The Scope of the Regulations
The new Regulations have been adapted in line with the most important judgements of the European Court of Justice and will apply to any transfer of an undertaking or 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 as a result of a merger. A “transfer” in this regard means the transfer of an economic entity which retains its identity.
To whom do the Regulations apply?
The Regulations apply to all economic entities which are defined as organised groupings of resources, which have as their objective the pursuit of economic activity, whether or not that activity is for profit, and whether it is essential or ancillary to another economic or administrative entity. Therefore, the Regulations will apply to charitable organisations and also to a part of a business, whether that part is central or ancillary to the main business. The definition of employee remains unchanged from the previous Regulations in force in this area and applies only to individuals with a contract of employment as defined in Irish Employment Law. Those employed by the State and in Health Boards and Vocational Education Committees are covered by the Regulations.
Rights and Obligations arising on foot of the Regulations
The Regulations state that all rights and obligations arising from Contracts of Employment existing on the date of the Transfer will, by reason of the Transfer, be transferred to the Transferee. Furthermore, the Transferee will assume rights and obligations under any Collective Agreements in force at the date of Transfer. These rights and obligations do not extend to the Transferee assuming responsibility for company pension schemes that do not fall within the Social Welfare Acts.
Prohibitions in the Regulations
The Regulations prohibit the dismissal of any employee arising from the transfer of an undertaking, business or a part thereof. However, in line with the previous Regulations in force, dismissals which arise for economic, technical or organisational reasons are still permissible.
If a Transferee imposes a substantial change to the terms and conditions of employment of an employee following a transfer, which leads the employee to resign from their position, the Regulations provide that the Transferee will be deemed to have constructively dismissed the employee in question. However, the employee concerned must sue the Transferee under either the Unfair Dismissal Acts or under the Regulations and cannot sue under both.
Bankruptcy and Insolvency
The Regulations do not apply to the transfer of an undertaking or business where the Transferor is the subject of bankruptcy proceedings or insolvency proceedings pursuant to the Bankruptcy Act, 1988 and the Companies Act, 1963. However, if it is found that the main purpose of the Bankruptcy or Insolvency proceedings is to avoid the provisions of the Regulations, the Regulations will be deemed to apply.
Representation of Employees
Where the undertaking or business, or part thereof, preserves its autonomy after the transfer, the Regulations provide that the status and function of the representatives of those employees affected by the transfer will be preserved following the transfer. In circumstances where autonomy is not preserved, the Transferee must arrange for all employees who were represented before the transfer to choose a person or persons from among their number to represent them for the period necessary for the reappointment of formal employee representatives.
Information and Consultation
The Regulations impose extensive obligations on the Transferee and Transferor to inform and consult with their respective employee representatives. In this regard, they must each inform and consult with the employees in relation to the date of the proposed transfer, the reasons for the transfer, the legal implications of the transfer for the employees and a summary of any relevant economic and social implications of the transfer for them and any measures envisaged in relation to the employees.
The obligation of the Transferor is to give the information not later than thirty days before the transfer is carried out and the obligation of the Transferee is to give the information not later than thirty days after the Transfer is carried out. Where specific measures are envisaged in relation to any employees, by either the Transferee or the Transferor, then both have an obligation to consult with the representatives of the employees not later than thirty days before the transfer is carried out with a view to reaching an agreement on such measures. If there are no employer representatives in the undertaking or business to be transferred, then procedures must be put in place whereby the employees may choose representation from among their number. If this does not happen, then each of the employees must be informed and consulted individually in writing not later than thirty days before the transfer.
Most importantly, these obligations to consult and inform apply irrespective of whether the decision resulting in the transfer is taken by the employer or by an undertaking controlling the employer. The Regulations go on to state that the fact that the information concerned was not provided to the employer by the undertaking controlling the employer does not release the employer from those obligations.
Amendments to Contracts of Employment
Any attempt by an employer to exclude or limit the application of any provision of the regulations by agreement with nay employee will be void.
Redress for infringement of the Regulations
An employee, a Trade Union, or other employer representative body can bring a complaint to a Rights Commissioner that an employer has contravened the Regulations. Such a complaint must be presented to the Rights Commissioner within six months of the date of the alleged contravention of the Regulations.
The Rights Commissioner can do one or more of the following:-
Appeals
Either party may appeal to the Employment Appeals Tribunal from a decision of a Rights Commissioner. The appeal must be initiated within six weeks of the date of the Rights Commissioner’s decision. The Tribunal can affirm, vary or set aside the decision of the Rights Commissioner.
Conclusion
The new Regulations impose significant obligations on all parties involved in mergers and acquisitions and impose specific time limits which cannot be ignored. They are likely to lead to a rise in case-law in this area, particularly where it is alleged that employers have failed to consult with and inform their employees about a transfer. The Regulations allow for Employers to be penalised as well as being forced to rectify whatever breach of the Regulations is alleged.
Jennifer Cashman
