Parul Madaan 11 Dec 2020



The council Directive 77/187 of 14th February 1977 has been given the name the Acquired Rights Directive. It focuses on the approximation of laws of the member states relating to safeguarding the rights of employees in the event of undertaking, businesses or parts of businesses. The acquired rights regulate the transfer of an undertaking by ensuring that the terms and conditions of employment are maintained for the affected employees. It has essential implications for privatisation and contracting out policies in some member states.

If privatisation includes the transfer of part of the state-owned firm with its workforce, this normally means that the employees transferred benefit from the protection of the Directive. The same thing happens when the services are the public are contracted out to private enterprises which undertake to employ the existing workforce.

The Transfer of Undertakings Directive of 1977 (TUPE)

The Transfer of Undertakings Directive of 1977 (TUPE) became a part of Irish law by the European Communities Regulations,1980, which safeguards the rights of employees where the business in which they are employed is transferred to a new owner.

TUPE protects the employees in Transfer of undertaking, a business, school, colleges, Educational institutions, charities, local authorities, health boards, trade associations, trade unions, state and semi-state bodies. The employees can retain all the rights in their employment contract with the originating employers, such as,

a)      Employee and trade union contractual entitlements

b)      Employee representatives continue to have standing

c)      Employees are entitled to be notified and consulted about the transfer before it happens

d)     Employees can not be dismissed because of the transfer of the entity

e)      Their length of service includes their time with the original business

Employees’ protection

The protection of employees on transfer of undertaking regulations apply to any person:

·         Working under a contract of employment, including apprenticeship.

·          Employed through an employment agency.

·          Holding office under or in the state’s service, an officer or servant of a harbour authority.

·          Health board or vocational educational committee and a member of the Garda Siochana or the defence forces.

Under such situations the TUPE is applied in cases of service organisations-

a)      When the activities are outsourced to a contractor

b)      When activities are moved from one contractor to another

c)      When activities are moved in house from a contractor

In situations where the rights and obligations in respect of employment contracts of transferring business are transferred to a new business that time the employees and trade union contractual entitlements survive post transfer regardless of irrespective of the fact that whether the purchasers are aware of these entitlements or not.

The pension rights are not transferred and it is the responsibility of the new business to comply with TUPE. if the first business is insolvent,  or where the transfer of business is by way of share sale then TUPE does not apply.

Thus, TUPE is enacted to protect the jobs of workers, their record of the length of service, and the working conditions when the business they are working for changes the ownership. The starting date of the employee is considered to be when he joins the original entity, his accrued vacation, stock shares, all such things needs to be transferred or should be compensated with cash. Most importantly, the new employer may not ever transfer employees working conditions to match those of its existing employees if such is solely due to the transfer. Such action would be a violation of TUPE.

The ETO (economic, technical and organisational) defence

The ETO (economic, technical and organisational) defence is allowed. This means that the employee can be dismissed if the reason is ETO. However, this is considered as a redundancy situation and the transferee will be liable for the redundancy costs.

There are 2 conditions in order to avail the ETO Defence-

1.      The changes made in the workplace

2.      The employees surplus to requirement

To avail this defence, the employer needs to show a bona fide decision to make changes in the workplace. But, ETO defence does not permit any employer to reduce the remuneration of an employee.

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