Business Transfer

Background to Acquired Rights Legislation The European Union Acquired Rights Directive 1977 was designed to protect the interests of employees on the transfer of a business.  Regulations were made in 1980 and 2003 to implement Directive. The key protection is that continuity of employment is preserved. The transferee of the business must afford employees the same terms and conditions as they enjoyed with their former employer. Prior to the Acquired Rights legislation,  the common law effectively allowed a transfer of business without any employee consultation.  The transfer of the business automatically terminated employment.  Laterally, redundancy payment and minimum notice legislation provided some protection, where an employer, who disposed of business assets. The purpose of the Acquired Rights Directive and the Irish regulations made pursuant to it, is   to provide for uniform EU-wide legislation on consultation and the continuity of employment on the transfer of undertakings. The Acquired Rights Directive was first translated into Irish law by 1980 regulations.… Read the rest

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Transfer of Undertaking The Acquired Rights legislation applies to the transfer of an undertaking.  This may be the whole of or a part of a business.  In most cases, there will be a transfer of an economic entity which retains its identity. The business / undertaking may retain its identity, but need not necessarily do so. An economic entity in this context, is an organised group of personnel and other resources, having the object of pursuing an economic activity, whether or not that activity is for profit and whether or not it is central or ancillary to some other economic or administrative entity.  See the article on the scope of the legislation which discusses the nature of an undertaking. A transfer usually implies a change in the identity of the person or legal corporation which carries on the business and who is an employer or undertakes the obligations of an employer towards the employees. … Read the rest

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Mandatory Transfer The Acquired Rights legislation provides for the transfer of the rights and obligations of employers and employees in the transfer of an undertaking. The mutual rights and obligations of employer and employee, pass from the transferor to the transferee. The transfer is effectively mandatory. The employment contract is transferred.  The employee cannot claim that he has been dismissed by his former employer or made redundant.  The employee is entitled not to be transferred, but cannot claim that his employment with the transferor survives, that there is a redundancy or an unfair dismissal. The basic principle of the Acquired Rights Directive is that the rights and obligations under the transferring employee’s contracts of employment are preserved.  They are transferred to the transferee, who assumes responsibility for them. The legislation preserves the employee’s continuity of service. Accordingly, all rights accrued under protective legislation, continue as if there had been no transfer, in calculating the required period of service.… Read the rest

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Information and Consultation The representatives of the employees who are affected by the transfer, or where there are no representatives, the employees, must be informed of the proposed date of transfer, the legal economic and social implications, and the measures envisaged in relation to employees.  This obligation is in addition to the general obligations in relation to information and consultation. This information must be given in good time before the transfer is carried out. What constitutes sufficient time, or “in good time” is not defined. Furthermore, where measures are contemplated in relation to the employees, the employer must consult with them in good time with a view to reaching an agreement. The obligation applies, irrespective of whether the transfer is undertaken or caused to be undertaken by the employer itself, or by some other entity, which it does not control.  The fact that the employer may not be in a position to provide all the information is not sufficient excuse for failing to do so.… Read the rest

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