Mr G Rawlinson and Others v Hopefield Fab Ltd (in Creditor’s Voluntary Liquidation) and Others: 2402007/2023 and Others
JUDGMENT
[1]The claimants made a claim for a redundancy payment to the third respondent within six months of the alleged entitlement to such a payment therefore, the application to strike out the claims was refused.[2]There was a relevant transfer of the claimants’ employment from the first respondent to the second respondent on 23 May 2022 and therefore the claimants are not entitled to redundancy payments.[3]The first respondent entered into insolvency proceedings on 7 July 2022. Therefore, the first respondent was not insolvent prior to the relevant transfer.[4]The claims for payments from the third respondent are unsuccessful and are dismissed.REASONS
[1]The claimants brought claims for a redundancy payment against the three respondents.[2]The claimants say their employment with the first respondent ended on 23 May 2022 when the first respondent entered into insolvency proceedings. The claimants made applications for redundancy payments to the third respondent in June 2022. In August 2022 the third respondent rejected those applications.[3]The first two respondents have not taken part in these proceedings. The first claimant gave evidence and made submissions on behalf of all the claimants. The third respondent’s representative was given the opportunity to ask questions of the first claimant and make submissions.The issues
[4]The third respondent conceded that because the claimants had made applications for redundancy payments to the third respondent within six months of the end of their employment with the first respondent and therefore, in accordance with section 164 of the Employment Rights Act 1996, the third respondent could be liable for the redundancy payments.[5]The third respondent submitted that the claimants were not made redundant and they were not entitled to a redundancy payment because there was a relevant transfer of their employment from the first respondent to the second respondent.The Relevant Law
[6]Regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 defines a relevant transfer as a transfer of an undertaking as an economic entity which retains its identity. An “economic entity” is defined in the legislation as an organised grouping of resources which has the objective of pursuing an economic activity. Discussion and Conclusions Was there an economic entity which retained it’s identity?Discussion and Conclusions
[7]I read the applications that all the claimants made to the third respondent. In those applications the claimants all said that they left the first respondent on 23 May 2022 and started their employment with the second respondent on 23 May 2022. They all said that their jobs were the same. They all said that they were dealing with the same customers and that their terms and conditions did not change.[8]In evidence the first claimant confirmed that they were dealing with the same machinery and that their old manager (Mr Gary McClung) was now an employee at the second respondent, dealing with both sheet metal work and in control of the finances. The director of the second respondent is Mr McClung’s wife, but that she was not really present on site. The first claimant said that if anyone was to ask for the person in charge, the would be directed to Mr McClung.[9]During his evidence, the first claimant said that he was actually offered the job with the second respondent on 24 May 2022 and started on the same date. The first claimant said he now worked as a Sales Estimator and was no longer performing sheet metal work. All of the other claimants do the same job for the second respondent as they did for the first respondent. The claimants all work out of the same unit and until January 2024, the second respondent used the same website as the first respondent. The second respondent also relies upon previous work done by the first respondent. The second respondent also uses the same phone number used by the first respondent.[10]During submissions, the third respondent referred to the guidelines in the case of Cheesman v R Brewer Contracts Ltd (2001) IRLR 144.[11]There must be a stable economic entity in that the employees and assets move across to allow the new company to pursue the same objective. In this case there was a stable economic entity. Whilst not all of the employees moved across, a number did. They use the same machinery, they use the same address, they use the same administration, and they service the same customers.[12]The economic entity must be sufficiently structured. Mr Gary McClung is still the operational boss of the business (Mrs McClung only attending when necessary), and three of the claimants are still doing the same job.[13]There must also be an organised group of wage earners who specifically and permanently are assigned to a common task. Three claimants do the same job; Mr McClung essentially does the same job, and whilst the first claimant does a different job, it is for the same purpose as the others and in pursuance of the same common task.[14]I have therefore concluded that there was an economic entity.[15]In order to determine if the economic entity retained it’s identity, I asked the first claimant if a member of the public would be able to tell the difference between the first and second respondent. The first claimant conceded it would be very difficult for them to do that, and I agree with him. They are the same type of business, there has been a transfer of assets, the same staff are servicing the same customers and performing the same activities.[16]Whilst it is now asserted that there was one day interruption of business, between the end of employment with the first respondent and start of employment with the second respondent, this would not have been a significant interruption to the business – it was transferred as a going concern.[17]There was a relevant transfer between the first respondent and the second respondent and therefore the claimants were not made redundant and are not entitled to redundancy pay.[18]In addition, the first respondent was not insolvent at the time of the relevant transfer. Insolvency proceedings began on 7 July 2022. The claimants are therefore, not entitled to any other payments from the third respondent.