In the case of The Minister for Employment Affairs and Social Protection Appellant and the Labour Court Mary Dunne Respondents being a Judgment of Mr. Justice McGrath delivered on the 4th of July 2019 the Court set out the general principles on Transfers of Undertaking having been referred to a number of decisions of the CJEU. The Court set out that the main principles are as follows;-
- The aim of the Directive, and thus the Regulations is to ensure continuity of employment relationships with an economic entity and referred to case C13/95. The Court pointed out that the Directive expressly acknowledges this as one of its purposes and the necessity to provide for the protection of employees in the event of a change of employer.
- The transfer must concern an economic entity which has the objective of perusing an economic activity.
- The economic entity must retain its identity after being taken over by the new employer and referred to cases C-458/12 and C-416/16.
- Deciding whether there has been a transfer or the circumstances must be looked at including those listed at 5 below and quoted the cases of C-248/5 and C-340/01 and C-509/14.
- The circumstances to be considered include;-
- The type of undertaking or business in question;
- Whether or not it is tangible assets, such as buildings and movable property, transferred;
- The value of its intangible assets at the time of the transfer;
- Whether or not the majority of its employees are taken over by the new employer;
- Whether or not its customers are transferred;
- The degree of similarity between the activities carried on and before and after the transfer; and
- The period, if any, for which those activities were suspended.
- The degree of importance to be attached to any of these criteria will vary according to the activity carried on.
- The mere fact that one economic entity takes over the economic activity of another entity it is not a ground for concluding that the latter has retained its identity. It was pointed out that the identity of such an entity cannot be reduced to the activity entrusted to it. Its identity emerges from several factors such as its workforce, its management staff, the way in which the work is organised, its operating methods or indeed, where, appropriate the operational resources available to it C-463/09.
- What is relevant for the purpose of finding that the identity of the transferred entity has been preserved it is not the retention of this specific organisation imposed by the employer on the various elements of production which are transferred, rather the retention of the functional link of interdependence and complementarity between those elements C-466/07 and C-160/14.
- Where a transfer relates to an economic activity it falls within the scope of the Directive. The public or private law nature of the transferor is of little importance in this regard. It was pointed out that services carried out in the public interest and without profit motives are in competition with those offered by operators pursuing a profit motive and have been classified as economic entity in C-108/10.
Where a particular economic entity is able, in certain sectors, to function without any significant tangible or intangible assets the maintenance of its identity following the transaction affecting it, logically, depend on the transfer of such assets.
The tangible assets do not belong to a predecessor and are provided by the contracting authority that does not exclude the existence of a transfer within the meaning of a Directive see C-340/01.
The Court reviewed the decision of the Labour Court under TUD174 where the Labour Court acknowledged that a distinction should be draw by businesses which are asset reliant and those which are labour intensive and it took the view that significant tangible assets which are essential to the performance of the branch office of its functions consist of the data of the recipients of relevant Social Welfare Schemes administered by the branch office.
The appeal concerned an appeal from the Labour Court relating to the decision of the Labour Court which had held that an employee working in a branch office of a Post Office did transfer when the function was taken back by the Department. The High Court refused the application by the Minister for Employment Affairs and Social Protection.
An interesting aspect of this case is that a number of arguments were raised, by Counsel, which have not been raised in the Labour Court and which the High Court held were not appropriate to be raised when the matter came on appeal. It is interesting that if an issue is to be raised by way of a point of Law Appeal that issue must have been raised before the Labour Court. It would have been of course open, to the Minister to bring a claim by way of Judicial Review which is done where an issue has not been raised in the first instance before the Labour Court.
The decision of the High Court is extremely helpful in setting out particular issues relating to this case but also the principles to be applied in the case of deciding whether or not a transfer of undertakings has occurred.
The relevant reference is 2017 173 MCA.
*Before acting or refraining from acting on anything in this guide, legal advice should be sought from a solicitor.
**In contentious cases, a solicitor may not charge fees or expenses as a portion or percentage of any award of settlement.