THE INDUSTRIAL TRIBUNALS

CASE REF:	170/10

CLAIMANT:		Jonathan Armstrong	

RESPONDENTS:	1.   Central Group Services Limited (in receivership)
2.   Contract Services (Northern Ireland) Limited
3.   Department for Employment and Learning

DECISION
(A)	The claimant’s claims (for breach of contract and in respect of redundancy pay) against Central Group Services Limited are well-founded.
(B)	The claimant’s claims (in respect of breach of contract and in respect of redundancy pay) against Contract Services (Northern Ireland) Limited are not well-founded and accordingly they are dismissed.
(C)	Pursuant to Article 205 of the Employment Rights (Northern Ireland) Order 1996 (“the 1996 Order”), I have decided that, in August 2009, as a result of the termination of the claimant’s employment, Central Group Services Limited became liable to make a redundancy payment to the claimant.  
(D)	The claimant’s Article 233 complaint (the complaint made by him pursuant to Article 233 of the 1996 Order, regarding the refusal of the Department to make any payment to him pursuant to his Article 227 application, in respect of notice pay, wages and holiday pay) is well-founded.

Constitution of Tribunal:
Chairman (sitting alone):		Mr P Buggy

Appearances:
The claimant appeared in person.

There was no appearance by or on behalf of Central Group Services Limited.  

Contract Services (Northern Ireland) Limited was represented by Mr C Hamill, Barrister-at-Law, instructed by M McGuinness, Solicitor, of PricewaterhouseCoopers LLP.

The Department for Employment and Learning (“the Department”) was represented by Mr P McAteer, Barrister-at-Law, instructed by the Department Solicitors Office.

REASONS

1.	The claimant was employed by Central Group Services Limited (which is referred to below as “the old employer”) for several years.  He was employed by them as the Senior Invoice Manager.  In early August 2009, the old employer went into receivership.  At that time, the old employer purported to terminate the claimant’s contract of employment with it, ostensibly on the ground of redundancy.  Contract Services (Northern Ireland) Limited (referred to below as “the new employer”) purported to offer the claimant employment with it, as an administrator, with effect from 10 August 2009.  The claimant resigned from the latter post on 11 September 2009, because his salary as an administrator with the new employer was much less than the salary which he had received when he had been a manager with the old employer.

The claims, the appeals, and this tribunal’s jurisdiction

2.	In these proceedings, the claimant makes claims against the old employer and against the new employer in respect of redundancy pay, notice pay, wages and holiday pay. 

3.	An industrial tribunal has jurisdiction to entertain claims for breach of contract pursuant to an order which was made under Article 5 of the Industrial Tribunals (Northern Ireland) Order 1996 (“the ITO”).  Article 118 of the 1996 Order makes provision regarding the rights of an employee to a minimum period of notice of the termination of his employment.  The claim for breach of the Article 118 rights is a claim for breach of contract. The claimant’s claims in respect of wages and holiday pay are also claims for breach of contract.

4.	Article 170 of the 1996 Order imposes a requirement upon an employer to pay a redundancy payment to any of its employees, if that employee is dismissed by that employer by reason of redundancy.  Article 198 of the 1996 Order provides that any question arising under that Order as to the right of an employee to a redundancy payment is to be referred to and determined by an industrial tribunal. The redundancy pay claim against the employers is brought under Article 198.

5.	The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPER”) was intended to implement the requirements of the EU Acquired Rights Directive of 2001 (Directive 2001/23).  According to the  claimant and the new employer and the Department, if there was  a relevant transfer (from the old employer to the new employer), the effect upon the contracts of employment of the assigned employees (those employees who were assigned, or are deemed to have been, assigned, at the time of the transfer, to the transferred  entity) is as follows.  The transfer does not have the effect of automatically terminating those contracts of employment.   Those contracts can continue, with the old employer being replaced, by operation of law, by the new employer.  This is a seamless transition, which is effected by operation of law.  As a result, the contract of employment of an assigned employee does not terminate by reason of redundancy, so no entitlement to redundancy payment exists, and no entitlement to notice, or pay in lieu of notice, arises. 

6.	The Department has a role, as the statutory guarantor, in respect of certain employment debts. 

7.	First, if an employer cannot or will not make a payment in respect of a redundancy payment which is due to a particular employee, that employee can apply to the Department for a payment in respect of that debt.  Any such application is made under Article 201 of the 1996 order.  In certain situations, the Department is under an obligation to make a payment in response to such an application.  However, any such requirement does not arise unless the Department is satisfied that the employee is entitled to the redundancy payment.

8.	Article 205 provides that, where an Article 201 application is refused by the Department, there shall be referred to an industrial tribunal any question as to the liability of the relevant employer to pay the redundancy payment.

9. 	In this case, the claimant did make an Article 201 application, which was unsuccessful.  This is the claimant’s Article 205 “reference“ (appeal) in respect of that refusal.

10.	Secondly, the Department also has a role as the statutory guarantor in respect of the payment of other employment debts.  (See Article 229 of the 1996 Order).  The relevant debts include arrears of pay, holiday pay, and an employer’s obligation to make a payment upon termination of employment, in lieu of notice, as provided for by Article 118 of the 1996 Order. 

11.	In respect of those other employment debts, the Department only has a role as statutory guarantor if the relevant employer  is “insolvent” within the meaning of the relevant provisions of the 1996 Order.  In this particular case, the old employer went into receivership.  The Department accepts that, because of that  receivership,  the old employer has become “insolvent” within the meaning of the relevant provisions of the 1996 Order.

12.	The Department’s statutory guarantor role, in relation to  those other debts, only arises when an application is made to the Department  pursuant to Article 227 of the 1996 Order.  The claimant did make such an application,  to the Department,  in respect of the “other” debts.  That application was unsuccessful.

13.	If the Department refuses an Article 227 application, that refusal can be the subject of any appeal. Any such appeal is made by way of complaint pursuant to Article 233 of the 1996 Order. This is the claimant’s “complaint” (appeal) in respect of the refusal of his Article 227 application.

The context of the claims and appeals, and the course of these proceedings

14.	Arising out of the purported termination of his employment in August 2009, the claimant asked the old employer to make payments in respect of a redundancy payment  and in respect of the other alleged debts which are specified above.  The old employer made no such payments.  

15.	The claimant then made applications to the Department, in the Department’s role as statutory guarantor, in relation to all of those alleged debts.  In response to those applications, the Department declined to make any payment.  In each instance, the Department’s refusal was based on the Department’s conclusions that, in August 2009, the claimant had been assigned to an entity (within the old employer) which was the subject of a relevant transfer, from the old employer to the new employer.

16.	The old employer has not participated in these proceedings.  The new employer contends that there has been no relevant transfer (within the meaning of TUPER) and that, accordingly, the new employer has not succeeded to any liabilities which had been incurred by the old employer by the time of the receivership.

17.	The claimant’s position is that he does not accept, and never has accepted, that  there was a relevant transfer within the meaning of TUPER.  He  joined the new employer, as a party to these proceedings, only as a precautionary measure, and only as a response to the Department’s refusals (in the Department’s role as statutory guarantor).

18.	The Department’s position, in its role as the respondent to the statutory guarantor appeals, is as follows.  The Department accepts that it would have a liability to the claimant, in a statutory guarantor role, in respect of both of the two claims which were made against the old employer (the redundancy payment claim and the claim in respect of other employment debts) if there was no relevant transfer.  However, the Department maintains its refusals, to pay in relation to the employer’s claims, because the Department continues to contend that there was indeed a relevant transfer.

19.	Both the Department and the new employer are agreed that if there was a relevant transfer, then the transferred entity must consist of that part of the old employer which carried out operations within Northern Ireland (as distinct from that part of the old employer which carried out operations in the Republic of Ireland). Those parties are also agreed that, immediately prior to the receivership, that part of the old employer (the Northern Ireland part) did amount to an entity. Both the Department and the new employer are also agreed that, immediately prior to the commencement of the receivership, the claimant was assigned (within the meaning of Regulation  4 of TUPER) to the Northern Ireland part of the old employer. 

20.	Accordingly, in these proceedings, the central issue is whether or not  the Northern Ireland part of the old employer  was the  subject of a relevant transfer (within the meaning of TUPER).

21.	During the period which began when the old employer went into receivership and ended when the claimant resigned from the new employer, the claimant was paid a salary which was much less than the salary which he had been paid by the old employer.  Accordingly, I invited the claimant to seek leave to amend his claim form so as to include an additional breach of contract claim, against the new employer, in respect of the difference between the rate of pay which he had received from the old employer and the rate of pay which he had  received,  in August  and September 2009, from the new employer. He did seek such leave and I granted that application.

22.	In summary, in these proceedings, the following claims, complaints or appeals are being made:-

	(1)	The claimant makes claims, against the old employer and against the new employer, in respect of a redundancy payment.  

	(2)	The claimant appeals, under Article 205 of the 1996 Order, to this tribunal in respect of the Department’s refusal to make the claimant a payment in connection with the old employers’ alleged redundancy payment debt.

	(3)	The claimant makes breach of contract claims, against both the old and the new employer,  in respect of other alleged employment debts (which have already been specified above).  

	(4)	The claimant appeals to this tribunal, under Article 233 of the 1996 Order, against the Department’s refusal to make an Article 227 payment in respect of those other debts.

The evidence

23.	The claimant gave evidence on his own behalf.  Mr Rory MacNaughton (the Managing Director and in effect, owner, of the new employer) gave evidence on behalf of the new employer.  I also saw four bundles of documents consisting of many hundreds of pages.  (I told the parties that, for evidential purposes, I would not take account of any document in any bundle unless my attention had been drawn to that particular document by one or more of the parties.)  I also saw some miscellaneous documents which were provided to me during the course of the hearing.

24.	I regarded the claimant as a generally honest witness.

25.	I did not regard Mr MacNaughton as an unreliable witness in relation to all of the matters upon which he gave evidence on these proceedings.  However, I do have considerable reservations about his reliability as a  witness in relation to significant aspects of the evidence which he gave about the process by which a number of employees of the old employer came to be offered employment by the new employer.  In particular, in relation to that aspect of the evidence, he professed a vagueness of recollection, and a lack of knowledge of detail, which were frankly unbelievable.

The facts

26.	For ease of reference, and in order to minimise avoidable duplication, I have set out some important findings of fact in other paragraphs of this Decision.  However, this paragraph contains many of the findings of fact which are relevant to the issues which I have determined.

(1)	The claimant was employed by the old employer for nine years as a Senior Invoice Manager at a salary of £30,000 per annum, with a company car.   The old employer, which was a limited company, went into administrative receivership in early August 2009.  At that time, the claimant was on holiday.  He was contacted by a Director of the old employer.  That Director told the claimant that the new employer was “looking for workers”.  He made contact with the new employer.  They offered him a position as a general office worker earning only £18,000 per annum, and without any company car.  He completed an application form in respect of that new job.  The application form and any subsequent “interview” in respect of this position were perfunctory.  They were designed only to formalise matters.  They were not designed to assess the claimant’s suitability for the new position.  Instead, when the relevant Director of the old employer had phoned him about the availability of the post in the new employer,  he had in reality already been ear-marked for the relevant office-worker  post (by the relevant Director of the old employer) and the written application and any interview were merely procedural formalities. At the time the relevant Director phoned the claimant, that Director had already been offered, and accepted,  employment within the new employer.

(2)	Due to the reduction in his salary and because of the lack of a company car,  the claimant felt unable to continue working in the new employer and he 
	resigned on 9 September 2009.

(3)	The old employer did not pay the claimant any redundancy payment, or any sum in lieu of notice, and it did not pay any of the other employment debts which he claimed against that company.  He made applications to the Department (in the Department’s role as statutory guarantor) in respect of the redundancy payment and in respect of  the other employment debts.  The Department refused to make any payment  to him pursuant to those applications, because the Department has taken the view that there was a relevant transfer of the Northern Ireland part of the old employer.  Therefore, according to the Department’s reasoning, the claimant was never entitled to a redundancy payment from the old employer, he was never entitled to pay in lieu of notice from the old employer, and the other relevant employment debts are debts which the new employer is well able to pay.

(4)	The claimant was given his P45 by the old employer.

(5)	The old employer carried out operations both in Northern Ireland and in the Republic of Ireland.  The operations carried out within the Republic of Ireland were carried out by staff who were exclusively dedicated to the work being carried out there.  The staff employed by the old employer in Northern Ireland were exclusively dedicated to carrying out the old employer’s operations in Northern Ireland.

(6)	When the old employer went into receivership, only three of the Directors of the old employer were active Directors.  All of those active Directors became employees of the new employer.

(7)	A majority of the Northern Ireland employees of the old employer, 29 of them, became employees of the new employer soon after the demise of the old employer.

(8)	The old employer installed and maintained heating systems.  The new employer does that as well, but the new employer carries out a broader range of building activities than those which were carried out by the old employer.  For example, the new employer can construct a building, can install and equip  gas and electrical fittings in a building and carries out cleaning services in 
	respect of buildings.

(9)	
Accurate and comprehensive evidence has not been provided by the new employer about the circumstances in which  various employees of the old employer were offered employment by the new employer.  I am satisfied that the reality of the situation was that, at the request of,  or with the support of, 
Mr MacNaughton, one or more of the three ex-directors (the active Directors of the old employer who had accepted offers of employment with the new employer) identified a specified number of staff from the old employer who they considered would be most appropriate for employment in the new employer.  That was the beginning of a  process  which ended when some of the employees of the old employer  (“the favoured employees”) were offered new contracts of employment within the new employer.

(10)	In arriving at the those conclusions (my conclusions in relation to the process by which employees of the old employer came to be offered employment by the new employer), I have had regard to the testimony of the claimant and to the testimony of Mr MacNaughton.  The claimant’s evidence, which I accept, outlines the process by which he personally came to be offered employment by the new employer.  It seems to me to be likely that the same process was followed in relation to the other favoured employees.  Having watched, and listened to, Mr MacNaughton giving evidence, I have no doubt that he is a very “hands-on” entrepreneur, that he is the dominant figure within the new employer, and that he has a considerable appetite for, and attention to, detail.  Against that background, I have no doubt that, before any offers of employment were made, he had approved the types of job  which should be offered,  how many such posts should be offered, and the mechanism by which the favoured group (of employees of the old employer) would be selected.

(11)	Accordingly, the reality is that the new employer carried out an unfair, non-transparent and non-objective process, whereby some of those who would have otherwise been deemed to be jobless were given jobs by the new employer.  The process by which some employees were chosen to be saved, while others were discarded, was a very unfair process.  However, the fairness or unfairness of that process is not strictly relevant to the issues which I have to determine in this case.

(12)	Of the 51 Northern Ireland-based staff of the old employer:

	7 out of the 11 plumbers began working for the new employer;
	3 out of the 6 electricians began working for the new employer;
	6 out of the 12 service engineers worked for the new employer;
	7 out of the 16 administrative or management staff were offered and accepted work within  the new employer; and
	all 6 of the builders were accepted as employees by the new employer.

(13)	So what Mr McNaughton sought, and what he got, was as follows.  First, the new employer took on all of the old employer’s builders.  Secondly, that employer took on approximately 50% of the remainder of the old employer’s operational workforce.  Thirdly it took on less than 50% of the administrative/managerial element of the old employer’s workforce.

	(14)	Some of those employees of the old employer, who signed contracts of employment with the new employer, were being offered posts which were substantially different from the posts which they had occupied in the old employer, and at reduced salaries.  However, many of them were being offered posts which were exactly the same as the posts which those individuals had held in the old employer.

	(15)	I am satisfied that a very substantial element  of the work carried out by the old employer was carried out pursuant to  long term contracts, and that only one of those long term contracts was assigned to the new employer.  The latter contract was  a contract with Fold housing association. It was a contract which was near to the end of its term when the older employer went into receivership, and that contract was continued by the new employer only for a very short number of weeks.

	(16)	Mainly on the basis of the evidence of Mr McNaughton, I accept that none of the other term contracts were transferred to the new employer and that the new employer did not gain any other substantial additional custom either as a result of the demise of the old employer or as a result of the influx of the favoured employees.

(17)	I accept that many of the “favoured” tradesmen ( those  tradesman employees of the old employer who were offered employment with the new employer) had to use expensive testing equipment for the purpose of carrying out their work, both while working for the old employer and while working for the new employer.  I also accept that the relevant testing equipment (the testing equipment of the old employer) was not transferred, either directly or indirectly, to the new employer.  

	(18)	I also accept that many of the favoured tradesmen needed vans for the purpose of carrying out their work.  I also accept that the vans which had been available to them while working for the old employer were no longer available to them while working for the new employer.  (Thus, the new employer had to itself make provision for vans for use by those men).

The arguments

27.	The claimant made no substantial legal submission.  Instead, his case rested on his argument that he had been dismissed by the old employer and that there had been no relevant transfer (of the Northern Ireland part of the new employer) to the new employer.

28.	Detailed oral admissions were made on behalf of the new employer and on behalf of the Department.  On behalf of the new employer, Mr Hamill helpfully supplemented his oral submissions with a written note (“the Note”).

29.	Because of the existence of that Note, there is no need for me to provide a comprehensive written account (in this Decision) of the new employer’s submissions.  However, paragraph 1.5 of Mr Hamill’s Note is particularly important:-

		“1.5	A number of staff approached [the new employer] and 29 were subsequently recruited.  Apart from those staff [the new employer] received no other asset or benefit from the collapse of [the old employer].  In particular the following assets either did not go to [the new employer] or ceased to exist:-

•	All physical assets  -  sold on.

•	All contracts, 2.5 million  - ceased to exist, none taken over by [the new employer].

•	A business with turnover of 3.5 million, value of 2 million  -  gone.

•	Goodwill (Name, customer base, etc)  -  gone.

•	Telephone number  -  sold on.”

30.	Both the old employer and the Department referred me to the case of Cheesman  v  R Brewer Contracts Limited [2001] IRLR144, which both of the parties regarded as the leading case on the question of whether or not there has been, or has not been, a transfer of an undertaking in the context of a business transfer.

31.	 Klarenberg  v  Ferrotron Technologies GmbH [2009] All ER (D)133, is a European Court of Justice Decision.  That case is authority for the proposition that there can be a relevant transfer even if the relevant entity (the entity which was the subject of the relevant transfer) did not, post-transfer, retain its organisational autonomy, provided that the functional link between the various elements of production transferred was preserved.

32.	Against that background, in these proceedings, the Department has accepted that  the question of whether or not the staff of the old employer were integrated, in a non-autonomous fashion, within the staffing structure of the new employer, is a question which is not  important in this case.

33.	The Department also accepts that the new employer’s very temporary role in completing the Fold contract was of very limited significance in the context of the question of whether or not there was a relevant transfer. 

34. 	However, the Department drew particular attention to the fact that a majority of the staff of the old employer had been taken on by the new employer; that the new employer had recruited all the people who had constituted the active directorate of the old employer; and that many of the staff who were taken on by the new employer were taken on in the same roles as they had  previously carried out  for the  old employer.

35.	The Department also pointed out that the situation whereby so many employees of the old employer had signed contracts of employment with the new employer  situation  had not come about by chance.  Instead, it was the result of a deliberate plan on the part of Mr MacNaughton.  That was a factor, according to the Department which ought to be taken into account in deciding whether or not there had been a relevant transfer.

36.	Mr McAteer pointed out that, although Mr MacNaughton valued the company as a whole at £2 million, he  valued its tangible assets at  only £100,000.  The implication, according to Mr McAteer, was that the human assets of the relevant entity (its staff) were its main assets.

37.	On behalf of the Department, he also argued that it was likely that some of the work, a substantial proportion of the work, which had been carried out by the old employer, was subsequently carried out by the new employer.  He accepted that the Department was not in a position to quantify how much of that work had transferred to the new employer.  However, I could infer, he argued, that a significant proportion had indeed transferred.

38.	This case is one of a number of cases which constitute a group (or multiple) litigation.   This case is a “lead” case in that litigation.

39.	A considerable number of ex-employees of the old employer made applications to the Department, in the Department’s role as statutory guarantor.  The general outcome of those applications can be summarised as follows.  The Department accepted the validity of the applications of those applicants who had not been offered and accepted posts within the new employer.  The Department refused applications from ex-employees (of the old employer) who, like the claimant, did sign contracts of employment with the new employer.

40.	According to Mr Hamill, this was an unacceptably inconsistent pattern of behaviour on the part of the Department.  I should take that pattern of behaviour into account in determining  whether there was a relevant transfer.  On behalf of the Department, Mr McAteer argued that there was nothing to be inferred from the Department’s view, in any particular case, or in any group of cases, on the question of whether or not there was a transfer.  The Department’s view, according to Mr McAteer, had no probative value in the context of either of these appeals.

The law and my conclusions

41. 	In this paragraph, I set out certain legal principles which are applicable to the issues which I have determined in this case; I also set out my overall conclusions :

	(1)	Regulation 3(1) of TUPER provides that the Regulations apply to a transfer of an entity (an undertaking, business or a  part of an undertaking or  a part of a business) to “another person” where there is “a transfer of an economic entity which retains its identity”.

(2)	TUPER has to be construed in light of the requirements of the Directive.  Article 1 of the Directive provides that it is to apply to any transfer of  an entity “to another employer as a result of a legal transfer or merger”.  Article 1(b) provides that (subject to certain exclusions which are irrelevant in the present context) there will be a transfer within the meaning of the Directive where there is a transfer of an economic entity which retains its identity.

	(3) 	Regulations 3(2) of TUPER defines “economic entity” as an organised grouping of resources which has the objective of pursuing an economic activity (even if that activity is an ancillary activity).  The same definition of an economic entity is to be found in Article 1 of the Directive. That  reflects the case law of the European Court of Justice which had developed  during the period leading up to the enactment of the  2001 Directive.

	(4)	As Regulation 3(6) of TUPER makes clear, for the purposes of the Regulations,   a relevant transfer may take place even if no property is transferred within the context of that transfer.  However, the question as to whether or not any property has been transferred is nonetheless a  matter which may be of relevance, as part of the overall assessment, in assessing whether or not there has been, or has not been, a relevant transfer.  So the transfer of property is not a necessary condition for the existence of a relevant  transfer, but the question of whether or not there has been a transfer of property is, or may be (depending on the particular circumstances of the case), a significant issue in arriving at an overall assessment. (That  overall assessment is of course focussed on the question of whether or not there has been a transfer of an undertaking which has retained its identity).

	(5)	As already mentioned above, the statement of the law which was set out in Cheesman has been commended to me by both parties.  Cheesman accurately sets out the state of the European case law as at the time of Cheesman.  

	(6)	As was pointed out in Cheesman, at sub-paragraphs (iii) and (iv) of   paragraph 10:

(iii)	“In certain sectors … the assets [of the business] are often reduced to their most basic and the activity is essentially based on manpower ... [my underlining].
(iv)	An organised grouping of wage-earners who are specifically and permanently assigned to a common task may in the absence of other factors of production amounts to an economic entity … [my underlining].” 

	(7)	In my view, in this case, the activity of the relevant entity (the Northern Ireland portion of the old employer) cannot be regarded as being essentially based on manpower, and there were other factors of production, apart from manpower.

	(8)	Those  other factors of production  include the building in which the workers of the old employer  were based,  expensive  testing equipment which many of the favoured tradesmen used, and the vans which they used to travel to and from the old employer’s customers. 

	(9)	At paragraph 11 of Cheesman, reference is made to the classic test which is contained at paragraphs 12 and 13 of the judgement in Spijkers v Gebroeders Benedik Abattoir CV [1986] ECR 1119.  In that case, the Dutch Government submitted that, in the context of acquired rights law, the term “transfer”  implies “… that the transferee actually carries on the activities of the transferor as part of the same business”.  At paragraph 11 of its judgement, the Court endorsed that view, adding the following comment:

			“It follows that the decisive criterion for establishing whether there is a transfer for the purposes of the Directive is whether the business in question retains its identity”.

	(10)	At paragraph 12 of that judgement, the Court declared that the implication of that decisive criterion (the question of whether or not the business retained its identity) was that a relevant transfer, within the meaning of the legislation, does not occur merely because the assets of a particular business are disposed of; instead, according to the Court, what really matters is whether or not the business was disposed of as a going concern (whether or not, in the hands of the putative transferee,  the business has retained its identity).  

	(11)	In the same paragraph of the Spijkers judgement, the Court pointed out that one relevant indicator (one indicator that the business was disposed of as a going concern and had retained its identity) would be provided by the fact, if indeed it be the fact, that  (1) the business’s operation was actually continued or resumed by the new employer,  and  (2) it was continued or resumed with the same or similar activities.  

	(12)	At paragraph 13 of the same judgement, the Court made the point that there has to be an overall assessment on the question of whether or not the business has been disposed of to the putative transferee as a going concern.  In that paragraph, the Court drew attention to certain factors which could properly be taken into account in arriving at that overall assessment.  However, the Court also made the point that those factors are only appropriate for consideration as part of an overall assessment, and that: “… they cannot therefore be considered in isolation”.  

	(13)	What were the factors to which the Court drew attention at paragraph 13 of Spijkers?  They were as follows:

		(a)	The court or tribunal was to pay regard to the type of undertaking or business which is involved.

		(b)	Were the business’s tangible assets, such as buildings and moveable property, transferred to the transferee?

		(c)	What was the value of the intangible assets (such as goodwill) of the business at the time of the transfer?

		(d)	Were the majority of the employees of the business taken on by the new employer?

		(e)	Were the customers of the old employer transferred to the new employer?

		(f)	How similar were the activities carried on before and after the putative transfer?

		(g)	Were those activities suspended for any period?

	(14)	This is very much a border-line case.  Not without hesitation, and having had regard to the oral testimony which I received from the claimant and from Mr McNaughton, I am on balance satisfied that the relevant entity was not transferred to the new employer.  In arriving at that overall conclusion, I have also had regard to the following matters and conclusions:

		(a)	The work premises, the testing equipment and the vans were significant in the context of the business.  They were not transferred to the new employer.

		(b)	I have concluded that, apart from the Fold contract, the new employer did not take over any of the term contracts of the old employer. I have concluded that, during the period from August 2009 onwards, the new employer did not obtain any substantial business (either in the form of term contracts or in the form of one-off purchases of services) from among the old employer’s circle of customers. (In the present context, “one-off” custom means business generated by people who want a single, discrete, piece of business to be done for them, as distinct from entering into long term business relationships with the service-provider).

	(c )	I note that a majority of the staff of the old employer were taken over by the new employer.  I also note that this did not come about as a result of coincidence.  Instead, it came about as a result of Mr McNaughton’s determination to pick and choose from among the staff of the old employer, so as to augment the  skills-base within the new employer.  (Incidentally, I accept that the planned nature of the transfer of employment of the favoured employees is a factor to be taken into account in favour of the proposition that there has been a transfer of an  entity which has retained it identity).

	(d)	In my view, the similarity between the activities which were carried out before the relevant transfer and the activities which were carried out after the relevant transfer is also a factor in favour of the proposition that there has been a relevant transfer.

	(e)	I note that the relevant activities were not suspended for any period whatsoever.

	(15)	I am satisfied, mainly as a result of  certain public comments which Mr McNaughton made during the summer of 2009, that it was his aspiration to take over at least some elements of the business of the old employer.  However, what Mr McNaughton wanted to achieve is not of central importance.  What matters is what he  did achieve.  The real question  here is whether, as a  matter of law, the overall  consequence of  the totality of all the relevant acts and omissions (the various  interactions between the old employer and the new employer,   the various interactions between the new employer and the staff of the old employer, and the various acts of the new employer)   was that there was, in reality  a transfer of an undertaking which retained its identity.  

	(16)	Similarly, the question of whether or not the Department, in reality, thought that there was a transfer of undertaking, or thought that there was not a transfer of an undertaking, is not of central relevance in the present context.

	(17)	The important question is whether there was a relevant transfer, not whether various protagonists thought that there was one, or thought that there wasn’t one.

Next steps

42.	On the basis of the information which was made available to me during the course of this hearing, it seems to be clear that the old employer is probably not in a position to meet any award of compensation.

43.	The claimant and the Department made it clear to me that they considered that it was likely that they would agree on amounts if  either or both of the appeals was successful.

44.	Against that background, and with the agreement with all of the parties, I did not receive any evidence on remedies during the course of this hearing.

45.	If either the claimant or the Department so requests, a remedies hearing (in respect of the statutory guarantor appeals) can be arranged at relatively short notice.

46.	However, no request for a remedies hearing should be made until six weeks have elapsed from the date of promulgation of this Decision.

General comments

47.	I make the following comments with some diffidence; in my view, an industrial tribunal has no role in “second-guessing” Departmental decisions  about applications which are not the subject of any appeal to that tribunal.  Nevertheless, I make those comments, for two reasons.  First, it was made clear on behalf of the new employer that that party would welcome any  comments I might make about the appropriateness,  or otherwise,  of the Department’s differential attitudes in relation to the various applications which had been made to it by ex-employees of the old employer.  Secondly, it was made clear during the course of the hearing that the Department would have no objection to any such comments being made.

48.	On behalf of the new employer, Mr Hamill was sharply critical of the anomalous position in which the Department had put itself, by granting applications (in its role as statutory guarantor) which had been made by ex-employees who had not ended up working for the new employer, while refusing similar applications made by 
ex-employees of the old employer who had been offered, and had accepted,   what purported to be new contracts of employment with a new employer.

49.	I agree that the refusal of certain relevant applications and the acceptance of other relevant applicants created unfortunate anomalies (because all of the applicants, the successful applicants as well as the unsuccessful applicants, had been assigned to the same entity at the time of the putative transfer).

50.	However, it seems to me that, in deciding whether or not to pay out in response to a  Article 201 or Article 227 application, the Department has a duty only to carry out such investigations as are  proportionate in all the circumstances of any specific and particular application.

51.	In deciding how much investigation to carry out in any particular instance, the Department is entitled to have regard to the question of  whether or not, on the face of it, the particular applicant is, or is not, in a situation in which the  scheme of the overall legislative framework envisages action  being taken by the Department in its role as statutory guarantor.

52.	It seems to me that the scheme of the general, and overall, legislative framework,  becomes clearer if we stand back from the detail of transfer of undertakings law, and if we stand back from the detail of redundancy law, and if we look at  both of those branches of employment law as part of the overall framework of employment law as a whole. If we do that, it becomes obvious that the position, in very broad and general terms, is as follows:	If you have been employed by employer A within a particular  business, and employer A leaves the scene, and the particular business  continues under  the control of a new employer (employer B), you are not redundant,  you do not need notice pay, you should not lose your job and you are entitled to your TUPE rights.  On the other hand, if the business ceases when A departs,  you are redundant,  you do need notice pay, A is obliged to make a redundancy payment, and to give you notice pay, and the State may act as statutory guarantor in respect of those monetary obligations of A’s.  (So two alternative schemes of social protections are available depending on the circumstances: If the business continues,   the State, through TUPER, enforces your right to continue to be a part of that business.  And if the business, dies,  the State,  through sanctions and grant-making, seeks to ensure that you get  termination payments).

53.	In exercising its important role as statutory guarantor, the Department must have regard to the need to safeguard public monies.  However, it must also act in a pragmatic and proportionate manner.  If X was employed by firm A, which has now ceased to operate, there may be a very interesting legal issue as to whether firm B,  has become the transferee of the entity previously run by A.  However, the resolution of that issue may take months or years.  In the meantime,  if B has not accepted that  it has incurred TUPE obligations in respect of X, it will often not be inappropriate for the Department to accept that X is entitled to the Department’s  protection in its role as statutory guarantor, even if the Department  has  doubts on that matter.  The alternative to such pragmatism would  for the Department  to require X (who has not actually enjoyed any fruits of TUPE entitlements)  to exhaustively explore the possibilities of TUPE,  in lengthy and expensive  litigation, without any clarity as to the likely  ultimate outcome of that litigation. 

54.	Against that background, it seems to me that it is not at all unreasonable for the Department to give the benefit of the doubt to statutory guarantor applicants who have not been offered employment by any “new” employer, while at the same time demanding strict proofs from employees who, on the face of it, appear to have lost nothing because of the demise of their old employer.

Chairman:

Date and place of hearing:     16-18 June, Belfast.

Date decision recorded in register and issued to parties: