TUPE, Unfair Dismissal and “LIFO”

The case of Lorraine Hynes v Carlow County Development Partnership Limited UD 714/10 MN 673/2010 primarily concerned a claim for unfair dismissal (on foot of redundancy) but raises questions in relation to the European Communities (Protection of Employes on Transfer of Undertaking Regulations) 2003 and what transfers when the Regulations apply.BackgroundIn this case a merger took place on 31st December 2008 between company C1 and company C2 to form the Respondent company. The Claimant worked previously for company C1 and held the position of LDSIP Administrator and on her transfer to the Respondent company on 1st January 2009 retained the position.In January 2009 the CEO furnished a memorandum to all staff outlining management priorities for 2009 whereby the streamlining of administration and financial procedures was listed as a priority. The CEO again listed priorities including streamlining in a memorandum to all staff in March 2009. Following a meeting on 26th March 2009, a memorandum was sent to all finance employees attaching agreed integrated financial procedures for the company.A vacancy for an Assistant Co-ordinator in a Jobs club arose and the CEO notified staff in a memorandum in May that given budgetary constraints, it was recommended that staff undertaking administration and/or finance duties would carefully consider the specifics of the position to determine their interest in same.A decision was subsequently made to consolidate the existing financial and associate administrative function to creat a new position of company finance manager, which when filled would result in the claimants position and administrator positions being made redundant. The Claimant and another party were invited to submit their CV’s. The Claimant attended the interview on 25th June 2009 and was informed on 16th July 2009 that she was unsuccessful. The Claimant was offered a part-time finance related role as an alternative to redundancy and subsequently went on sick leave. The Respondent subsequently received a letter from the Claimant’s solicitor.In relation to selection criteria and LIFO, the Respondent stated that there was no agreement with the union and the Claimant never stated that she wanted LIFO.DeterminationThe Tribunal accepted that there was a genuine redundancy due to the merger of two entities which resulted in the amalgamation of the claimant’s job with that of another employee. The Tribunal noted that the merger amounted to a transfer of undertaking and that the Claimant was entitled to terms no less favourable than those she previously enjoyed.The Tribunal noted that the Claimant’s contract prior to the merger contained a clause to the effect that should it be necessary to effect redundancies, it would be on the basis that all things being equal “last in first out would apply”. The Tribunal noted that LIFO should have applied in this case. The Tribunal also noted that the alternative post offered to the Claimant was not suitable.The Claimant was awarded €65,121 under the Unfair Dismissal Acts and six weeks pay in lieu of notice which had been paid by the Respondent but returned by the Claimant.The European Communities (Protection of Employees on Transfer of Undertaking) Regulations 2003 came into operation on 11th April 2003 and apply to “any transfer of an undertaking, business, or part of an undertaking or business from one employer to another employer as a result of a legal transfer (including the assignment or forfeiture of a lease) or merger”.  As we are aware, an employee is entitled to transfer from the transferor (old employer) to the transferee (new employer) on the same terms and conditions which they enjoyed previously.The Regulations specifically provide at Regulation 4(1) that “the transferor’s rights and obligations arising from a contract of employment existing on the date of transfer shall, by reason of such transfer, be transferred to the transferee”.As can be seen from the above case, the rights and obligations can include selection criteria as outlined in a contract of employment which was clearly set out in the employee’s contract prior to the transfer date.Although outside the scope of this post, I thought it useful to highlight that the extent of the obligations and rights which transfer under Article 5 of the Regulations are extensive and include all contractual rights and have been held to include claims in tort or the implied contractual duty of care. In essence Regulation 5 transfers all rights, powers, duties and liabilities under or in connection with the employment contract to the transferee and anything done before the transfer by the transferor is deemed to have been done by the transferee.Also remember that there are clear obligations on both the old and new employer in respect of the furnishing of information under the Employees (Provision of Information and Consultation) Act 2006.