The appellant employees in this case worked in the transport section of a firm (Company K) that ran a chilled and frozen foods warehousing and national distribution centre for a large supermarket (company T). Company T decided to award the contract for these services to the respondent company Stobart Ireland Driver Services Limited (the respondent, company S). Had a transfer under the Regulations occurred? The rights Commissioner ruled no and the 18 appellant employees, supported by their union, appealed to the EAT. At the time of the transfer there were a total of 147 Company K employees allocated to the transport contract including 126 drivers with the remaining employees working in transport management and administration.

The Tribunal noted that that the information given to the Rights Commissioner differed significantly from that given to the Tribunal. The Rights Commissioner was informed that no tangible assets were transferred between Company K and the respondent. The appellants informed the Tribunal that all the trucks and other equipment (owned by the supermarket) which transferred from Company K to the respondent on 22 October 2010 were used as and from that day on by the respondent.

The Tribunal was also informed that some of these vehicles were replaced by the respondent some time later. The EAT concluded that while on the face of it, it appears that only a small proportion of the staff were claiming the transfer of undertaking, a very large proportion of the staff actually ceased work with Company K on 21 October 2010 and commenced with the respondent on 22 October 2010. Those staff who took or received “redundancy” at the time could not have been dismissed and if no dismissal took place, as no dismissal is allowed to take place where the Directive applies, then there can be no redundancy as a matter of law because there must be a dismissal in order for there to be a redundancy. So, whilst only a few employees took a claim under the Regulations, the EAT decision could be far-reaching.

The EAT found that it was clear that in or about late September 2010 the contract that Company K had with Company T was coming to an end and the contract was being passed to the respondent who were to succeed to the contract with Company T. Company K at that time had 126 drivers, 14 clerical staff and 8 managers approximately, working on Company T’s contract out of premises owned by Company T. Company K had 63 tractor units, 131 trailers, 8 rigid trucks , 3 tug masters and 5 double-decker trucks - all owned by Company T and used by Company K.

On 22 October 2010 all the above vehicles were transferred for the use of the respondent. Some of the employees of Company K were paid what was called “a redundancy payment” but the appellants in this case did not accept redundancy. If the Tribunal decided that the transfer of undertaking Directive applied in this case then it applied to all the employees of Company K at the time of transfer which would be 22 October 2010 and not just to the appellants. And that is what the EAT decided in this case.

Prior to the transfer, talks had taken place between company K and the respondent and the trade union and the respondent but the respondent refused to acknowledge a transfer would take place. The EAT found that, due to the refusal of the respondent to acknowledge a transfer of undertaking the union was constrained to enter into an agreement with the respondent, without prejudice to the rights of members to pursue claims under the Regulations for their full rights and entitlements and without prejudice to the drivers’ collective agreement.

In a very clear and well-structured judgement, the EAT listed 10 factors from case law that point to a transfer of undertakings in a case like this where there has been a change of service provider. The EAT then compared those points with the facts in this case and concluded that most of them applied when the contract moved from company K to the respondent.

The respondent was required to honour all the conditions of employment and the terms of the agreement made between the transferor and the representatives of the appellants prior to the transfer and compensate each of the appellants for all and any financial loss suffered by them by the non-adherence of the respondent to the terms and conditions of their employment and the said agreement from the date of the transfer, the 22nd of October 2010, to the date of this determination.
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Practical Lessons from this Case:

This is a well-structured judgement that clearly sets out the laws on transfers of undertakings as they apply in Ireland, in accordance with CJEU jurisprudence. Anyone involved in service delivery would do well to read this case and apply the criteria set out therein to their own situation before taking legal advice.