Group of Companies and Redundancy

Group of Companies and Redundancy

On the 2nd July 2014, in the employment matter Vanessa Grech and SL Ship Management Co. Ltd, the Industrial Tribunal decided the case in favour of the applicant on the grounds that her dismissal was unfair.

Summary of Facts of the Case

The applicant Vanessa Grech was engaged with SL Ship Management Co. Ltd. (“SL”) as a Safety Superintendent on an indefinite basis and her employment was terminated due to the restructuring of SL brought on by a reduction in the number of vessels operated by SL. On her part Ms Grech claimed that the work which she performed was in actual fact assigned to another employee who was not engaged by the same company. SL argued that her termination on the grounds of redundancy was valid and that Ms Grech’s duties were subsequently assigned to a person who had, for a number of years, been servicing the group of companies, which SL formed part of.

From evidence produced before the Industrial Tribunal, it resulted that:

  • SL was a company which managed vessels owned by various companies forming part of a group of companies (the “Group”);
  • Restructuring of SL became necessary after a reduction of SL’s operations and number vessels operated by the Group;
  • Ms Grech was made redundant pursuant to this state of affairs and her work was assigned to another employee Mr Matthew Refalo, who serviced the Group but who was not, as such, an employee of SL.

Conclusion

In delivering its decision, the Tribunal declared that the crux of the matter lied in the juridical relationship between Ms Grech and SL, as well as the position of Mr Refalo to whom the work was assigned. The Tribunal concluded that it was clear that while Ms Grech’s contractual relationship was with SL, the same could not be said in respect of Mr Refalo who was not in fact engaged with SL at the time of Ms Grech’s redundancy, but with another company within the Group, Waste Oils Co. Ltd. The Tribunal declared that redundancy occurs when the services of an employee are no longer required.  In this case Ms Grech’s services were still required to the extent that they were assigned to somebody else. It further reiterated that Ms Grech was employed with SL and not with the Group which has no juridical personality as such.

On the basis of the above, the Tribunal decided that the termination of Ms Grech’s employment was unfair and awarded compensation in the amount of Eur30,000.

This decision is noteworthy in that the “last in first out” rule on the basis of which a person is made redundant should be applied specifically between a company and the employees it engages in terms of the relative employment contract, regardless of the fact that the said company forms part of a group of companies serviced by a number of other employees.

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