The case of a Fast Food Manager v A Fast Food Outlet highlights some of the problems which can arise where there is a transfer of a business or part of a business to a new employer and the employee’s terms and conditions are subsequently changed. This may entitle an employee in some cases to resign and claim constructive dismissal under the Unfair Dismissal Act 1977 (as amended).
The complainant employee started work in July 2016 as a kitchen porter and he also took care of the business social media accounts. He resigned from his position within four months of his position being transferred to a new employer. This transfer was a Transfer of Undertaking in accordance with the European communities (Protection of Employees on Transfer of Undertaking) Regulations 2003 (SI No 131 of 2003). Unfortunately the new employer began to install his own family and friends into key positions and the employee in this case began to lose hours and to have his customary hours interfered with. His social media role was also removed resulting in his weekly remuneration or pay for this being stopped. In addition the employee felt that the hygiene standards in the business were deteriorating and that he (as kitchen porter) was getting blamed for it but was not being given the extra hours needed to deep clean the premises. The employee’s standard of work was also being criticised and he felt anxious and uncomfortable. No payslips were provided by the new company and they would not accept that they were responsible for paying for annual leave. There was also no grievance procedure in place in the company and ultimately the employee felt he had no option but to resign from his job.
Transfer of Undertaking Regulations (“TUPE”)
These Regulations apply in essence where there is a transfer of a business or part of a business from one employer to another as a result of a legal transfer or merger and provide that all of the rights and obligations of an employer under a Contract of Employment (including terms inserted by collective agreement) other than pension rights and which existed on the date of transfer are transferred to the new employer on the transfer of the business. The new employer must continue to observe terms and conditions. An employee may not be dismissed solely by reason of the transfer. However, dismissals may take place for economic, technical or organisational reasons involving changes in the workforce. In addition, if an employment is terminated because of a transfer involving a substantial deterioration in the working conditions of the employee, the employer concerned is regarded as having been responsible for the termination.
The Adjudicator in this case observed:
“I fully accept that the Complainant had good reason to resign his position by reason of the unreasonable conduct on the part of the Respondent. I am satisfied that the employment terminated because this transfer involved a substantial deterioration in the working conditions of the employee, and the employer concerned is therefore regarded as having been responsible for the termination”
As compensation awarded under unfair dismissal is based on financial loss, the Adjudicator observed that the complainant continued to develop his personal training business in conjunction with looking for a replacement part time position and that he had been on a salary of €300 per week. The employee was awarded €4,200 per week compensation.
Employment law case tip
Where there is a transfer of a business or part of a business from one employer to another, both the old and new employer should look to see whether the Regulations (sometimes known as “TUPE”) apply. If they do, employees are entitled to transfer from the old employer to the new employer on the same terms and conditions of employment and there should be no changes to those terms and conditions. In addition, an employee cannot be dismissed simply by reason of the transfer taking place unless there is an economic, technical or organisational reason for this, otherwise known as the “ETO” defence. The Regulations contain penalties for failing to comply with the Regulations including failing to inform and consult with employees affected by the transfer within 30 days of the date of transfer or in any event in good time.
Professional advice should be sought prior to any business being bought or sold to determine if the Regulations apply.
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