PART 1 INTRODUCTION
1. The Acquired Rights Directive[1]
is one of a small number of European Community legislative measures
aimed at protecting workers. It is concerned with the situation
where a business or part of a business is transferred. The Directive
gives affected employees protection in three main ways: by providing
for the automatic transfer of employees' terms and conditions
of employment on the transfer of an undertaking, by making certain
dismissals unlawful, and by giving employees' representatives
rights to information and consultation. The Directive has not
been easy to apply in practice and has proved to be particularly
controversial in relation to contracting-out and out-sourcing
arrangements. It has given rise to a large number of cases being
referred from national courts to the European Court of Justice
for interpretative guidance. The Directive is implemented in the
United Kingdom by the Transfer of Undertakings (Protection of
Employment) Regulations 1981[2]
(the TUPE Regulations).
2. Though it was only in February 1996
that the Committee presented a detailed Report[3]
to the House on the Commission's proposal to amend the Directive,
there have been a number of important developments. The Commission
has presented a revised draft of its proposal. The European Court
of Justice has given its judgment in the Süzen case[4].
There has also been a change of Government in the United Kingdom.
3. The Commission's amended proposal
takes into account amendments put forward by the European Parliament
and the respective opinions of the Economic and Social Committee
and the Committee of the Regions. Significantly the Commission
has withdrawn its attempt to clarify the definition of the transfer
of a business or part of a business by seeking to exclude a transfer
of only an activity. Other important changes relate to liability
for pre-transfer debts to employees, the application of the Directive
in insolvency situations, and the information and consultation
provisions. The Commission has, in addition to presenting its
amended proposal, published a Memorandum in which it sets out
guidelines on the application of the (existing) Directive. It
describes the key provisions of the Directive, referring to appropriate
rulings of the European Court. The Memorandum also contains a
"twenty questions and answers" guide for employees'
and employers' representatives.
4. In March 1997, the European Court
gave its judgment in Süzen, a case involving a second
generation contract. Mrs Süzen was employed by Zehnacker
and was assigned to cleaning operations in a secondary school
in Bonn-Bad-Godesberg, Germany, under a cleaning contract between
the school and Zehnacker. That contract was terminated by the
school with effect from 30 June 1994. Zehnacker dismissed Mrs
Süzen and seven other employees. The school then contracted
the cleaning of its premises to Lefarth, with effect from 1 August
1994. Mrs Süzen challenged her dismissal in the Arbeitsgericht
(Employment Court), Bonn, which sought clarification from the
European Court of Justice of the applicability of the Acquired
Rights Directive in the situation in which a person who has entrusted
the cleaning of its premises to a first undertaking terminates
its contract with the latter and, for the performance of similar
work, enters into a new contract with a second undertaking. The
European Court held that the Directive does not apply "if
there is no concomitant transfer from one undertaking to the other
of significant tangible or intangible assets or taking over by
the new employer of a major part of the workforce, in terms of
their numbers and skills, assigned by his predecessor to the performance
of the contract".
5. The Government is in the course
of conducting a major review of employment legislation, European
and domestic. It has recently conducted public consultation on
the Acquired Rights Directive and the TUPE Regulations and on
employees' information and consultation rights on transfers of
undertakings and collective redundancies[5].
The Government has also announced that it will also be publishing
a White Paper on Fairness at Work, which will include proposals
on trade union recognition. All this is at a time when the United
Kingdom occupies the Presidency of the Council of the European
Union with the concurrent responsibilities of taking forward the
proposed revision of the Acquired Rights Directive as well as
other measures having an impact on employer/employee relations.
6. Sub-Committee E (Law and Institutions),
whose members are listed in Appendix 1, carried out an enquiry
into the main changes introduced by the Commission's amended proposal.
Witnesses were invited to give views on the following issues in
particular:
(1) the abandonment by the Commission
of its attempt to define, in Article 1(1) of the Directive, a
transfer of an undertaking;
(2) the adequacy of the Commission's
Memorandum, in particular in the light of the Süzen
case;
(3) the requirement of the joint
liability for pre-transfer debts;
(4) the practicality of the proposals
relating to insolvency situations;
(5) the effect of the proposed
amendment to Article 6(5) concerning consultation with employee
representatives.
7. The Committee received the evidence
listed in Appendix 2. Several parties additionally supplied copies
of their responses to the Government's two consultation exercises[6].
The Committee also heard evidence from Ian McCartney, MP, Minister
of State, Department of Trade and Industry. Appendix 3 contains
a comparative table setting out the texts of the current Directive,
the Commission's initial proposal and the amended proposal. Appendix
4 sets out the Commission's Explanatory Memorandum. The evidence,
both written and oral, is printed with the Report. We are grateful
to all those who assisted in this enquiry.
1 Directive 77/187/EEC on the approximation of the
laws of Member States relating to the safeguarding of employees'
rights in the event of transfers of undertakings, businesses or
parts of businesses.
[1977] OJ L61/27. Back
2
SI 1981 No 1794, as amended. Back
3
Transfer of Undertakings: Acquired Rights,
5th Report, 1995-96, HL Paper 38. Back
4
Case C-13/95, Ayse Süzen v. Zehnacker Gebäudereinigung
GmbH Krankenhausservice:
[1997] ECR 1-1259. Back
5
European Acquired Rights Directive and Transfer of Undertakings
(Protection of Employment) Regulations 1981 (The TUPE Regulations):
Public Consultation (Doc URN 98/513), and Employees' Information
and Consultation Rights on Transfers of Undertakings and Collective
Redundancies: Public Consultation (Doc URN 97/988). Back
6
These are not printed with the Report. Copies have been placed
in the library of the House. Back
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