Mrs T White and others v The Animal Ark Pet Store Ltd and others: 1811232/2018 and others
JUDGMENT
The Judgment of the Employment Tribunal is that there was a transfer of the undertaking being carried out by the first respondent to the third respondent. This was a transfer pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006 and occurred on or around 21 August 2018. Case Number: 1811232/2018 1811242/2018 &1811575/2018 1811396/2018 1800280/2019 2REASONS
[1]These reasons are supplied at the request of the solicitor acting for the first claimant and third respondent.[2]This preliminary hearing was listed in order to decide whether there was a transfer of the undertaking being carried out by the first respondent to the third respondent.[3]Mr Clay acted upon behalf of the first claimant and third respondent. The other three claimants were unrepresented. There was no attendance or representation by or on behalf of the first respondent. Mr Hunter appeared on behalf of the Secretary of State for Business, Energy and Industrial Strategy.[4]The claimants worked for the first respondent which operated from premises at 86 High Street, Maltby, Rotherham as a pet store and purveyor of sundry other items as set out in paragraph 19 below.[5]The first respondent went into liquidation. A liquidator was appointed on 30 August 2018. The liquidator was appointed following a creditors’ meeting. Thus, the first respondent is in creditors’ voluntary liquidation.[6]The claimants presented claims against the first respondent and the second respondent for redundancy pay, unpaid holiday pay, unpaid wages and unpaid notice.[7]The case benefited from a case management preliminary hearing which came before Employment Judge Little on 16 January 2019. He observed that the second respondent had declined to satisfy the claims being made against the first respondent. (The claimants had made claims for a redundancy payment and other monies owed to them by the first respondent as against the second respondent pursuant to Chapter VI of Part XI of the Employment Rights Act 1996 and Part XII of the 1996 Act). The second respondent’s declinature of the claim was upon the basis that the second respondent believe there to have been a transfer of the undertaking from the first respondent to the third respondent and that liability for the payments had transferred to the third respondent.[8]The Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’) contain provisions that apply in circumstances where an undertaking has transferred from one entity to another.[9]In short, in circumstances where there has been a transfer of an undertaking for the purposes of TUPE then, amongst other things, (by virtue of Regulation 4 of TUPE) upon completion of the transfer all of the transferor’s rights, powers, duties and liabilities under or in connection with a contract of employment shall be transferred to the transferee. The protection afforded to those employed at the time of the transfer extends Case No: 1811232/2018 1811242/2018 &1811575/2018 1811396/2018 1800280/2019 1811232/2018 10.8 Reasons – rule 62(3) March 2017 to those employed immediately before the transfer or those who would have been employed had they not been dismissed because of a relevant transfer. The second respondent’s case therefore was that the obligation to make the payments claimed by the claimants and referred at paragraph 7 above was one that fell upon the third respondent because there was a transfer of the undertaking.[10]The transfer of the rights and obligations from the first and third respondent will not occur unless there has been a relevant transfer under Regulation 3 of TUPE.[11]Under Regulation 3(1)(a) there is a “relevant transfer” of an undertaking or part of an undertaking only where “there is the transfer of an economic entity which retains its identity.” An “economic entity” is defined in Regulation 3(2) as “an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary”.[12]In order to determine whether there is an economic entity in existence the following key principles need to be considered: There needs to be a stable economic entity, which is an organised grouping of persons and assets enabling (or facilitating) the exercise of an economic activity that pursues a specific objective. The undertaking must be sufficiently structured and autonomous but will not necessarily have significant tangible or intangible assets. An activity is not of itself an entity. The identity of an entity emerges from other factors such as its workforce, management staff, the way in which the work is organised, its operating methods and where appropriate the operational resources available to it.[13]The Tribunal must also consider whether the economic entity retains its identity following a transfer. In order to decide whether such retention of identity has occurred the following circumstances need to be taken into account: The type of business or undertaking. The transfer or otherwise of tangible assets such as buildings and stock. The value of intangible assets at the date of transfer. Whether the majority of the staff are taken over by the new employer. The transfer or otherwise of customers. The degree of similarity of activities before and after the transfer. The duration of any interruption in these activities. Whether there had been a change of location for the carrying out of the activities: A change of location will not mean that the identity Case No: 1811232/2018 1811242/2018 &1811575/2018 1811396/2018 1800280/2019 1811232/2018 10.8 Reasons – rule 62(3) March 2017 has not been retained. A similarity of location may be indicative of a transfer.[14]These are factors in the overall assessment and cannot be considered in isolation. No single factor is decisive and not all the criteria need to be satisfied in order for Regulation 3(1)(a) of TUPE to apply.[15]The decisive criterion for establishing the existence of a transfer is whether the entity in question retains its identity by the fact that the operation is actually continued or resumed. The absence of any contractual link between transferor or transferee may be evidence that there has been no relevant transfer but is certainly not conclusive as there is no need for any such direct contractual relationship. A transfer may be effected by a series of transactions.[16]TUPE applies automatically if there is a relevant whether or not the parties want it to.[17]The degree of similarity of activities before and after the transfer is a relevant factor. An illustration of this may be found in the case of Mathieson and Another v United New Shops Ltd EAT 554/94. There, a hospital shop operating from a portacabin was re-developed, and the hospital invited people to tender to run the new shop. The old shop sold newspapers, magazines, confectionary and flowers. The new one sold the same goods, with the exception of flowers, as well as other items such as clothes, electrical equipment, cards and toys; opened for longer hours; and was run on a commercial basis. The Employment Appeal Tribunal held that an Employment Tribunal was correct to determine that there had not been a relevant transfer as the differences in stock, hours and commercial attitude meant that the new shop was a different business. On the other hand, minor changes in the way in which activities are carried out might not change the essential identity of the entity being transferred.[18]The first respondent’s business was run from the premises at 86 High Street, Maltby. The premises were leased to the first respondent by its director Abby Reece. The pet store and operation was run over two floors of the premises.[19]The first respondent sold an array of items from the premises. These were: Exotic pets including reptiles and fish. Aquatics equipment. DIY equipment. Pet supplies. Gardening supplies. Pet food. Dog collars. Case No: 1811232/2018 1811242/2018 &1811575/2018 1811396/2018 1800280/2019 1811232/2018 10.8 Reasons – rule 62(3) March 2017 Birds. Hamsters, guinea pigs and rabbits.[20]The first respondent employed all of the claimants until 21 August 2018. It operated by utilizing a range of fixtures and fittings some of which are listed in the bundle at page 153 (which is an inventory of the shelving and stock). The shop served drop in/walk in customers.[21]The following are features of the business run by the third respondent: It is run from part of the premises at 86 High Street formerly occupied by the first respondent. The third respondent leases the premises from Abby Reece. The fourth claimant Miss Holmes is an employee of the third respondent. It seems that another employee hitherto employed by the first respondent has been engaged by the third respondent. The second and third claimants have not been retained by the third respondent. Some of the shelving and equipment hitherto used by the first respondent is being utilized by the third respondent. In particular, the third respondent is using the shelving and two display cases. The third respondent is servicing drop in/walk in customers. The third respondent opened on 22 August 2018, the day after the closure of the business being run by the first respondent. In evidence given under cross-examination Mrs White fairly accepted there to have been a seamless transition of the business.[22]The third respondent sells an array of items as follows: Hamsters and guinea pigs. Birds. Pet food. Pet accessories.[23]The third respondent does not sell garden items, reptiles and fish or rabbits.[24]There was no contract between the first and third respondent. A transfer can be affected by a series of transactions. Here, it appears that Abby Reece accepted a surrender of the lease between her and the first respondent and then in turn granted a lease from her to the third respondent.[25]In my judgment, there is such a similarity between the activities carried out by the first and third respondent as to constitute a transfer for the purposes of TUPE. The identity of the undertaking is the same before and after 21 August 2018. That is to say, both the first and third respondent are running Case No: 1811232/2018 1811242/2018 &1811575/2018 1811396/2018 1800280/2019 1811232/2018 10.8 Reasons – rule 62(3) March 2017 a pet store. The activities are very similar. I accept that there are differences in what is being sold but the core activity is the sale of pets, pet accessories and pet food. Further, there was no interruption in activities. A customer visiting the premises on 21 August and then repeating his or her visit the next day will still have found a pet store (operating albeit with a new sign signifying a change of ownership). Further, the second visit would reveal the premises operating from only part of the store hitherto occupied by the first respondent. Nonetheless, some of the same shelving and display units were being utilized by the second respondent.[26]The third respondent was therefore operating from the same premises, in the same location, serving the same customers, trading in similar goods and livestock, having retained part of the workforce with no business interruption between the closure of the first respondent’s undertaking and the opening of the second respondents. A purposive approach is to be given to TUPE which is there to protect employees. That purpose would be defeated if minor differences in activity could defeat the employment protections conferred by TUPE. Standing back, in my judgment anyone calling in for dog food, for example, on 21 and 22 August 2018 would consider there to have been a seamless transfer to a new undertaking. I hold that TUPE applies and there was a transfer of the undertaking from the first to the third respondent.[27]A further issue in this case is the application of Regulation 8(7) of TUPE. This provision operates to disapply Regulation 4 (summarised at paragraph 9 above) and Regulation 7 (which provides for protection against dismissal because of a transfer) where the transferor is subject to bankruptcy or analogous insolvency proceedings instituted with a view to liquidating the transferor’s assets under the supervision of an insolvency practitioner. In such cases, employees will not be accorded the normal protections in respect of the automatic transfer of their employment and attendant rights, duties, power and liabilities on a relevant transfer, nor the protections against detrimental variation of contracts or unfair dismissal by reason of the transfer.[28]The third respondent was incorporated on 30 July 2018. The first respondent went into creditors voluntary liquidation on 30 August 2018. I find that the relevant transfer occurred on or around 21 August 2018. Merely having an insolvency practitioner to advise does not constitute an appointment of an insolvency practitioner such as to bring Regulation 8(7) into operation. It follows therefore that Regulation 8(7) is not engaged. The claimants may claim the protection of TUPE having been dismissed immediately before the transfer. This is the effect of Regulation 4 of TUPE. Case No: 1811232/2018 1811242/2018 &1811575/2018 1811396/2018 1800280/2019 1811232/2018 10.8 Reasons – rule 62(3) March 2017 In those circumstances, liability for the employee obligations and to make payments to the claimants for the monies owed passes to the third respondent. Employment Judge Brain Date 4 July 2019 Case Number: 1811232/2018 1800280/2019 1811575/2018 1811396/2018 10.5 Reserved judgment with reasons – rule 61 1 March 2017 EMPLOYMENT TRIBUNALS Claimants: Mrs T White Miss J Holmes Miss J Weaver Mr D Wilkinson First Respondent: The Animal Ark Pet Store Limited (in liquidation) Second Respondent: Secretary of State for Business Energy and Industrial Strategy Third Respondent: Paw Prints Pet Supplies Ltd Heard at: Sheffield On: 27 September 2019 Before: Employment Judge Little Representation Claimants: In person Respondent 1 & 2: No attendance or appearance Respondent 3: Mr I Clay, solicitor (Walker & Co)[1]The claim of Mrs T White is dismissed upon withdrawal.[2]The sums which are due to the remaining three claimants are as follows: Miss J Weaver – a payment in respect of statutory redundancy pay in the amount of £4143.13. Holiday pay £284.10. Unauthorised deduction from wages £94.70. Notice pay £2841. Miss J Holmes – statutory redundancy payment £8384.19. Notice pay £3469.32. Mr Wilkinson – statutory redundancy pay £5138.82. Notice pay £3425.88. Holiday pay £285.49. Case Number: 1811232/2018 1800280/2019 1811575/2018 1811396/2018 10.5 Reserved judgment with reasons – rule 61 2 March 2017[3]Consequent upon the Judgment of Employment Judge Brain given at a hearing on 16 April 2019 the liability for making payment to the claimants of the sums set out above is that of the third respondent, Paw Prints Pet Supplies Limited. These sums are to be paid by that respondent to the remaining claimants no later than 23 October 2019.[1]At a hearing before Employment Judge Brain on 16 April 2019 it was adjudged that there had been a relevant transfer under the terms of the Transfer of Undertakings (Protection of Employment) Regulations 2006 of the undertaking formerly carried on by the first respondent to the third respondent. It was found that that had occurred on or about 21 August 2018.[2]At the same hearing the Employment Judge made various case management orders in respect of determining the question of remedy. In short the claimants were to liaise with the solicitor for the third respondent, Mr Clay, as to the amounts they considered they were entitled to and that solicitor was then to report to the Tribunal by way of a position statement. I think that the implication was that at the same time the solicitor would convey to the Tribunal the amounts which were being claimed. The consent order also spoke of the possibility of a draft consent Judgment if agreement could be reached.[3]A position statement was filed with the Tribunal under the cover of Mr Clay’s letter of 24 May 2019. This was a brief statement. Whilst it referred to the claimants having been in correspondence with the solicitor it did not explain what they had said about the sums they were due. The statement went on to note that the third respondent had sought written reasons for the 16 April Judgment “with a view to an appeal of the decision”.[4]During the course of today’s hearing it became apparent that the third respondent had sent a document to the Tribunal entitled Third Respondent’s Response to Claims. I was told that this had been sent to the Tribunal on 23 September 2019 but unfortunately it had not found its way on to the Tribunal’s file.[5]Although they are of course separate legal entities, the third respondent Paw Prints Pet Supplies Limited is a company which, I understand, was set up and is now run by Mrs T White. In these circumstances Mr Clay confirmed that Mrs White was no longer pursuing claims which would now have to be met by her own company.[6]The status of the recent “Response” document cannot be that it is a response or an amended response to the claims within the meaning of Rule 16. There was no witness statement prepared by Mrs White or anybody else on behalf of the third respondent. I have therefore taken the response document as in effect a skeleton argument. It raises three reasons why it is said the third Case Number: 1811232/2018 1800280/2019 1811575/2018 1811396/2018 10.5 Reserved judgment with reasons – rule 61 3 March 2017 respondent should not make payments to the remaining claimants. One of those reasons applies only to the case of Miss Holmes.[7]The two matters which apply to all the continuing claims are as follows: 7.1. Employment Rights Act 1996 section 166 This section applies where an employee claims that his employer is liable to make certain payments including a redundancy payment and where the employee has taken all reasonable steps to recover the payment from the employer but the employer has refused or failed to pay it. In those circumstances the employee may apply to the Secretary of State for a payment. I considered that this was not a good defence. It is clear that under the statutory scheme the Secretary of State will not make a payment if he considers that somebody else is liable. It is for that reason that the Secretary of State had been joined to these proceedings to contend, successfully as it turned out, that there had been a relevant transfer to the third respondent. I felt that this contention had to be viewed in the context in which this case finds itself, not least that today was a hearing established to determine the extent of the third respondent’s liability. Whilst in due course it may be that the claimants may have to have recourse to this section, I did not consider that it was appropriate for the third respondent to defend on this basis. It would in any event have been unfair to the Secretary of State who has to all intents and purposes been discharged from these proceedings and who, as far as I am aware, would have been unaware that a further attempt was being made, by the back door, to fix him with liability. 7.2. That there were “economic and operational reasons entailing a change in the work force” My understanding is that this could be a potential defence if any of the claimants were complaining that they had been automatically unfairly dismissed by reason of a relevant transfer. However they are not and I cannot see that this is a relevant consideration for the complaints which are before the Tribunal. In the same paragraph of the response document (paragraph 9) there is a reference to “Regulation 4(4)(b)” which Mr Clay confirmed was a reference to the Transfer of Undertakings Regulations. Whilst that precise paragraph does not exist in the current form of the TUPE Regulations, Regulation 4(4) of those Regulations deals with purported variations of a contract of employment in the context of transfers. I did not see how that could be relevant to these cases.[8]The matter specifically referable to Miss Holmes is the third respondent’s contention in paragraph 8 of the response document that whilst Miss Holmes’ employment had been found to transfer to the third respondent, the fact that she was currently employed by the third respondent should mean that she was not entitled to remedies flowing from a dismissal. However, paragraph 8 fails to refer to the fact that it is common ground Miss Holmes was, along with the other claimants, dismissed by the first respondent with effect from 21 August 2018. Mr Wilkinson showed me a copy of the letter that he received Case Number: 1811232/2018 1800280/2019 1811575/2018 1811396/2018 10.5 Reserved judgment with reasons – rule 61 4 March 2017 from a director of the first respondent, a letter dated 20 August 2018 and it was confirmed that Miss Holmes had received the same letter. On 30 September 2018 Miss Holmes commenced what I find to be fresh employment with the third respondent. That employment began some six weeks after the dismissal which gives rise to Miss Weaver’s complaints. In these circumstances I considered that the fact that she is now in employment with the third respondent was not a relevant factor and did not defeat her claim for notice pay and a statutory redundancy payment.[9]I should confirm that apart from the matters referred to above the third respondent raised no objection to the quantum of the complaints. Employment Judge Little __________________________ Date 4th October 2019 Case Number: 1811232/2018 1800280/2019 1811575/2018 1811396/2018 *1811242/2018* 10.5 Reserved judgment with reasons – rule 61 1 March 2017 EMPLOYMENT TRIBUNALS Claimants: Mrs T White Miss J Holmes Miss J Weaver Mr D Wilkinson First Respondent: The Animal Ark Pet Store Limited (in liquidation) Second Respondent: Secretary of State for Business Energy and Industrial Strategy Third Respondent: Paw Prints Pet Supplies Ltd Heard at: Sheffield On: 27 September 2019 Before: Employment Judge Little Representation Claimants: In person Respondent 1 & 2: No attendance or appearance Respondent 3: Mr I Clay, solicitor (Walker & Co) CORRECTED JUDGMENT My Judgment is that:-[1]The claim of Mrs T White is dismissed upon withdrawal.[2]The sums which are due to the remaining three claimants are as follows: Miss J Weaver – a payment in respect of statutory redundancy pay in the amount of £4143.13. Holiday pay £284.10. Unauthorised deduction from wages £94.70. Notice pay £2841. Miss J Holmes – statutory redundancy payment £8384.19. Notice pay £3469.32. Mr Wilkinson – statutory redundancy pay £5138.82. Notice pay £3425.88. Holiday pay £285.49. Case Number: 1811232/2018 1800280/2019 1811575/2018 1811396/2018 *1811242/2018* 10.5 Reserved judgment with reasons – rule 61 2 March 2017[3]Consequent upon the Judgment of Employment Judge Brain given at a hearing on 16 April 2019 the liability for making payment to the claimants of the sums set out above is that of the third respondent, Paw Prints Pet Supplies Limited. These sums are to be paid by that respondent to the remaining claimants no later than 23 October 2019.[1]At a hearing before Employment Judge Brain on 16 April 2019 it was adjudged that there had been a relevant transfer under the terms of the Transfer of Undertakings (Protection of Employment) Regulations 2006 of the undertaking formerly carried on by the first respondent to the third respondent. It was found that that had occurred on or about 21 August 2018.[2]At the same hearing the Employment Judge made various case management orders in respect of determining the question of remedy. In short the claimants were to liaise with the solicitor for the third respondent, Mr Clay, as to the amounts they considered they were entitled to and that solicitor was then to report to the Tribunal by way of a position statement. I think that the implication was that at the same time the solicitor would convey to the Tribunal the amounts which were being claimed. The consent order also spoke of the possibility of a draft consent Judgment if agreement could be reached.[3]A position statement was filed with the Tribunal under the cover of Mr Clay’s letter of 24 May 2019. This was a brief statement. Whilst it referred to the claimants having been in correspondence with the solicitor it did not explain what they had said about the sums they were due. The statement went on to note that the third respondent had sought written reasons for the 16 April Judgment “with a view to an appeal of the decision”.[4]During the course of today’s hearing it became apparent that the third respondent had sent a document to the Tribunal entitled Third Respondent’s Response to Claims. I was told that this had been sent to the Tribunal on 23 September 2019 but unfortunately it had not found its way on to the Tribunal’s file.[5]Although they are of course separate legal entities, the third respondent Paw Prints Pet Supplies Limited is a company which, I understand, was set up and is now run by Mrs T White. In these circumstances Mr Clay confirmed that Mrs White was no longer pursuing claims which would now have to be met by her own company.[6]The status of the recent “Response” document cannot be that it is a response or an amended response to the claims within the meaning of Rule 16. There was no witness statement prepared by Mrs White or anybody else on behalf of the third respondent. I have therefore taken the response document as in effect a skeleton argument. It raises three reasons why it is said the third Case Number: 1811232/2018 1800280/2019 1811575/2018 1811396/2018 *1811242/2018* 10.5 Reserved judgment with reasons – rule 61 3 March 2017 respondent should not make payments to the remaining claimants. One of those reasons applies only to the case of Miss Holmes.[7]The two matters which apply to all the continuing claims are as follows: 7.1. Employment Rights Act 1996 section 166 This section applies where an employee claims that his employer is liable to make certain payments including a redundancy payment and where the employee has taken all reasonable steps to recover the payment from the employer but the employer has refused or failed to pay it. In those circumstances the employee may apply to the Secretary of State for a payment. I considered that this was not a good defence. It is clear that under the statutory scheme the Secretary of State will not make a payment if he considers that somebody else is liable. It is for that reason that the Secretary of State had been joined to these proceedings to contend, successfully as it turned out, that there had been a relevant transfer to the third respondent. I felt that this contention had to be viewed in the context in which this case finds itself, not least that today was a hearing established to determine the extent of the third respondent’s liability. Whilst in due course it may be that the claimants may have to have recourse to this section, I did not consider that it was appropriate for the third respondent to defend on this basis. It would in any event have been unfair to the Secretary of State who has to all intents and purposes been discharged from these proceedings and who, as far as I am aware, would have been unaware that a further attempt was being made, by the back door, to fix him with liability. 7.2. That there were “economic and operational reasons entailing a change in the work force” My understanding is that this could be a potential defence if any of the claimants were complaining that they had been automatically unfairly dismissed by reason of a relevant transfer. However they are not and I cannot see that this is a relevant consideration for the complaints which are before the Tribunal. In the same paragraph of the response document (paragraph 9) there is a reference to “Regulation 4(4)(b)” which Mr Clay confirmed was a reference to the Transfer of Undertakings Regulations. Whilst that precise paragraph does not exist in the current form of the TUPE Regulations, Regulation 4(4) of those Regulations deals with purported variations of a contract of employment in the context of transfers. I did not see how that could be relevant to these cases.[8]The matter specifically referable to Miss Holmes is the third respondent’s contention in paragraph 8 of the response document that whilst Miss Holmes’ employment had been found to transfer to the third respondent, the fact that she was currently employed by the third respondent should mean that she was not entitled to remedies flowing from a dismissal. However, paragraph 8 fails to refer to the fact that it is common ground Miss Holmes was, along with the other claimants, dismissed by the first respondent with effect from 21 Case Number: 1811232/2018 1800280/2019 1811575/2018 1811396/2018 *1811242/2018* 10.5 Reserved judgment with reasons – rule 61 4 March 2017 August 2018. Mr Wilkinson showed me a copy of the letter that he received from a director of the first respondent, a letter dated 20 August 2018 and it was confirmed that Miss Holmes had received the same letter. On 30 September 2018 Miss Holmes commenced what I find to be fresh employment with the third respondent. That employment began some six weeks after the dismissal which gives rise to Miss Weaver’s complaints. In these circumstances I considered that the fact that she is now in employment with the third respondent was not a relevant factor and did not defeat her claim for notice pay and a statutory redundancy payment.[9]I should confirm that apart from the matters referred to above the third respondent raised no objection to the quantum of the complaints. Employment Judge Little __________________________ Date 4th October 2019 Case No: 1811232/2018 1800280/2019 1811575/2018 1811396/2018 1811242/2018 10.15 Certificate of Correction – rule 69 EMPLOYMENT TRIBUNALS Claimant: Mrs T White Miss J Holmes Miss J Weaver Mr D Wilkinson Respondents: R1. The Animal Ark Pet Store Limited (in liquidation) R2. Secretary of State for Business Energy and Industrial Strategy R3. Paw Prints Pet Supplies Ltd CERTIFICATE OF CORRECTION Employment Tribunals Rules of Procedure 2013 Under the provisions of Rule 69, the Judgment sent to the parties on 9th October 2018, is corrected as set out in underlined block type to show the additional Case No: 1811242/2018.