THE INDUSTRIAL TRIBUNALS

CASE REFS:	1631/02
1634/02
1635/02

APPLICANTS:		1.	Mervyn Bell
				2.	Alfreda Freel
				3.	Lynne Hutchinson

RESPONDENTS:		1.	Department of Employment & Learning
				2.	Mahood & Watson Garments Limited
				3.	Marquis Tailoring Limited

DECISION
The unanimous decision of the tribunal is that there was not a transfer of undertaking from Mahood & Watson Limited to either the second or third respondents or both.  All three applicants are entitled to redundancy payments and holiday pay.  The first and second applicants are entitled to notice pay.
Appearances:
The applicants were self-represented.
The first respondent was represented by Mr B Mulqueen, of Counsel, instructed by the Departmental Solicitors.
The second and third respondents were represented by Mr T Wylie, Personnel Manager.

1.	The reasons are given in extended form.

2.	Each applicant claimed to be entitled to a statutory redundancy payment, holiday pay and statutory notice pay from the respondent.  The first respondent asserted that a transfer of undertaking had occurred from Mahood & Watson Limited to the second or third or both respondents.  The second and third respondents denied that there had been a transfer of undertaking to either or both of them.

3.	The tribunal made the following findings:-

(a)	The first applicant was born on 16 September 1942.  He was employed by Mahood & Watson Limited from 1 December 1956 to 31 January 2002 as a manager/director.  He earned per month £1392 gross £1004 net.  He was also employed by the second respondent from 8 April 2002 to date as manager.  He is claiming a redundancy payment, statutory notice pay (8 weeks and 3 days) and holiday pay for 16 days.

(b)	The second applicant was born on 14 May 1960.  She was employed by Mahood & Watson Limited from December 1997 – 28 January 2002 as a lock stitcher.  She earned per week £133 gross £114 net.  She was also employed by the second respondent from 15 April 2002 to date as a superlocker/overlocker.  She is claiming a redundancy payment, statutory notice pay (12 days) and holiday for 24 days.

(c)	The third applicant was born on 4 October 1968.  She was employed by Mahood & Watson Limited from 4 August 1999 to 28 January 2002 as a stitcher.  She earned per week £116.85 gross £111.86 net.  She was also employed by the third respondent from 4 February 2002 to date as a stitcher.  She is claiming a redundancy payment, statutory notice pay and holiday pay for 20 days.  She is not entitled to statutory notice pay as she received the requisite notice.

(d)	Mahood & Watson Limited had 14 employees before it was the subject of a creditors’ voluntary winding-up.  It makes overalls.  It carried out cutting, making and trimming of the overalls.  The second respondent makes workwear, skirts, bags and trousers.  About 50% of its work is similar to Mahood & Watson Limited’s work.  It employed 8 of the former employees of Mahood & Watson Limited.  The third respondent made clothing to measure.  It employed 3 of the former employees of Mahood & Watson Limited to replace employees who had left.  The second and third respondents are owned by Mr J Cranston.  The third respondent was located on a different floor within the same building as Mahood & Watson Limited.  The second respondent and a firm of architects took over the floor formerly occupied by Mahood & Watson Limited.  The 3 remaining former employees of Mahood & Watson Limited successfully applied to the first respondent for a redundancy payment.

(e)	In January 2002 Mr Peter Frazer, the owner of Mahood & Watson, notified all 3 applicants that the company was being placed in the hand of a receiver and that their employment was terminated.  This was owing to a downturn in orders.  He removed machines, trimmings, patterns, materials, customer lists and work in progress.

(f)	On 24 January 2002 the second and third applicants with some other employees of Mahood & Watson Limited visited Mr Cranston at the third respondent’s premises to see if he could offer them a job with the third respondent.  He could not but took their names lest any vacancy occur.

(g)	Mr Davidson, managing director of Arco-Gilpins, a large customer of Mahood & Watson Limited, approached the first applicant on 7 or 8 February and Mr John Cranston on 8 February 2002 about supplying clothing for his firm.

(h)	On 11 February 2002 the first applicant, Mr Davidson and Mr Cranston met to discuss how Mr Davidson would continue to be supplied by clothing, at the third respondent’s premises.  The outcome of the meeting was that a new company would be established, the second respondent.

(i)	The second respondent was established on 22 February 2002.  It employed initially 5 and later 8 former employees  of Mahood & Watson Limited.  At the start the third respondent funded the second respondent and provided it with administrative support.  Of the latter’s 10 or 11 pieces of equipment had previously belonged to Mahood & Watson Limited and the remainder had belonged to the third respondent.  On 6 February 2002 the third respondent had bought all the equipment previously in Mahood & Watson Limited’s premises though all but 3 machines were dumped as they were useless.

(j)	In assessing whether there was a transfer of undertaking the tribunal followed the approach set out in Cheesman  -v-  R Brewer Contracts [2001] IRLR 144, viz firstly, whether there is an undertaking and secondly, if there is an undertaking, whether it has been transferred.

(k)	In Cheesman  -v-  R Brewer Contracts at page 147 paragraph 10 the EAT set out 5 factors for deciding whether there is an undertaking.  It is clear that by applying these 5 factors that Mahood & Watson Limited constituted an undertaking.  Indeed it was not seriously disputed that that was the case.

(l)	Similarly the EAT in Cheesman  -v- R Brewer Contracts at pages 147 and 148 paragraph 11 set out 12 factors for deciding whether there has been a transfer of undertaking.

(m)	Considering the above 12 factors in relation to the third respondent there was not a transfer of undertaking:-

(i)	The third respondent employed 3 employees of Mahood & Watson Limited and bought all machines dumping all but 3 of them and supplying them to the second respondent.

(ii)	The third respondent did not retain the identity of Mahood & Watson Limited.  Machines, trimmings, patterns, materials, customer lists and work in progress were removed by the former owner of Mahood & Watson Limited.  Three employees went to the third respondent, 8 to the second respondent and 3 were redundant and received a redundancy payment from the first respondent.

(iii)	The work carried out by the third respondent was different to that of Mahood & Watson Limited.

(iv)	The third respondent employed the 3 employees to fill vacancies within the third respondent.

(v)	There was not any contractual relationship between the third respondent and Mahood & Watson Limited.

(n)	Consider the above 12 factors in relation to the second respondent there was not a transfer of undertaking:-

(i)	The second respondent bears similarities to Mahood & Watson Limited.  It employed 8 former employees including a manager, acquired 3 former machines, had a similar name, occupied part of the former site, did similar work and had 1 former customer of them.

(ii)	The second respondent did not retain the identity of Mahood & Watson Limited.  Machines, trimmings, patterns, materials, customer lists and work in progress were removed by the former owner of Mahood & Watson Limited.  Three employees went to the third respondent and 3 were redundant and received a redundancy payment from the first respondent.

(iii)	The work carried out by the second respondent was 50% different to that of Mahood & Watson Limited and was not restricted to cut, make and trim.

(iv)	The second respondent employed the 8 employees, occupied part of its former site, used a similar name in an attempt to exploit a business opportunity in the very precarious textile marketplace prompted by the needs of a former customer of Mahood & Watson Limited to maintain its supply of garments.

(v)	There was not any contractual relationship between the second respondent and Mahood & Watson Limited.

(vi)	At the time of the redundancy of the applicants the second respondent did not exist nor was it planned or in contemplation.  Its very existence arises from an attempt to exploit it an opportunity in the textile market.

(vii)	There was a significant delay between the redundancy of the first and second applicants and their employment by the respondent.

(o)	The parties were in agreement that should there not be a transfer of undertaking that the first respondent was responsible for the applicants’ claims for a redundancy payment.

(p)	Accordingly all 3 applicants are entitled to redundancy payments and holiday pay as set out above.  The first and second applicants are entitled to notice pay as set out above.

Chairman:

Date and place of hearing:	23 and 24 August, 18-20 October, 10 November 2004, Belfast.

Date decision recorded in register and issued to parties: