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Acquired Rights Directive in UK
Parul Madaan 26 Nov 2020

Acquired Rights Directive in UK

INTRODUCTION

Directive 2001/23/EC on Transfers of Enterprises is a European Union law protecting employment contracts for individuals employed in enterprises transferred between owners. It replaced  and revised the legislation previously known as Directive 77/187/EC on Acquired Rights.

The object of the Directive is to control the transition of an undertaking by ensuring that conditions of employment for the affected employees are retained. For collective agreements, Article 3(3) stipulates that this privilege should last until' the date on which the collective agreement is terminated or expires or another collective agreement comes into effect or applies.'

Transfer of Enterprises (Employment Protection) Regulations, 2006

The 2006 Transfer of Enterprises (Employment Protection) Regulations, known colloquially as TUPE, are the regulation of the European Union Transfer of Enterprises Directive by the United Kingdom. It is an important part of UK labor law to protect workers whose work is transferred to another country. The regulations of 2006 replace the old regulations of 1981 introduced the original directive. The legislation was revised in 2014 and 2018 and the specific provisions of the 2006 Regulations have changed.

A company or activity (or part of a business) based in the United Kingdom immediately prior to the move, which moves between one employer to another, may also include when two businesses cease to exist and combine to form a new, as well as the transition of an economic entity that maintains its identity.

Objectives of TUPE

The main objectives of the Regulations are to ensure that employment is covered in connection with the transition are mentioned below-

• employees are not dismissed

• employees' most important terms and conditions of contracts are not worsened

• affected employees are informed and consulted through representatives prior to the transfer


This does not refer to transactions that only include the selling of the stock of a company. If that occurs, because the employer is still the same employer, all contractual obligations remain the same. The Directive and Regulations apply, through the selling of physical assets and leases, to other ways of transfer. In some cases, the rules often apply to work being passed to contractors. Such covered employment contract terms include hours of work, wages, service duration, and so on, but pension entitlements are excluded.

It protects the employment and contractual contact of an employee by ensuring that the person in charge of the business is obliged to honor the employees in the contractual terms in force prior to the transfer. As well as preventing the employee from being fired by the company as part of the transfer of undertakings, it will be an involuntary unfair dismissal for the transfer of undertakings. Nevertheless, Regulation 7(2) provides that if the employee has been dismissed for an economic, technological or organizational purpose which has entailed a change in the workforce of either the transferor or the transferor, the reason for the dismissal shall be treated as either for redundancy or for a substantial reason such as to justify the dismissal of the employee holding the position.

It also means that the company or person taking possession of the entity must accept all established trade unions and established employee representatives, as well as adhere to any collective agreements reached by the unions on behalf of the employees, which remain in place until either they dissolve or they are replaced by new agreements.

Certain obligations which are transferred-

General responsibilities and duties arising from Regulation 5(2) Art 3(1) occur within a transition and are as follows- 

• Where a transition happens, all workers hired by the seller will be transferred to the buyer under their current terms and conditions of employment and retained continuity of jobs. This is known as the theory of automatic transfer which occurs at the point of transfer, which is usually at the time of completion rather than contract exchange.

• The buyer shall inherit all the rights, duties and liabilities of the seller under or in connection with the contracts for the transfer of employees. This will include all contractual and statutory privileges such as vacation pay, incentives and other entitlements such as maternity / redundancy programs as well as any future disputes that may have occurred before the transition due to the seller's actions or omissions.

• TUPE Regulation 13 allows the transferee to notify and communicate with relevant employee representatives before completion. The obligation to communicate would extend if it is assumed that measures will be taken in relation to any workers rendered in connection with the move.

• The Court of Appeal held that the Royal Mail had not failed in its duty to provide the required information as it had provided information that it truly believed was correct.


Conclusion

The Transfer of Undertaking (Protection of Employment) Regulations (2006) are in place in order to protect the employees statutory rights in the event of a business take over, by ensuring continued employment at the same, or more favorable contractual terms. It also gives the employees guidelines of a course of action to take if there is a breach of these contractual terms.


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