability as it was a transfer of undertaking and the liability lay with the new contractor.
The EAT accepted that there would not be a transfer of undertaking if there was no transfer of significant tangible or intangible assets. However, the claimant had transferred under the Acquired Rights Directive. She has no case against the transferor / respondent.
There was no redundancy as the school cleaning was still required.
Brian Tangney and 27 Others v Dell Products, Limerick
2012 No. 245MCA
High Court
26 June 2013
[2014] 25 E.L.R. 61
Birmingham J.
delivered his judgment on June 26, 2013 saying:
1. This matter comes before the court by way of an appeal from a determination of the Employment Appeals Tribunal (hereinafter “EAT”) dated June 5, 2012. That decision had dismissed a complaint on behalf of the applicant and 27 others that the respondent had breached the terms of s.9 of the Protection of Employment Act 1977 as amended. The decision of the EAT was itself reached on an appeal *63 from a decision of the Rights Commissioner dated November 12, 2009 which had concluded that the respondent had breached s.9 of the Protection of Employment Act 1977. Under s.8(4)(b) of the Employment (Information) Act 1994, provision is made for an appeal from a determination of the EAT to the High Court on a point of law, but the determination of the High Court is final and conclusive.
The factual background
2. Dell Products, Limerick (Dell) is one of the largest multi-national companies active in Ireland. In 2009 it embarked on a worldwide rationalisation and re-organisation of its activities which saw the cessation of manufacturing in Ireland which had previously been carried on at its premises at Raheen Business Park in Limerick.
3. On January 8, 2009 the appellants and other employees received a written communication from their employer furnishing information as to the employer’s plan. On the same day a staff meeting was held at which employees were briefed by senior management figures. In essence the case that has been made by the applicants throughout is that what occurred on January 8, 2009 (the written communication and the briefing at the staff meeting) constituted a notice of dismissal and accordingly that any discussion that took place thereafter came too late to be effective. It is the case that following on from what occurred on January 8, 2009, Dell engaged in a consultation and discussion process with its employees and their designated representatives. Discussions took place with a representative group known as the Site Communication Team (SCT) and with an ad hoc group styled as the Dell Employees Representative Committee (DERC).
4. In the course of argument I have been told by counsel for the respondent that the fact that the redundancy package was modified at an additional cost to the employer of approximately €9 million shows that the consultation process that occurred was a meaningful, worthwhile and effective one.
5. I will return to the communications of January 8, 2009 in greater detail but at this stage it will be evident that the core issue in this appeal is whether a notice of dismissal took place on January 8, 2009, and that accordingly whatever consultations took place thereafter came too late, or whether, as contended by Dell, what occurred on January 8, 2009 and thereafter was sufficient to comply in full with all statutory obligations.
Legislation
6. It is convenient to refer at this stage to the Irish and European legislation that appears in issue. The Irish legislation with which we are concerned is the Protection of Employment Act 1977, as amended and in particular Part 2 thereof. Section 9 provides as follows:
“ Obligation on Employer to Consult Employees Representatives
*64
9–(1) Where an employer proposes to create collective redundancies he shall, with a view to reaching an agreement, initiate consultations with employees’ representatives.
(2) Consultations under this section shall include the following matters –
(a) the possibility of avoiding the proposed redundancies, reducing the number of employees affected by them or, mitigating their consequences by recourse to accompanying social measures, aimed, inter alia, at aid for redeploying or retraining employees made redundant
(b) the basis on which it will be decided which particular employees will be made redundant.
(3) Consultations under this section shall be initiated at the earliest opportunity and in any event at least 30 days before the first notice of dismissal is given.
10–(1) For the purpose of consultations under section 9, the employer concerned shall supply the employees’ representatives with all relevant information relating to the proposed redundancies.
(2) Without prejudice to the generality of subsection (1), information supplied under this section shall include the following, of which details shall be given in writing –
(a) the reasons for the proposed redundancies.
(b) the number, and description of categories, of employees whom it is proposed to make redundant,
(c) the number of employees, and description of categories, normally employed
(i) the number (if any) of agency workers to which the protection of Employees (Temporary Agency Work) Act 2012 applies engaged to work for the employer,
(ii) those parts of the employer’s business in which those agency workers are, for the time being, working, and
(iii) the type of work that those agency workers are engaged to do, and
(d) the period during which it is proposed to effect the proposed redundancies,
(e) the criteria proposed for the selection of the workers to be made redundant and,
(f) the method of calculating any redundancy payments other than those methods set out in the Redundancy Payments Act 1967 to 2007 or any other relevant enactment for the time being in force or, subject thereto, in practice.
(3) An employer shall as soon as possible supply the minister with copies of all information supplied in writing under subsection (2).”
7. It may be noted that this Act was designed to satisfy Ireland’s obligations under Council Directive 98/59 on the approximation of the laws of the Member States relating to collective redundancies consolidating earlier directives. The relevant portions of the directive are to be found at section II and section III. *65
“Section II
Information and Consultation
Article 2(1)
(1) Where an employer is contemplating collective redundancies, he shall begin consultations with the workers’ representatives in good time with a view to reaching an agreement.
(2) These consultations, shall, at least, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences by recourse to accompanying social measures aimed, inter alia, at aid for redeploying or retraining workers made redundant.
Member States may provide that the workers’ representatives may call on the services of experts in accordance with national legislation and/or practice.
(3) To enable workers’ representations to make constructive proposals, the employers shall in good time during the course of the consultations:
(a) supply them with all relevant information and
(b) in any event notify them in writing of:
(i) The reasons for the proposed redundancies;
(ii) the number of categories of workers to be made redundant;
(iii) the number and categories of workers normally employed;
(iv) the period over which the projected redundancies are to be effected;
(v) the criteria proposed for the selection of the workers to be made redundant in so far as national legislation and/or practice confers the power therefor upon the employer;
(vi) the method for calculating any redundancy payments other than those arising out of national legislation and/or practice.
The employer shall forward to the competent public authority a copy of, at least, the elements of the written communication which are provided for in the first subparagraph, point (b), subpoints (i) to (v).
(4) The obligations laid down in paragraphs, 1, 2 and 3 shall apply irrespective of whether the decision regarding collective redundancies is being taken by the employer or by an undertaking controlling the employers
In considering alleged breaches of the information, consultation and notification requirements laid down by this Directive, account shall not be taken of any defence on the part of the employer on the ground that the necessary information has not been provided to the employer by the undertaking which took the decision leading to collective redundancies.”
8. Section III deals with the procedures for collective redundancies. It requires employers to notify competent public authorities in writing of any projected collective redundancies. Article 4 provides that projective collective redundancies shall take effect not earlier than 30 days after the notification to the competent public authority.
*66
The decision under appeal
9. The question is whether the consultation process required by the 1977 Act commenced, as it ought to on January 8, 2009 or whether a breach of s.9 of the 1977 Act occurred by reason of the fact that the respondent made a decision to terminate the employment of the applicant prior to January 8, 2009, and on that occasion merely communicated a decision already taken, a decision which had been taken in the absence of consultation.
10. The Rights Commissioner had concluded that the specific terms of the individual letters that issued on January 8, 2009, made it impossible for the employer to comply with s.9.
11. The appeal submitted to the Employment Appeals Tribunal was very specific in contending that the Rights Commissioner had misinterpreted the letters of January 8, 2009 as a notice of termination of employment, when in fact the letters were no more than an indication to employees of the terms that would apply if they were made redundant. In its determination it recited the opening remarks of counsel for the employer. Of note is that reference is made to the fact that counsel had referred to two cases Junk v Kühnel Case C-188/03 [2005] E.C.R. I-855 and also Akavan Erityisalojen Keskusliitto (AEK) ry v Fujitsu Siemens Computers Oy Case C-44/08 [2009] E.C.R. I-8163. Counsel is quoted as saying that the Fujitsu decision “is clear whether it is too early to consult” and “it is also incorrect to conflict the strategic decision and the delivery of a decision”. The comment is added:
“The point counsel makes from the authorities is that it is clear whether it is too late to consult employees or too early to consult”.
Then, reference is made in the determination in these terms to the submissions that had been made in regard to s.9:
“The submission is that regarding s. 9 the employer ticks all of the requirements of s. 9.
(1) The employer did not start the consultation too late.
(2) By reference to the Fujitsu case there was no question of the employer having to consult any earlier because of the strategic to migrate was the employer [sic] decision and
(3) There is no prohibition in the employer dismissing employees whilst the consultative process is ongoing provided …..The RC [Rights Commissioner] wrongly decided that the employer started to dismiss before consultation”.
I have set out this section of the determination in full and exactly as it appears there as in my view it serves to clarify the operative part of the determination. Thereafter, the appellant’s case (Dell), the respondents’ case and the closing arguments of counsel for the respondent employees are recited.
*67
12. The operative part of the determination, the actual decision is particularly brief. It is convenient to quote it in full.
“ Determination
Having heard all the evidence and submissions of the parties, including Mr. G.H. who was self-represented, the Tribunal makes the following Determination.
Regarding s.10 of the Act, the Tribunal upholds the Decision of the Rights Commissioner.
Regarding s.9 the employer is entitled to make a strategic decision and the Tribunal is satisfied that the meeting of January 8, 2009 was the commencement of this process. The Tribunal unanimously determines that the complaint by the respondent is not well founded and the appellant employer is not in breach of s.9 of the Act. Accordingly the Rights Commissioners [sic] decision is upset.”
13. Dell has asserted that the purported appeal to the High Court does not raise any valid point of law arising from adjudication of the EAT. Rather, it is said, that the appellants are seeking a further appeal on the facts, something that is not permissible. Dell contends that the EAT was confronted with the need for a simple factual determination as to whether the communications of January 8, 2009 constituted a notice of dismissal, and concluded that was not so. While the determination of the EAT may well involve a finding of fact, it seems to me that one cannot lose sight of the fact that the notice of appeal purports to raise issues of law. In particular it is contended by the notice of appeal that the EAT’s interpretation of the requirement for consultation as provided for under s.9 of the Protection of Employment Act 1977, the Protection of Employment Regulations 2000 and the jurisprudence of the European Court of Justice was incorrect in law. More particularly it is contended that the EAT erred in its conclusions as to when the obligation to consult arose. It seems to me that in these circumstances it would not be appropriate to dispose of the appeal in a summary fashion as suggested by Dell. Rather, it is appropriate to identify what was the threshold that the EAT was applying and consider whether that was appropriate. It may nonetheless be the case that on closer examination it will emerge that the determination was in reality a finding of fact and that an appeal does not lie.
The authorities
14. The question of when the obligation to consult arises has been the subject of a number of decisions of the European Court of Justice (hereinafter “ECJ”) and of the British courts. So far as the ECJ decisions are concerned the starting point for consideration of this issue is Junk v Kühnel Case C-188/03 [2005] E.C.R. I-855. The background to that case was that Mrs Junk had been employed as a care assistant and domestic carer by a company referred to as A.W.O. On January 31, 2002 A.W.O. lodged a request for the opening of insolvency proceedings on grounds of financial difficulties. With effect from February 1, 2002, it released all *68 its employees from the obligation to work and did not pay them any remuneration for January 2002. On February 5, 2002, insolvency proceedings were opened, followed on May 1, 2002, by liquidation proceedings. Mr Kühnel was appointed liquidator. By letter of June 19, 2002, Mr Kühnel informed the chairman of the works council in the company that because of the closure of the company he intended to terminate all remaining contracts of employment, including that of Mrs Junk, with effect from September 30, 2002 and to carry out a collective redundancy. Mrs Junk submitted before the Arbeitsgericht (or Labour Tribunal) that her redundancy was ineffective. Significantly the Arbeitsgericht pointed out that according to the view which had been dominant in German law, the provisions applicable in cases of collective redundancies do not refer to the termination of the contracts of employment but to the date on which the workers actually leave the undertaking, that is to say generally on the expiry of their periods of notice of redundancy. The ECJ at para.31 interpreted the first question submitted to it as in substance seeking to ascertain whether arts 2 and 4 of the Directive are to be construed as meaning that the event constituting redundancy consists of the expression by the employer of his intention to put an end of the contract of employment or of the actual cessation of the employment relationship on the expiry of the period in the notice of redundancy.
15. Having referred to certain technical terms that appeared in the German language version of the Directive, the ECJ at para.35 observed as follows:
“Next, it must be noted that Article 2(1) of the Directive imposes an obligation on the employer to begin consultations with the workers’ representatives in good time in the case where he ‘is contemplating collective redundancies’.Article 3 (1) requires the employer to notify the competent public authority of ‘any projected collective redundancies’.”
The ECJ in the following paragraphs went on to comment as follows:
“(36) The case in which the employer ‘is contemplating’ collective redundancies and has drawn up a ‘project’ to that end corresponds to a situation in which no decision has yet been taken. By contrast, the notification to a worker that his or her contract of employment has been terminated is the expression of a decision to sever the employment relationship, and the actual cessation of that relationship on the expiry of the period of notice is no more than the effect of that decision.
(37) Thus, the terms used by the Community legislature indicate that the obligations to consult and to notify arise prior to any decision by the employer to terminate contracts of employment.
(38) Finally, this interpretation is confirmed, in regard to the procedure for consultation of workers’ representatives, by the purpose of the Directive, as set out in Article 2(2), which is to avoid terminations of contracts of employment or to reduce the number of such terminations. The achievement of that purpose *69 would be jeopardised if the consultation of workers’ representatives were to be subsequent to the employer’s decision.
(39) The answer to the first question must therefore be that Articles 2 to 4 of the Directive must be construed as meaning that the event constituting redundancy consists in the declaration by an employer of his intention to terminate the contract of employment.”
16. The ECJ returned to the issue in case Akavan Erityisalojen Keskusliitto (AEK) ry v Fujitsu Siemens Computers Oy Case C-44/08 [2009] E.C.R. I–8163. This is the decision that the Employment Appeals Tribunal was referring to as Fujitsu Siemens. For convenience I will adopt the same abbreviation.
17. The background to the matter coming before the ECJ is that following the merger of certain information technology businesses of Fujitsu Limited and Siemens AG into a joint undertaking. The Fujitsu Siemens computer group started trading in October 1999. FSC was a subsidiary of Fujitsu Siemens Computers (Holdings) BV (the parent company), a company established in the Netherlands. At the time the group had a production plant in Espoo in Finland and a number of plants in Germany.
18. At a meeting held on December 7, 1999, the executive counsel of the parent company, which consisted of the executive members of its board of directors, decided to make a proposal to the board of directors to dispose of the Espoo facility. At a meeting held a week later, on December 14, 1999, the board of directors decided to support the proposal, but no specific decision was taken in relation to that factory. On the same day FSC proposed consultations and those took place between December 20, 1999 and January 31, 2000. On February 1, 2000, FSC’s board of directors, mainly consisting of directors of the group and chaired by the deputy chairman of the parent company’s board of directors took a decision to terminate FSC’s operations in Finland with the exception of computer sales. On February 8, 2000, FSC began making employees redundant. Some employees claimed that FSC had infringed the law on cooperation and commenced proceedings. During the course of those proceedings it was contended on behalf of the employees that a final decision to run down the activities of the Espoo factory and to separate it from the group’s activities before transferring it to Germany had in fact been taken by the parent company’s board of directors by December 14, 1999 at the latest. According to the employees, the real decisions had been taken on or before December 14, before the consultations with the workforce required by law had taken place. When the matter made its way to the Finnish Supreme Court six questions were submitted to the ECJ, the first two of which were as follows:
“(1) Is Article 2(1) of Directive 98/59 to be interpreted as meaning that the obligation under that provision to embark on consultations when ‘contemplating collective redundancies’ of employees and ‘in good time’ requires consultations *70 to be started when it is established from strategic decisions or changes that have been made relating to the activity that a need for collective redundancies of employees follows? Or is the provision in question to be interpreted as meaning that the obligation to start consultations already arises on the basis of the employer contemplating measures or changes affecting the activity, such as a change in production capacity or a concentration of production, as a consequence of which a need for collective redundancies is to be expected?
(2) Having regard to the fact that the first subparagraph of Article 2(3) of Directive 98/59 refers to the supply of information in good time during the course of the consultations, is Article 2(1) of [that] Directive to be interpreted as meaning that the obligation under that provision to start consultations when ‘contemplating’ collective redundancies and ‘in good time’ requires consultations to be started already before the employer’s intentions have reached the stage at which the employer is required to identify and supply to the employees the information specified in Article 2(3)(b) [of that Directive]?”
These questions were answered as follows:
“(1) Article 2(1) of Directive 98/59 of July 20, 1988 on the approximation of the laws of the Member States relating to collective redundancies must be interpreted to mean that the adoption, within a group of undertakings, of strategic decisions or of changes in activities which compel the employer to contemplate or to plan for collective redundancies gives rise to an obligation on that employer to hold consultations with workers’ representatives.
(2) Whether the obligation has arisen for the employer to start consultations on the collective redundancies contemplated does not depend on whether the employer is already able to supply to the workers’ representatives all the information required in Article 2(3)(b) of Directive 98/59.”
The discussion at paras 38 to 49 as to how question 1 was to be answered is of considerable interest. It is convenient to set out those paragraphs which are of particular importance at this stage.
“38. In that regard, it must be recalled that, as is clear from the wording of Articles 2(1) and 3(1) of Directive 98/59, the obligations of consultation and notification imposed on the employer come into being prior to the employer’s decision to terminate employment contracts (see, to that effect Junk v Kühnel Case C-188/03 [2005] E.C.R. I-885, paragraphs 36 and 37). In such a case there is a still a possibility of avoiding or at least reducing collective redundancies, or of mitigating the consequences.
39. Under Article 2(1) of Directive 98/59, the employer has the obligation to start consultations with the workers’ representatives in good time if he is ‘contemplating collective redundancies’. As stated by the Advocate General in points 48 and 49 of his Opinion, it is clear from comparison of various language versions of that provision that the Community legislature envisaged that the *71 obligation at issue to hold consultations would arise in connection with the existence of an intention on the part of the employer to make collective redundancies.
40. The references in Articles 3 and 4 of Directive 98/59 to ‘projected’ collected redundancies confirm that the existence of such an intention is the factor which triggers the obligations laid down by that directive, in particular by Article 2.
41. It follows that the obligation to hold consultations laid down in Article 2 of Directive 98/59 is deemed to arise where the employer is contemplating collective redundancies or is drawing up a plan for collective redundancies (see, to that effect, Dansk Metalarbejderforbund and Specialarbejderforbundet i Danmark v H. Nielsen & Son, Maskinfabrik A/S, in liquidation Case 284/83 [1985] E.C.R. 553, paragraph 17).
42. It must however be added that, as is clear from the actual wording, the obligations laid down by Directive 98/59, in particular the obligation to hold consultations laid down in Article 2, are also triggered in situations where the prospect of collective redundancies is not directly the choice of the employer.
43. Under Article 2(4) of that Directive, the employer is responsible for compliance with the information and consultation requirements stemming from that directive, even if the decision on collective redundancies is made not by the employer, but by the undertaking controlling the employer, and even though the employer may not have been immediately and properly informed of that decision.
44. Against an economic background marked by the increasing presence of groups of undertakings, that provision serves to ensure, where one undertaking is controlled by another, that the purpose of Directive 98/59, which, as is stated in recital 2 of its preamble, seeks to promote greater protection for workers in the event of collective redundancies, is actually achieved (Athinaïki Chartopoiïa AE v Panagiotidis Case C 270/05 [2007] E.C.R. I-1499, paragraph 25).
45. Moreover, as the United Kingdom Government rightly observes, a premature triggering of the obligation to hold consultations could lead to results contrary to the purpose of Directive 98/59, such as restricting the flexibility available to undertakings when restructuring, creating heavier administrative burdens and causing unnecessary uncertainty for workers about the safety of their jobs.
46. Lastly, the raison d’être and effectiveness of consultations with the workers’ representatives presuppose that the factors to be taken into account in the course of those consultations have been determined, given that it is impossible to undertake consultations in a manner which is appropriate and consistent with their objectives when there has been no definition of the factors which are of relevance with regard to the collective redundancies contemplated. Those objectives are, under Article 2(2) of Directive 98/59, to avoid termination of employment contracts or to reduce the number of workers affected, and to mitigate the consequences (see Junk , paragraph 38). However, where a decision deemed likely to lead to collective redundancies is merely contemplated and where, accordingly, such collective redundancies are only a probability and the relevant factors for the consultations are not known, those objectives cannot be achieved.
47. On the other hand, it is clear that to draw a link between the requirement to hold consultations arising under Article 2 of Directive 98/59 and the adoption *72 of a strategic or commercial decision which makes the collective redundancies of workers necessary may deprive that requirement, in part, of its effectiveness. As is clear from the first subparagraph of that Article 2(2), the consultations must cover, inter alia, the possibility of avoiding or reducing the collective redundancies contemplated. A consultation which began when a decision making such collective redundancies necessary had already been taken could not usefully involve any examination of conceivable alternatives with the aim of avoiding them.
48. It must therefore be held that, in circumstances such as those of the case in the main proceedings, the consultation procedure must be started by the employer once a strategic or commercial decision compelling him to contemplate or to plan for collective redundancies has been taken.
49. In those circumstances, the answer to be given to the first question referred is that Article 2(1) of Directive 98/59 must be interpreted to mean that the adoption, within a group of undertakings, of strategic decisions or of changes in activities which compel the employer to contemplate or to plan for collective redundancies gives rise to an obligation on that employer to consult with workers’ representatives.”
19. The reference in the judgment with apparent approval to the arguments that had been advanced on behalf of the government of the United Kingdom about the dangers of premature consultation is instructive. I have discussed the approach taken by the ECJ in the Fujitsu Siemens case at some length because it seems to me that the EAT was seeking to apply this decision when it reached the conclusion that it did. It is for this reason that I have referred to the recital of the arguments of counsel for the employer in the body of the determination.
20. Still greater clarity, if that was required, might have been provided by United States of America v Nolan [2012] I.R.L.R. 1020 but unfortunately the ECJ, faced with the very unusual situation of a dispute involving a civilian employee working at U.S. air force base in Britain, concluded that it did not have jurisdiction to reply to questions which had been submitted to it by the Court of Appeal.
21. The factual background to that case could hardly have been more unusual and indeed the notion of a sovereign government engaging in consultation before closing a military base for strategic reasons raises eyebrows. However, what is of interest is that the United States argued by reference to the Fujitsu Siemens case that the consultation obligation was not triggered by a proposed business decision to close a plant, but that the consultation obligation only arose at a later stage when the business decision had already been made and the intention to make the employer redundant had been formed. In a situation where it was clear that if the interpretation being placed on the ECJ decision in Fujitsu Siemens was correct that this meant that a decision of a divisional court in R. v British Coal Corporation and Secretary of State for Trade and Industry, ex parte Vardy [1993] I.R.L.R. 104 had been wrongly decided, the Court of Appeal decided to submit certain questions to the ECJ. By way of further background it should *73 be noted that in the Nolan case the EAT had found against the government of the United States. In doing so it was following a decision of the EAT in U.K. Coal Mining Limited v National Union of Mineworkers (Northumberland Area) [2008] I.R.L.R. 4 which had held that the consultation obligation arose when the mine closure was proposed, or at least when it was contemplated that the closure would give rise to redundancies and that the consultation should concern the reasons for the closure. That decision, it may be noted, was departing from earlier EAT decisions such as Middlesbrough Borough Council v Transport and General Workers Union [2002] I.R.L.R. 332 and Securicor Omega Express v G.M.B. [2004] I.R.L.R. 9. The Court of Appeal in Nolan ([2010] EWCA Civ 1223) felt that the interpretation of the ECJ decision in Fujitsu Siemens was not straightforward. In the course of its consideration the Court of Appeal quoted the first question that had been referred by the Finnish Supreme Court. I referred to that question earlier but it is convenient to set it out once more and to do so as the Court of Appeal did. The question was as follows:
“Is Article 2(1) of Directive 98/59 to be interpreted as meaning that the obligation under the provision to embark on consultations when ‘contemplating collective redundancies’ of employees and ‘in good time’ requires consultations to be started when it is established from the strategic decisions or changes that have been made relating to the activity that a need for collective redundancies of employees follows ? Or is the provision in question to be interpreted as meaning that the obligation to start consultations already arises on the basis of the employer contemplating measures or changes affecting the activity , such as change in production or concentration of production, as a consequence of which a need for collective redundancies is to be expected.” (Emphasis as provided by the Court of Appeal).
The Court of Appeal then put the Finnish question in the context of its domestic jurisprudence and suggested that the first sub question was asking whether the approach in Middlesbrough and Securicor was correct while the second sub-question was asking whether the UK Coal Mining line of authority was correct.
22. The Court of Appeal then went on to conduct a forensic analysis of the opinion of the Advocate General and then of the judgment of the ECJ. The Court of Appeal commented that they had to say with respect that they found the reasoning of the Advocate General quite difficult to follow and that they did not find the interpretation of the ECJ’s decision on the first question straightforward. The Court of Appeal having conducted that exercise commented that it proposed to venture no further views on the true interpretation of the judgment which it respectfully regarded as unclear. While not spelled out by the Court of Appeal it does seem to me implicit in its judgment that the court was of the view that as between the two options offered, option 1 being that the obligation arose when the employer was proposing, but had not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies and *74 option 2 that the obligation arose only when that decision had actually been made and the employer was then proposing consequential redundancies, that option 2 was more likely the correct interpretation but that the matter was sufficiently uncertain that a reference was appropriate.
23. In a situation where the Court of Appeal has expressed the view that the decision of the ECJ is unclear, I have to give serious consideration to the question of whether a reference is necessary. In particular, I must think long and hard if the matter is not to be referred, given that by virtue of Terms of Employment (Information) Act, 1994 there is no appeal from my decision.
24. I have paid particular attention to the opinion of Advocate General Mengozzi in United States of America v Nolan given that he was also the Advocate General in the Fujitsu Siemens case his opinion is particularly influential. He felt that the European Court of Justice was being asked to determine the trigger point for the employer’s obligation of prior consultation in the case of collective redundancy and more specifically that the referring court was uncertain whether that obligation arose when the employer was planning to make a strategic or operational decision which, foreseeably or inevitably, will lead to collective redundancies or only when that decision had actually been made and the employer is planning to proceed with the consequential redundancies. As between the position argued for by Mrs Nolan which was that only the first possibility ensured the effectiveness of the directive and the position adopted by the Commission and the EFTA Surveillance Authority who argued that in light of Fujitsu Siemens and the facts of the case of the referring court that the employer’s obligation to begin consultations concerning collective redundancies arises when a strategic or commercial decision is taken which compels the employer to contemplate or to plan collective redundancies, the Advocate General indicated that he agreed with the interpretation contended for by the Commission and the EFTA Surveillance Authority. His subsequent analysis shows clearly the extent to which this was an area where facts had to be found and where he saw this as the critical exercise to be undertaken. He observed, at para.49:
“In my view, the method to be used by the referring court should be to identify which of the events mentioned in the order for reference which occurred before June 5, 2006 was in the nature of a strategic decision and exerted compelling force on the employer for the purposes of giving effect to the consultation obligation, and the date on which that decision was made.”
25. Returning then to the decision of the Employment Appeals Tribunal in the present case it does seem to me that the determination approached the controversy before it as essentially one of fact and decided as a matter of fact that the communication by Dell on January 8, 2009 did not constitute notice of dismissal and that the employer had commenced the consultation process *75 at an appropriate stage. It seems to me that the reference to the entitlement of the employer to make a strategic decision in the concluding paragraph of the determination must mean that the Employment Appeals Tribunal was taking the view that the employer had, as it was obliged to do, embarked on consultation when a strategic or commercial decision compelling it to contemplate or plan for collective redundancies had been taken. If one looks at what happened subsequent to January 8, 2009, further evidence emerges that the letters of January 8, 2009 were not simply the communication of what was a fait accompli. Many of the matters of substance contained in the letter of January 8 changed between that date and the end of the consultation period on March 27. A number of employees were redeployed and as a result their employment was never terminated, the actual leaving dates for several production lines were different from the dates suggested in the initial letters and there was a significant improvement in the severance package available to employees.
26. Further support for the view that what emerged on January 8, 2009, was not the communication of a finalised decision is to be found in the text of the letter of January 8 itself. The letter contains a specific statement that the content of the letter is for information purposes only and does not constitute contractual terms or conditions. The section on “Leaving Dates” refers to estimated ranges of leaving dates associated with individual production lines. Again, the section on severance payments refers to estimated severance payments and stresses that the calculations set out are estimates only. However, I do acknowledge that the letter contains a significant amount of detail and certainly does not suggest that the employer has an open mind, or that the employees are being provided with a blank sheet. However, it seems to me one has to recognise that a communication couched in generalities would be of little assistance to employees, and would likely be not well received.
27. In these circumstances I do not believe that a point of law has been identified which would provide a basis for overturning the decision of the Employment Appeals Tribunal and accordingly I dismiss the appeal.
Mary Sheehy v Laurence Ryan and James Moriarty
2002 No. 10338P
High Court
3 February 2004
[2004] 15 E.L.R. 87
(Carroll J)
CARROLL J
delivered her judgment on February 3, 2004, saying: The plaintiff was first employed by Bishop Lennon of the Diocese of Kildare and Leighlin as the bishop’s secretary on July 29, 1974. At the time she was employed by Carlow Vocational Educational Committee as senior administrator in the Regional Technical College at the grade of clerical officer. She had been there since March 1971. There was no written contract of employment.
The diocesan secretary at the time was Fr Waldron. He fell ill and died in 1977. Bishop Lennon then appointed the plaintiff as diocesan secretary in his place. Bishop Lennon retired in December 1987 and was succeeded by Bishop Ryan, the first named defendant. The plaintiff was concerned that there was no written record of the terms of her employment. She asked Bishop Lennon to produce a document setting out the terms. In a written document in his handwriting it is stated as follows (omitting deletions he made).
In July 1974, I engaged Mary C. Sheehy as my Secretary. During the previous month I had preliminary discussions with her and outlined the conditions of employment. At the time she had a permanent post in the Regional College Carlow and I was concerned that she should not be at any loss by accepting my offer.
Conditions Offered
1. Salary —to be linked with the salary of her existing post in the Regional College and with the annual increment of that post.
2. Pension — provision to be made.
3. Hours: 10 a.m. to 5 p.m. — with a luncheon break 1–2 p.m. from Monday to Friday.
4. Holidays — same as in her Regional College post with the addition of Church Holy days and an extra week at Christmas and Easter.
5. Duties: In answer to her specific question I assured her that her function would be far wider than that of a typist, and that I expected her to grow into the work so that she could, under my directions, take on the full management of the diocesan office.
Over the years her duties came to include: *90
(a) Diocesan correspondence.
(b) Keeping of records and recovery of information as requested; searching the diocesan archives (incomplete and scrappy) (as time allows) and trying to put them in order.
(c) Answering enquiries and dealing with requests which did not need consultation.
(d) Arranging appointments with the bishop for priests and people.
(e) Management of diocesan finances, bank accounts, investments, etc., under my direction.
In 1977 as she was already doing the work, I appointed her as diocesan secretary.
As the plaintiff’s salary arrangements were not very clear Bishop Ryan increased her salary.
Bishop Ryan sought over the years to agree appropriate pension arrangements with the plaintiff. There was a fund (Fund 49) set up by Bishop Lennon as pension provision for the plaintiff and some others, who had since died, which could have been liable to tax, so pension arrangements were incomplete.
In 1998, Fr Bill Kemmy was appointed Chancellor and part-time diocesan secretary in succession to Fr Thomas McDonald.
Bishop Ryan had two meetings with the plaintiff on March 16 and 23, 2001 relating to salary and pension. It was suggested to her that her pension would be set up as a contributory pension to which she would have to contribute but she refused.
Both the plaintiff and Bishop Ryan kept accounts of these meetings. In Bishop Ryan’s accounts he took issue with some of the details in her accounts. The plaintiff in her evidence took issue with some of the details of Bishop Ryan’s accounts. The conflict in evidence is immaterial as the discussions did not deal with her tenure.
Bishop Ryan became ill at the end of March 2001. He handed over negotiations to Mr Gerard Dooley in October 2001. The initial brief was to agree employment issues pertaining to salary and pension. The plaintiff was unwilling to meet with Mr Dooley without a professional advisor whom she said she could not afford to pay. Mr Dooley on behalf of Bishop Ryan agreed to pay the reasonable expenses of an advisor. The plaintiff appointed Mr Brian Gallagher, solicitor, as her representative and so informed Mr Dooley by letter of November 26, 2001. No meeting was held.
A severance package was offered to her through Mr Gallagher by letter of January 14, 2002. No reply was received. Eventually Mr Gallagher replied on April 28, 2002 to say that the plaintiff was not prepared to accept the severance *91 package and she wanted to keep her job until she was 65.
Bishop Ryan resigned with effect from June 4, 2002 and was appointed Apostolic Administrator with all the facilities of the Bishop. His successor Bishop Moriarty was latter appointed bishop with effect from August 31, 2002.
A notice, dated July 22, 2002, of termination of her contract of employment on the grounds of redundancy signed by Bishop Ryan was served on the plaintiff on July 23, 2002 with effect from September 19, 2002. She refused to accept it. She issued a plenary summons in this matter on July 29, 2002 and sought and obtained an interlocutory injunction on August 29, 2002 requiring the Diocese to pay her salary and fund her pension pending the outcome of these proceedings.
Bishop Moriarty was added as a defendant pursuant to an order of the Master made on February 20, 2003. Bishop Ryan died before the case came on for hearing.
The first six items of relief sought in the statement of claim relate to the plaintiff’s claim that her employment was not lawfully terminated and that she is entitled to remain on in her position as diocesan secretary until she attains 65 years of age. Items 7, 8 and 9 claim consequential relief of damages.
Set out in detail, these are as follows:
1. A declaration that the purported termination of the plaintiff’s tenure by the defendant as diocesan secretary to the Diocese of Kildare and Leighlin is invalid and unlawful in that it—
(a) Constitutes an unlawful repudiation of the plaintiff’s employment which has not been accepted by the plaintiff.
(b) Is without efficacy in that it has been embarked upon in breach of the tenants [sic] of natural and constitutional justice.
(c) Is predicated on an invalid invocation of the provisions of the Redundancy Payments Act 1967, as amended.
2. An order that the defendant do pay to the plaintiff all salary as accruing from the month of August 2002 to the trial of the action or until further order of this Honourable Court.
3. An order requiring the defendant to fund and maintain the plaintiff’s pension and life assurance benefits by paying all instalments of premium together with such further or other order restraining the defendant his servants and agents from reducing the plaintiff’s pension benefits in any mode whatsoever.
4. An injunction restraining the purported termination of the plaintiff’s employment and if necessary, an order permitting the performance of her functions and duties by the plaintiff in her said capacity as diocesan secretary. *92
5. An injunction restraining the defendant his servants and agents from appointing any person other than the plaintiff to the plaintiff’s said position as diocesan secretary and restraining the performance of the plaintiff’s functions and duties by any other person than the plaintiff.
6. An order restraining the defendant his servant and agent from publishing or otherwise disseminating the purported dismissal of the plaintiff whether by recourse to press releases, bulletins, announcements, communiqués or otherwise.
7. Damages as against the defendant arising out of his breach of the said Acquired Rights Directive and/or breach of the plaintiff’s constitutional right to work.
8. Damages for the reckless infliction of nervous shock and emotional suffering.
9. Damages for misrepresentation, negligence, breach of warranty and negligent mis-statement.
The issues to be determined in this action are:
1. Whether the plaintiff was entitled to be kept on in her job until she was 65 years of age in the absence of misconduct or inability.
If the answer is no:
2. Whether the defendants were entitled to determine the plaintiff’s employment on giving reasonable notice.
3. Whether the notice was reasonable.
4. Whether the reason given for the termination is relevant.
5. Whether the principles of national/constitutional justice require to be applied to the dismissal process.
6. Whether the dismissal of the plaintiff was in breach of the Acquired Rights Directive.
In order to determine the first issue it is necessary to determine what were the conditions of employment of the plaintiff as agreed with Bishop Lennon, in particular concerning tenure.
In her affidavit grounding the interlocutory application (paragraph 7) the plaintiff says that she was told she would be the holder of a permanent and pensionable job. She said she would not have accepted the offer without that assurance as she was the holder of a permanent position with the Carlow VEC. She also said that it was her understanding that in accepting employment she was to remain in office until age 65 provided she discharged her duties in a satisfactory manner and did not misconduct herself.
In her direct evidence in the trial she said the same. She said Bishop Lennon reiterated that it was intended that she should be at no loss for having moved *93 and that she should be moving to an equally secure job, permanent and pensionable. She said she understood that it was the equivalent to where she was, in terms of a job for life, if she wanted it, until her sixty-fifth birthday.
She did not say that Bishop Lennon said she had a job for life or until she was 65. She merely said what she understood ‘permanent and pensionable’ to mean.
In so far as her job with the VEC was concerned it was governed by the Vocational Education Act 1930. Section 23 provides:
(1) Subject to the provisions of this section, every vocational education committee shall appoint a chief executive officer and such other officers and servants as it shall from time to time think necessary for the due performance of its powers and duties under this Act.
and
(4) A vocational education committee may dismiss any servants of such committee and, with the approval of the Minister, remove any officer of such committee.
Based on the evidence before me, in my opinion the plaintiff was offered a permanent and pensionable job by Bishop Lennon. There was no express or implied added condition or promise that it would be for life or until age 65. Her previous employment with the VEC, while permanent and pensionable, was not a job for life.
The plaintiff has chosen to sue at common law. There were other possibilities open to her. She could have initiated proceedings under the Unfair Dismissals Act 1967 claiming unfair dismissal or under the Redundancy Payments Act claiming that there was no valid redundancy or that she was unfairly chosen to be redundant. If successful she would have been awarded statutory compensation.
The position at common law is that the employer is entitled to dismiss an employee for any reason or no reason, on giving reasonable notice.
The meaning of ‘permanent and pensionable’ has been defined in several cases. In Walsh v Dublin Health Authority 98 ILTR 82 where the plaintiff held a permanent pensionable position, it was held by Budd J at p. 95:
I have come to the view that the plaintiff has not sustained his case that his employment as a servant was permanent as being continuous for life or that it lasts until full pensionable age is reached, only subject to interruption for misconduct, neglect or unfitness, either at common law or by reason of the provisions of any of the statutes or regulations he relies on. He has, in my view, only established permanency in the sense that this *94 employment was under the terms of his contract indefinite in duration but subject to dismissal on reasonable notice …. If he is not permanent and pensionable in the sense that he claims of having a contract of employment for life subject only to dismissal for misconduct, neglect or unfitness or until he achieves full pensionable age, but merely employed for an indefinite period, as I have held, it follows that he would be dismissable on reasonable notice. It has not been contended that the length of notice given to him was not reasonable and he is therefore not entitled to the second declaration sought.
This judgment was followed with approval in Dooley v Great Southern Hotel [2001] ELR 340. In that case it was stated in the plaintiff’s contract (p. 342 of the judgment)
It is intended that this employment should extend up to normal retiring date, i.e. age 65 in present circumstances. If however, either party should wish, for good and sufficient reason, to terminate the employment, then the applicable period of notice would be six months.
McCracken J in setting out the law states at p. 347:
Finally, there is authority that a claim that employment is permanent in the sense of being continuous for life or until a pensionable age is not sustainable at common law and that in those circumstances the plaintiff’s employment is permanent only in the sense of being for an indefinite period terminable by reasonable notice (Walsh v Dublin Health Board 98 ITLR 82).
The case of Grehan v North Eastern Health Board [1989] IR 422, on which the plaintiff relies, is distinguishable because the plaintiff’s contract in that case specifically provided (subject to certain stated conditions) that the agreement would terminate on the medical practitioner reaching the age of 70 years.
In McClelland v N.I. General Health Services Board [1957] 1 WLR 594 the appointment of senior clerks was expressed to be permanent and pensionable. The Board purported to terminate the appellant’s employment by six months notice on the grounds of redundancy without any suggestion of misconduct or inefficiency on her part. It was held by the Court of Appeal that on a true construction of the terms and conditions of service, the expressed powers of the Board to dismiss and officer were comprehensive and exhaustive and no further power could be implied. Accordingly her service had not been validly terminated. In the course of his judgment Lord Goddard said at p. 601: *95
That an advertisement offers permanent employment does not in my opinion mean thereby that employment is offered. It is an offer, I think, of general as distinct from merely temporary employment, that is, that the person employed would be on the general staff with an expectation that apart from misconduct or inability to perform the duties of his office the employment would continue for an indefinite period. But apart from a special condition, in my opinion, a general employment is always liable to be determined by reasonable notice.
In my opinion the law is clear. In the absence of a special condition in a contract of employment entitling her to a job for life until she was 65, the plaintiff could be dismissed on getting reasonable notice.
There was no special condition in this case. The plaintiff was employed in a job that was permanent and pensionable. She could be dismissed on getting reasonable notice. The notice she received was eight weeks and no case has been made by the plaintiff that that was unreasonable.
The defendants gave redundancy as a reason for the dismissal. Strictly speaking the reason for dismissal is not relevant, but I think I should state that I accept Fr Bill Kemmy’s evidence that there was a true redundancy.
While the plaintiff claims that the principles of natural/constitutional justice applied to the decision to dismiss her, in Hickey v Eastern Health Board [1991] 1 IR 208, Gannon J held (affirmed on appeal by the Supreme Court) that the rules of natural justice regulating dismissal for misconduct had no application where the dismissal was for reasons other than misconduct.
In my opinion the plaintiff’s contention that the defendants were under a duty to consult with her, in accordance with the principles of natural and constitutional justice, having regard to the likely effect on the plaintiff’s employment of a decision to dismiss her, cannot be sustained.
Her other contention that prior consultation should have taken place with the plaintiff by virtue of the European Communities (Safeguarding of Employees’ Rights on Transfer of Undertakings) Regulations 1980 (S.I. 306 of 1980) as amended by European Communities (Safeguarding of Employees’ Rights on Transfer of Undertakings) (Amendment) Regulations 2000 (S.I. 487 of 2000) subsequently revoked and replaced by the European Communities (Protection of Employees’ on Transfer of Undertaking) Regulations 2003 (S.I. 131 of 2003) effective April 4, 2003.
The plaintiff’s argument is that there was a transfer of undertaking when Bishop Moriarty succeeded Bishop Ryan conferring a right to consultation on her. I do not consider it necessary to deal in any great detail with this submission. The Diocese of Kildare and Leighlin did not change its identity when Bishop Moriarty was appointed. The change in bishops could not be in my opinion be construed as a transfer of an undertaking. It is more akin to a change *96 in managing director. In any event I doubt that the directive was intended to apply to religions and how they were administered. No authority was submitted to that effect.
Since all the issues have been decided against the plaintiff she is not entitled to succeed. The action is dismissed.
Norah Ryan v Matt O’Flaherty
UD354/2003
Employment Appeals Tribunal
12 November 2003
[2004] 15 E.L.R. 180
Respondent’s case
It was the case for the respondent that he is a general medical practitioner who operated from a health centre from around 1998 in accordance with General Medical services arrangements. He engaged the services of a private secretary who remained in his employ up to around August 2000. He then engaged the claimant initially for five weeks from August 2000 to replace the private secretary, and at the beginning of October 2000 offered her a contract of employment. The respondent gave the claimant a job description, which set out her entitlements and that following her seeking clarification on aspects of it, was accepted by her. The claimant continued in his employment up to March 2002, at which stage the respondent verbally informed her that he was relocating to another area. Formal written notice of termination of employment was given to the claimant on April 24, 2002, which ran up to the expiry of the respondent’s own contract with a health board on May 24, 2002. He was anxious to assist the claimant and was aware that following discussions with a member of management in the health board, the claimant was informed that a locum would be assigned to the area. The claimant continued in employment with three *183 successive general medical practitioners who replaced the respondent, and she worked for each of them in succession from May 25-June 28, 2002; June 29November 2, 2002 and from November 4, 2002 to present respectively.
In his sworn evidence, the respondent confirmed that he did not know who would take over as general practitioner on his departure. The respondent confirmed that he offered employment to the claimant at his new work location but that she declined this offer. He paid approximately €600 to her as a good-will gesture but contended that the remedy being sought by the claimant before the Tribunal, i.e. where it was asked to retrospectively implement a continued contract of employment, was inappropriate. It was argued that a transfer of undertaking could not apply in this instance, as the respondent was a sub-contractor engaged by a health board to provide medical services on its behalf. The respondent did not know who would take over as general medical practitioner on his departure and he had no involvement in the advertisement for, recruitment of, or the appointment of his successor.
Claimant’s case
It was the case for the claimant that her initial contract of employment with the respondent transferred thereafter to each successive medical practitioner, from May 25-June 28, 2002; June 29-November 2, 2002 and from November 4, 2002 to the present. The claimant contended that these successive contracts of employment continued on from, and repeated, the terms of the contract entered into by her with the named respondent. The claimant’s P60 was unavailable, and it was accepted that she had received a P45 from two of the other medical practitioners who succeeded the respondent.
In sworn evidence, the claimant said that she was happy with her employment with the respondent, and that she was disappointed when he informed her of his departure. She said that for commuting reasons she declined the respondents offer of employment at his new location. She said that she raised the issue of a transfer of undertaking with the respondent, and that she also wrote to a member of the management of the health board seeking clarification in relation to her position.
In cross-examination, the claimant agreed that she had accepted a contract of employment, subject to amendments; that her gross salary was €1675 per month and that her current salary was €22,000 per annum, i.e. €1634 per month after deductions. She confirmed that following the respondent’s departure she continued in employment with each of the three successive medical practitioners and that she had not suffered a loss of employment. She denied that she was seeking a guarantee of employment, but said that her main concern was her contract of employment.
In reply to questions posed by the Tribunal, the claimant said that her primary objective was to have the respondent issue a letter to her, which she would then *184 raise with the replacement medical practitioner/s. She agreed that her intention in bringing the claim before the Tribunal was to seek a withdrawal of the notification of redundancy and to replace it with a transfer of undertaking
Determination
The evidence given in this case has been set out in sufficient detail above. It is the claimant’s case that a transfer of undertaking has taken place between a former employer, namely the respondent and a chain of employers resting and settling with her present employer.
In brief, the claimant was the secretary to a busy doctor’s practice. The respondent ceased to practice in that area and the claimant’s employment was terminated. The claimant in her T1A Form, the form initiating her appeal before this Tribunal, stated that the respondent:
“had a contract with the Western Health Board to provide the general medical service to approximately 600 patients. The health board provided him with the building Rosmuc Health Centre and some equipment to do so. He was also paid grants to assist in the payment of staff and other expenses at the health centre.
In May 2002 he terminated this contract and went to Kinvara where he accepted a new contract to provide the general medical service there. The health board then appointed a new contractor at the health centre from May 25 to June 28 and then Dr … from June 29 to November 2 and finally Dr … from November 4. Each time the new doctor commenced at the health centre they were providing the same service to the same patients as (the respondent). They also used equipment which was passed on to them and the premises. In addition private patients who were seen by Dr … (the respondent) also continued to attend the health centre.
I believe that this is a transfer of undertaking and as such Dr … (the respondent) should not have made me redundant. I went to great lengths to try to explain this to Dr … (the respondent) and his solicitor but they refused to withdraw the redundancy and would not enter into discussions about the transfer of undertaking regulations. I have looked into these regulations and some of the cases that have been brought before. I am confident that the service provided at the health centre by the general practitioner falls within these regulations and my employment should have been protected
I am asking the tribunal to recognise this and to have the redundancy notice withdrawn and my contract of employment reinstated and transferred to Dr … then to Dr … and finally to Dr … who has taken the contract with the Health Board on a permanent basis.”
*185 The respondent in his T2 Form, that is the form used to reply to the claimant’s grounds of appeal, states that the claimant was:
“employed by me as my secretary when I was based at the health centre in Rosmuc.
At the time … (of the claimant’s commencement of employment) she was informed that her employment was with me and not with the Western Health Board.
I operated in Rosmuc as a sub-contractor and when my contract was terminated, I gave … (the claimant) notice of redundancy from her position with me, as I no longer required her to work for me in Rosmuc.
All contracts for sub-contractor positions are awarded solely by the Western Health Board.
(The claimant) … was offered a position as secretary for me at my current practice — Kinvara, which she declined.
Further evidence to substantiate this claim will be adduced at the time of hearing.”
The contract of employment, and the terms and conditions thereunder, in the instant case can be determined from two letters. Firstly, by way of letter dated September 29, 2000 from the respondent to the claimant the offer of employment was communicated in the following fashion:
“I am pleased to offer you the position of practice secretary based here at Rosmuc Health Centre. This is a full time position and you will report directly to me in this role. Your official start date is Monday October 2, 2000 at 9am. The specific duties of the position will be outlined to you in the attached job description sheet.
As discussed, your rate of pay for the position is £15,000 gross per annum. This will be paid monthly in arrears, by cheque on the 1st of each month.
You will have a probationary period of three months, during which your performance will be reviewed and permanent employment confirmed. This probationary period is extendable by a further period of three months, should the need arise, this will be communicated to you in advance of the initial three month deadline lapsing.
The working week is Monday to Friday, with the occasional additional Saturday or Bank Holiday commitment, for which you will be remunerated separately.
Your holiday entitlement, in addition to statutory leave is 20 days. These holidays must be taken evenly throughout the year to ensure the smooth flowing of the operation here at the health centre.
*186
The recommended holiday schedule would include one spring week from mid-January to end April, one week winter holidays, in the period from mid-September to beginning December, with two additional weeks leave throughout the year. Except in extraordinary circumstances, holidays my not be taken in the peak periods of mid-December to mid-January or end August to end September or at any time when the doctor is on leave.
As a guideline, annual performance reviews (to include pay review where applicable) will take place 12 months after confirmation of permanent employment.
I am pleased to offer you the position. I would be obliged if you would review the attached job description and complete the attached job acceptance form and return it to me at your earliest convenience.
I look forward to having a good working relationship with you.”
The job description referred to set out the following functions and duties attached to the role of practice secretary.
A further letter issued shortly thereafter making certain changes and setting out terms omitted from the original offer. This letter of October 25, 2000 stated that:
“Further to the above mentioned correspondence and our subsequent conversation, I wish to amend the following details to the original document (copy attached). All details not referred to remain the same as per the previous document.
• Terms of notice:
The giving of notice of intention to quit this agreement by either party, to be of one month’s duration.
• Confirmation of working hours.
The working week to be of 37 hours duration, with additional phone coverage during daily lunch breaks. Lunch to be of one hour’s duration, normally from 1pm-2pm.
• Taking of holidays:
The holiday schedule to be 20 days as before, with either:
1. One annual break of 10 consecutive working days and one additional break of up to seven consecutive working days and the balance to be taken as required.
2. Two breaks of up to seven consecutive working days and the balance of six days to be taken as required (may be taken in one go, if required).
*187
Holidays to be arranged, per quarter in advance and with the same original considerations, i.e. never when the doctor is on holidays and not during peak periods to minimise disruption to the practice and to ensure adequate holiday cover. No holidays to be taken within the first 13 weeks of commencement of employment as is industry standards.
The title Mrs to replace all previous references to Ms as per your specific request.
I hope that this clarifies further for you the conditions of this employment and you will be in a position to return your acceptance of same forthwith.
I thank you for submitting your P45 and your RSI Number from your previous employment.”
An acceptance of the offer of employment was communicated by the claimant to the respondent on November 4, 2000. The only flaw or defect in the contract of employment was the very basis upon which the contract was grounded. The claimant’s contract of employment could only continue for as long as the health board retained the services of the respondent doctor.
The claimant wrote to the health board on April 9, 2002 expressing the following queries:
“(1) Is the health centre going to remain open after Dr … leaves?
(2) Does the Western Health Board intend to appoint a new general practitioner for Rosmuc?
(3) Please confirm the date that Dr … will cease practicing in Rosmuc
(4) If it is not possible to appoint a new general practitioner before Dr … leaves will the health board be appointing locums until the vacancy is filled?
(5) Is the Western Health Board prepared to employ me until a new general practitioner can be appointed?
(6) Would you also please provide me with your comments with regard to the transfer of my employment rights either to the health board or to the new general practioner”.
The Tribunal did not see the response to this letter, if indeed any written response was furnished. Notwithstanding this, the respondent furnished the following letter of termination on April 23, 2002:
“This letter is to confirm what we have already discussed. After close of business on Friday May 24, 2002, I will no longer require your services as my practice secretary here at the health centre in Rosmuc. I will be *188 terminating your employment with me and making your position redundant, due to my ceasing to practice in Rosmuc.
As per your contract of employment, I am giving you one month’s written notice to this effect. On your leaving you will be paid all monies owed to you. In the meantime you may wish to take the annual leave that is due to you; alternatively you can be remunerated in lieu of this in your final pay cheque. If taking leave, please inform me of proposed dates as soon as possible.
I would like to thank you for your good work and positive contribution to the practice during your time here. As already mentioned, I would have no hesitation in providing you with a reference at any time in the future.
May I take this opportunity wish you the best of luck in finding a new position and in your future career”.
The claimant responded on April 26, 2002, furnishing a courtesy copy to the health board, in the following terms:
“I refer to your letter dated April 23 and our meeting on April 25. First, I would like to thank you for taking the time to meet and discuss the situation. I hope that we can continue to deal with this problem in constructive and friendly terms.
At the meeting it was confirmed that the health board has advertised for a locum general practitioner from the May 25 to August 31 and a permanent one to commence on September 1. Catherine Duffy indicated that discussions would take place with the successsful applicant regarding my future employment with them. I was pleased to learn this however I am left in a very difficult situation as you have issued me with a redundancy notice terminating my contract of employment on May 24.
In my previous letters to you I pointed out that the circumstances of you terminating your contract with the health board and a new general practitioner being appointed to run the general medical service at Rosmuc is a transfer of undertaking. As such my future employment is covered by the relevant regulations in which case once the appointment is made by the health board you as my current employer are bound to negotiate the transfer of my contract of employment to the successful applicant. By issuing the redundancy notice I have to assume that you are ignoring these regulations and I have no alternative but to commence proceedings for unfair dismissal. However before I continue with this course of action I would like to give you an opportunity to withdraw the redundancy notice and enter into negotiations with the successful candidate following the interviews on May 3. I am prepared to suspend taking any further action *189 for unfair dismissal until May 8 on condition that the redundancy notice is withdrawn and you confirm in writing that my employment at the health centre is covered by the transfer of undertaking regulations and you will take the necessary action to ensure that my contract of employment is transferred accordingly. I regret to inform you that if you cannot agree with these terms I will proceed immediately with my claim for unfair dismissal”.
The claimant was caused to write to the respondent on May 16, 2002 and voiced the following matters:
“I am surprised that you are continuing to refuse to accept that there is a transfer of undertaking. My understanding of the current situation is that at the moment you are a contractor for the health board to provide the GMS at Rosmuc Health Centre and on May 24 this contract is being terminated and a new general practitioner will be appointed to provide exactly the same service in Rosmuc. With the limited knowledge I have of the law this is a transfer of undertaking and I really do not understand how you continue to believe it is not. As I have to date been kind enough to explain to you why I think this is a transfer of undertaking maybe you would do likewise and tell me why think it is not. I have researched the matter further and I would refer you to a number of cases which have gone before the tribunal and the employee has been successful in each case,
(1) Ryan v Kelleher UD 496/1991
(2) Roche v Salthill Hotel Ltd [1996] E.L.R. 15
(3) Bannon v Employment Appeals Tribunal and Drogheda Town Centre Ltd [1993] 1 I.R. 500
(4) Malone v Galway Shopping Centre Management Ltd UD 515/1994
(5) Gray, McCahill and Stewart v Irish Society for the Prevention of Cruelty to Animals [1994] E.L.R. 225
(6) Guidon v Farrington [1992] E.L.R. 146
(7) Brett and Others v Niall Collins Ltd [1995] E.L.R. 69
The reason that I am providing you with this information is so that we can resolve the matter without further delay. I really do not want to take the case for unfair dismissal against you however your attitude up to now about this situation has been unhelpful to say the least. As I have indicated before all I wish to do is to ensure my terms of employment remain secure.
Your solicitor has indicated in the letter that you are prepared to offer me a position in Kinvara. I am to say the least somewhat confused by this as you have already issued me with a redundancy notice as you are ceasing to practice at Rosmuc. Are you now saying that you are relocating your *190 practice to Kinvara along with the general medical service list of patients and all your private patients. As you have not told the patients of this fact then I assume it is not the case. As the business is not relocating then neither will I, as I will be making myself available to continue to work at Rosmuc for the new general practitioner.
I have been more than reasonable so far and made every effort to resolve the matter without having to make a claim for unfair dismissal. However as your solicitor has indicated that you will be defending my claim for unfair dismissal, I have to assume that you do not intend to withdraw the redundancy notice. As you still have until May 24 to withdraw the redundancy notice I will give you the chance to do so. However if you do not withdraw the notice I will proceed with my claim for unfair dismissal”.
Evidence was furnished to the Tribunal that the respondent held a GMS contract with the Western Health Board for the provision of services at Rosmuc Health Centre, County Galway. This matter is not in dispute. The question before this tribunal is whether or not a transfer of undertaking took place when the respondent resigned from his post to take up another GMS contract in Kinvara?
The respondent submits that he held a post, which was in essence a sub-contractor engaged by the health board. The evidence does not support such a proposition, even if it did, the protection afforded by virtue of the provisions of the European Communities (Safeguarding of Employees’ Rights on Transfer of Undertakings) Regulations 1980 (S.I. No. 306 of 1980) is not lost in the contracting out or sub-contracting of a business, if the business retains its identity or if there is a change in the legal or natural person who is responsible for carrying on the business regardless of whether or not ownership of the business is transferred. This proposition of law has been confirmed in the Irish case of Bannon v Employment Appeals Tribunal and Drogheda Town Centre Ltd [1993] 1 I.R. 500. In the Bannon case there existed a contract between the notice party and the applicant and accordingly the regulations applied to the employment relationship as hereinbefore stated.
The GMS contract is drawn up under the statutory authority of each health board which is under an obligation to provide medical services at each of its health centres. The contract sets out the terms and conditions, which a GP must accept before being retained under such a contract. This type of contract is a contract of adhesion. On reading the GMS contract it is clear that a GP does not hold a sub-contract position. The legislation permitting the health board to enter upon a contract with a GP does not allow such a hybrid contract to exist. The GP, under a GMS contract, is a service-provider retained and engaged by the health board to function within a specific health centre. The contract is with a specific GP and thus cannot be assigned nor transferred to another, even if that other has the qualifications to conduct such a service.
*191
Henchy J. explained the peculiar features of such a contract of adhesion in the case of McCord v ESB [1980] I.L.R.M. 153, wherein he stated at 161 that:
“… it is important to point out that the contract made between the plaintiff and the board (incorporating the general conditions relating to supply) is what is nowadays called a contract of adhesion: it is a standardised mass contract which must be entered into, on a take it or leave it basis, by the occupier of every premises in which electricity is to be used. The would-be consumer has no standing to ask that a single iota of the draft contract presented to him be changed before he signs it. He must lump it or leave it …”
The GP in the instant case is in a similar position as the customer in the McCord case. He or she must accept the contract as presented. It is a standard contract and differs little in any material respects from health board to health board. The parties to the contract are the health board on the one hand and the GP on the other hand. Should a GP employ a practice secretary, nurse, etc., they are not parties to the GMS contract. Accordingly, there is no privity of contract between the claimant in the instant case and the health board. This fact cannot be disputed. If a constructive privity could be assumed then it would be unlikely that GPs would engage persons under the GMS contract to assist in the practice for very obvious reasons. For example, if such a situation existed a cause of action would be open to persons so retained if the GP lost his position by virtue of, the GP being fired because he failed to meet required standards; the GP choses to resign, or the health board for its own reasons terminates the contract.
In the instant case the health board gives an allowance to the GP to retain a practice secretary. There is no privity between the health board and the person thus engaged. The health board has no control directly or indirectly over the person. Even if the health board is unhappy with any number of complaints it gets in respect of the performance of the secretary they are impotent in doing anything about it. They neither engage nor can they dismiss such a person. Accordingly, the situation cannot even be construed as a tripartite arrangement as understood in Halpin v Rothwell [1984] I.L.R.M. 613. The situation would be different if the GP required the sanction of the Health Board to employ a specific person. Then a tripartite agreement would indeed exist. In the case of Fox v Higgins (1912) 46 I.L.T.R. 222, a new manager of a school refused to re-engage a teacher returning from sick leave by refusing to enter an agreement with him. Before dismissing such a person the manager required, inter alia, the sanction of the National Board. Gibson J. stated at 224 that:
“… the defendant refused to enter into any agreement which was tantamount to summary dismissal, for which it was necessary to get the *192 sanction of the National Board. That is a very necessary protection, and it is right that the National Board should decide as to the special grounds of dismissal. If there had been a contract in writing, and the point had been raised, it is clear that the decision of the National Board would have been conclusive against the manager, and so strong was the opinion of the National Board that they actually removed the defendant from being manager of the school.”
In the Fox case, although the manager had the power to hire and fire, there was a nexus between the teachers and the board by virtue of the National Board Rules. In the instant case the legislation providing for the GMS contract does not create any relationship with or to the persons retained by the GP.
In Rask & Christensen v ISS Kantineservice A.S. [1993] I.R.L.R. 133, the European Court of Justice stressed that:
“Where the responsibility for providing a service is, by agreement, entrusted by the owner of an undertaking to the owner of another undertaking who assumes the obligations of an employer in respect of the employees who are engaged in the provision of that service, that transaction is capable of falling within the scope of Art.1(1). Neither the fact that the activity transferred is only an ancillary activity of the transferor nor the fact that the agreement relates to the provision of services provided exclusively for the benefit of the transferor in return for a fee the form of which is fixed by the agreement, prevents the directive from applying.”
The service in the instant case is to the practice and not to the health board. When the practice goes the service vanishes and there remains nothing to transfer. When a new GMS contract comes into being a new position of practice secretary may evolve, but not necessarily so. The distinction is that the position of practice secretary comes into being only if the GP considers it is necessary and he is entitled to receive funds from the health board to defray the expenses thereunder incurred. The practice secretary is in ease of the GP rather than of assistance to the health board. The GMS contract will have to be implemented by the GP whether or not he retains a practice secretary.
The rule of privity of contract provides that no one except a party to a contract can acquire rights under it and no one except a party can be subjected to liabilities under it. The concept of privity of contract is important in this case, as any other case, in that the claimant must acquire a right under the contract of employment before a transfer of undertaking takes place. If a relationship existed between the claimant and the health board, no matter how tenuous, a transfer might perhaps manifest itself having regard to the existing case law. The transfer, for the purposes of the case at hand would come into *193 being because the health board is still under a duty to provide a service pursuant to a GMS contract to the patrons of the health centre and accordingly a link between the claimant and the health board would be enough to qualify under the criteria set out in Dines v Initial Health Care Services [1994] I.R.L.R. 336.
It is the health board who awards such independent contracts which, although remunerative for the GP is not an economic entity to the health board. Even applying the tests laid down in Spijkers v Gebroeders Benedik Abbatoir CV et Alfred Benediken Zonen BV Case C-24/85 [1986] E.L.R. 119vis-à-vis assets transferred, customers, etc. this does not assist in determining whether or not the regulations apply.
The GMS contract itself is non-transferable and comes to an end naturally or by some intervening event happening. If the health board issues a new GMS contract to a different GP, even if everything else remains the same, location, surgery, patients, etc. the new contract in law has no similarity with or to the former contract. It is as though the former contract never existed as the liabilities thereunder cannot be carried over to the new operating contract. The GMS contract is one of those peculiar agreements which relates to a specific person, his skill, knowledge and experience. If this was not so a GP could engage in a multiplicity of such contracts throughout the country and retain junior doctors to carry out the duties and functions thereunder at each location for a nominal fee. The GP would receive the full remuneration in respect of each contract without ever setting foot in the respective centre or ever seeing a single patient. Moreover, such a state of affairs would allow the GP to lease out or franchise his practice under GMS contracts or enter an agency agreement with others, not necessarily qualified persons.
If the Tribunal accepts the above propositions of law and facts, then the professional service of a specific GP is not inter-changeable with that of another GP. The contract in the instant case is not that of a labour-intensive undertaking but rather the provision of professional medical services, which under the GMS contract, a quasi-statutory contract, cannot be transferred.
In Betts v Brintel Helicopters [1997] I.R.L.R. 361; [1997] 2 All E.R. 840, the English Court of Appeal in reversing the decision of the High Court held that:
“The High Court judged erred in finding that there was a relevant transfer to KLM within the meaning of the Transfer of Undertakings Regulations when it took over a contract which had been previously carried out by Brintel to provide helicopter services to Shell. In determining whether there has been a transfer of an undertaking there is a distinction between labour-intensive undertakings, such as the hospital cleaning in Dines v Initial Health Care Services [1994] I.R.L.R. 336, in which the court may conclude that the undertaking has been transferred if the staff combine to *194 engage in a particular activity which continues or is resumed with substantially the same staff after the alleged transfer so that it retains its identity in the hands of the transferee and other types of undertaking in relation to which application of the tests laid down by the European Court of Justice in Spijkers [1986] E.C.R. 1119 involves a more wide-ranging inquiry. The decision of the European Court in the Suzen case represents a clarification of the law in that the width of the Spijkers test was being to some extent overlooked. In the present case Brintel Beccles undertaking consisted of helicopters and infrastructure including the landing strip premises and buildings staff employed in performing the contract and maintenance and support staff, the contract with Shell for the carrying of men and goods to oilrigs and the right pursuant to that contract to land helicoters on oilrigs and use of their facilities. Once the undertaking was defined in that way even though some assets were acquired by KLM such as the right to land on oilrigs and use oilrigs facilities, a transfer of such a limited part of the undertaking could not lead to the conclusion that the undertaking itself was transferred so that it retained its identity in the hands of KLM.”
In the instant case the Tribunal believes that the claimant full well knew that she was an employee of the GP’s practice but not the GMS contract. The GP accepted this and was prepared to bring the claimant with him to his new location. Although the claimant would have been the subject of an entirely new and distinct GMS contract, her contract of employment would date back to November 4, 2000, that being the date when she became an employee of the GP. The claimant refused this offer to relocate, as she preferred to remain in the premises where the GMS contract appertained. She wished to rely upon the provisions of the regulations concerned with the transfer of undertakings to safeguard what she assumed, wrongly in the view of the Tribunal, to be her de facto employment.
The Tribunal believes that the claimant knew and was aware and had actual knowledge of the terms and conditions of her contract. Although the contract failed to stipulate this term, that is the scope of the employment contract and the fact that on the determination of the GMS contract the claimant would no longer be employed by the GP at that location. The claimant’s letter dated April 9, 2002 to the health board, requesting the board to employ her, is an acceptance that she was not then or otherwise an employee of the health board. Accordingly, she knew that her employment was with the GP and this was coming to an end. The GP in offering to take the claimant with him to his new location also understood the terms and conditions and the scope of the employment contract. Accordingly, the terms of the contract of the employment was mutually known, understood and accepted as having life during the currency *195 of the GMS contract with the GP which was limited and restricted to the GP operating his professional practice from a specific location under a type of licence.
When the GMS contract ceased the post of practice secretary thereunder ceased also. Such a post is in ease of the GP and not the contract nor the health board’s health clinic or centre. Rightly or wrongly, fairly or unfairly, justly or unjustly, the situation cannot be clearer. In Tamplin v Anglo Mexican Petroleum Co. [1916] 2 A.C. 397 at 403–404, Lord Loreburn stated that no court has absolving powers but the court will not regard an obligation as absolute if the parties themselves did not intend it to be absolute, if they “must have made their bargain on the footing that a particular thing or state of things would continue to exist … a term to that effect will be implied”. Accordingly, the term to the effect that the contract of employment of the claimant continues to exist whilst the GMS contract exists can be implicitly understood within the said contract. The change of circumstances is such as to place the contract of employment in a radically different form than that which was agreed. However, the claimant could have had an argument that her employment would continue and transfer to the new location but this argument was not advanced nor placed before the tribunal; it would not have affected the remedy sought in this instance.
Lord Haldane in the Tamplin case, in his dissenting speech at 406, maintained that:
“When people enter into a contract which is dependent for the possibility of its performance on the continued availability of a specific thing, and that availability comes to an end by reason of circumstances beyond the control of the parties, the contract is prima facie regarded as dissolved … Although the words of the stipulation may be such that the mere letter would describe what has occurred, the occurrence itself may yet be of a character and extent so sweeping that the foundation of what the parties are deemed to have had in contemplation has disappeared and the contract itself has vanished with that foundation.”
In the instant case the respondent wished to relocate his practice and in order to so do he resigned and thereby terminated his GMS contract with the health board. He was entitled to so do. Thus the contract of employment of the claimant also terminated as she did not wish to follow her employer elsewhere. Before the claimant initiated her appeal a new GMS contract had issued to a different GP, the claimant was employed by this GP in the practice. This new GMS contract was also terminated and a further GMS contract was issued and the claimant was retained thereunder. This situation, for the reasons aforesaid, has no bearing upon nor affects the determination.
Accordingly, the Tribunal finds that the provisions of the regulations *196 governing the transfer of undertakings do not apply in the instant case and the claimant was not unfairly dismissed.
Division of the Tribunal: Mr T Halpin (Chairman), Mr P O’Grady, Mr P Clarke