Symantec Ltd v Leddy & Lyons

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice John Edwards
• Judgment Date: 28 May 2009
• Neutral Citation: [2009] IEHC 256
• Docket Number: [2008 Nos. 663 and 666 SP]
• Date: 28 May 2009

[2009] IEHC 256

THE HIGH COURT

Record No: 663 SP/2008

Symantec Ltd v Leddy & Lyons

Case No 1.

And Case No 2.

IN THE MATTER OF THE REDUNDANCY PAYMENT ACTS 1967-2007 AND IN THE MATTER OF AN APPEAL PURSUANT TO SECTION 39 (14) OF THE REDUNDANCY PAYMENTS ACT 1967FROM A DETERMINATION OF THE EMPLOYMENT APPEALS TRIBUNAL DATED

1 JULY 2008

10 JULY 2008

Between/

SYMANTEC LIMITED

Plaintiff/Appellant

-AND-

DECLAN LEDDY

DIARMUID LYONS

Defendant/Respondent

EUROPEAN COMMUNITIES (PROTECTION OF EMPLOYEES ON TRANSFER OF UNDERTAKINGS) REGS 2003 SI 131/2003 REG 4(1)

REDUNDANCY PAYMENTS ACT 1967 S39(14)

KATSIKAS v KONSTANTINIDIS 1992 ECR I-6577 1993 1 CMLR 845

MERCKX & NEUHUYS v FORD MOTOR CO BELGIUM SA 1996 ECR I-1253 1996 AER (EC) 667

EEC DIR 2001/23

BERG & BUSSCHERS v BESSELSEN 1988 ECR 2559 1989 3 CMLR 817

EEC DIR 77/187 ART 3(1)

TREATY OF ROME ART 177

EEC DIR 77/187 ART 1(1)

REDUNDANCY PAYMENTS ACT 1967 S7(2)

EMPLOYMENT

Contract of employment

Transfer of undertakings - Redundancy - Whether employee dismissed by reason of redundancy on date of transfer - Whether contracts of employment continued in existence after transfer - Whether transferor discharged from all obligations arising under contract of employment if workers employed in undertaking objected to transfer - Katsikas v Konstantinidis (Joined Cases C-132, 138 & 139/91) [1992] ECR I-6577 and Merckx v Ford Motor Co. (Belgium) SA (Joined Cases C-171/94 & C-172/94) [1996] ECR I-1253 considered - European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (SI 131/2003), reg 4(1) - Council Directive 77/187/EEC, art 3 - Council Directive 2001/23/EC - Appeal from EAT allowed (2008/666SP - Edwards J - 28/5/2009) [2009] IEHC 256

Symantec Ltd v Leddy

1 JUDGMENT of Mr. Justice John Edwardsdelivered on the 28th day of May 2009.

Introduction

2 The issue in both of these cases is the same. It concerns the correct interpretation of Regulation 4(1) of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003.

Background

3 The common Plaintiff/Appellant in each case is a software manufacturer. On the 10 ^th of November, 2006 it transferred part of its undertaking to Corporate Occupier Solutions (Ireland) Limited in order to outsource its EMEA facilities. The Defendants/Respondents were at all material times employed by the Plaintiff/Appellant as a Manufacturing Engineer Grade 7 and as a Senior Manufacturing Engineer Grade 8, respectively. Both Defendant/Respondents were informed in or about the month of December 2005 of the proposed transfer of their respective contracts of employment to Corporate Occupier Solutions (Ireland) Limited as part of the outsourcing of the Plaintiff/Appellant's EMEA facilities. On the 10 ^th of November 2006 both Defendants/Respondents objected to the transfer and chose not to transfer to Corporate Occupier Solutions (Ireland) Limited. They had each been informed in advance of this that a failure to transfer would be treated as a resignation of their respective positions.

4 Both Defendants/Respondents then contended that they had been dismissed by reason of redundancy and claimed to be entitled to lump sum redundancy payments under the Redundancy Payments Acts 1967 - 2003. The Plaintiff/Appellant rejected their claims and contended that having regard to Regulation 4(1) of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 the Defendants/Respondents were not dismissed by the Plaintiff/Appellant by reason of redundancy.

5 The Defendants/Respondents then appealed to the Employment Appeals Tribunal (EAT) before which the same arguments were made by the Plaintiff/Applicant as to why they should be denied relief. However, their respective claims were upheld by the EAT which ruled that, in a transfer of undertaking, "the employee is not obliged to accept the new employer, and this is not inconsistent with the directive in relation to transfer of undertakings." They were both held to be entitled to lump sum redundancy payments under the Redundancy Payments Acts 1967 - 2003.

6 The Plaintiff/Appellant has in each case lodged appeals to the High Court against the determination of the EAT, pursuant to section 39 (14) of the Redundancy Payments Act 1967.

The regulation at issue.

7 Regulation 4(1) of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 provides:

"The transferor's rights and obligations arising from a contract of employment existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee."

Legal Submissions

8 Both sides have filed helpful written legal submissions for which the Court is grateful. Both sides principally rely on same two decisions of the European Court of Justice in support of their respective positions. These are the cases of Katsikas v. Konstantinidis (conjoined with Schroll v PCO Stauereibetrieb Paetz & Co Nft GmbH) [1992] ECR I 6577 and Merckx & Neuhuys v. Ford Motor Co of Belgium [1996] ECR I - 1253, both of which considered the purpose and correct interpretation of Directive 77/187/EEC on the transfer of undertakings. Its successor Directive is2001/23/EC. Counsel on both sides have also provided the Court with useful comparative law references.

The Plaintiff/Appellant's Submissions

9 It was submitted on behalf of the Plaintiff/Appellant that the purpose of Directive 77/187/EEC and its successor Directive 2001/23/EC (.hereinafter "the Directive) is to safeguard the rights of workers in the event of a change of employer by making it possible for them to continue to work for the new employer under the same conditions as those in place with the transferor.

10 It was submitted that as the Defendants /Respondents contracts of employment were in being at the date of the transfer then by virtue of Regulation 4(1) of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 the obligations and liabilities thereunder are the responsibility of the transferee Corporate Occupier Solutions (Ireland) Limited and not of the Plaintiff/Appellant.

11 They say that the European Court of Justice (hereinafter the ECJ) accepted in the case of Berg v Besselen [1998] ECR 2559 that the first subparagraph of Article 3 (1) of the Directive (the equivalent of Regulation 4(1) of the 2003 Regulations) must be interpreted as meaning that after the date of transfer and by virtue of the transfer alone, the transferor is discharged from all obligations arising under the contract of employment or the employment relationship, even if the workers employed in the undertaking did not consent or if they object, subject however to the power of the Member States to provide pursuant to the second subparagraph of Article 3(1) of the Directive for the joint liability of the transferor and the transferee for obligations arising under the contract of employment before the date of the transfer. This power has not been taken up in this jurisdiction. They say it must be presumed that thelegislature in promulgating the said regulations and in particular Regulation 4 (1) was lending clarity to the position of employees directly affected by a transfer. It was not simply repeating the words of the Directive to no effect.

The Katsikas Case

12 In Katsikas v. Konstantinidis (conjoined with Schroll v PCO Stauereibetrieb Paetz & Co Nfl GmbH) [1992] ECR I 6577 the ECJ was asked, by means of Article 177 references from the Courts of Bamburg and Hamburg respectively, to consider the interpretation of Article 3(1) of the Directive. Article 3 (1) provides:

"The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer within the meaning of Article 1(1) shall, by reason of such transfer, be transferred to the transferee.

Member States may provide that, after the date of transfer within the meaning of Article 1(1) and in addition to the transferee, the transferor shall continue to be liable in respect of obligations which arose from a contract of employment or an employment relationship."

13 In both the Bamburg and the Hamburg references the prospective employees refused to transfer to the employment of the transferee. The Bamburg Court referred the following question (inter alia) to the ECJ for a preliminary ruling:

"Is it possible under Article 3(1) of the Council Directive of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses (Directive 77/187/EEC) for an employee of the transferor at the date of transfer within the meaning of Article 1(1) of Directive 77/187/EEC to object to the transfer of rights and obligationsfrom the transferor to the transferee, with the result that the transferor's rights and obligations are not transferred to the transferee?"

14 At paragraphs 31 - 36 inclusive of it's judgment the ECJ held:

15 2 "31 Whilst the directive, which effects only partial harmonization in the area in question (see the judgment in Case 105/84 (Foreningen of Arbejdsledere i Danmark v Danmols Inventar [1985] ECR 2639), cited above, paragraph 16), allows the employee to remain in the employ of his new employer on the same conditions as were agreed with the transferor, it cannot be interpreted as obliging the...