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Thousands of dustbin men, dinner ladies and other ex-council workers who say they lost out when their jobs were pri...
Thousands of dustbin men, dinner ladies and other ex-council workers who say they lost out when their jobs were privatised today suffered bitter defeat in a test case that could have cost the government millions.

Lawyers for up to 2,000 workers argued the government's failure to fully implement EU employment protection laws meant wholesale privatisation of council services in the 1990s proved a financial disaster for them.

But three Appeal Court judges today dashed their compensation hopes when they ruled the Department of Trade and Industry could not be held legally responsible for the workers' losses.

Those involved in the case included school dinner ladies from Sunderland, refuse collectors from Carlisle and housing maintenance staff who once worked for Stroud DC in Gloucestershire.

But spearheading the union-backed test case were 122 former Liverpool City Council dustbin men who lost out financially when the council's refuse collection service was farmed out to private firm, Onyx UK Ltd, in 1991, under the 'compulsory competitive tendering' policy.

Onyx took on many of the workers, but on 'less favourable' terms and conditions than they had enjoyed when working for the council.

The case revolved around the 1981 Transfer of Undertakings (Protection of Employment) Regulations which were introduced to implement an EU employment protection directive in the UK.

TUPE requires that, where 'undertakings' are transferred from one service provider to another, the new employer has to take on the old one's staff on the same terms and conditions as before.

But, as originally drafted, TUPE did not apply where the undertaking being transferred was not 'in the nature of a commercial venture'.

Mr John Cavanagh, for the ex-council workers, said that restriction was removed after the government conceded in 1997 that it had 'breached its obligation' to fully translate the EU Directive into domestic law.

But that came too late for thousands of local authority workers who had already been made redundant or transferred to the private sector on less favourable terms and conditions than before.

A large number of damages claims were issued against the DTI, but they all came unstuck today when the Appeal Court upheld an earlier court ruling in the DTI's favour.

The Master of the Rolls, Lord Phillips, sitting with Lady Justice Arden and Lord Justice Dyson, ruled Liverpool's refuse collection service had in fact been 'in the nature of a commercial venture' even before privatisation.

That means, in effect, that the terms of TUPE should have been applied to the original transfer to Onyx and any loss suffered by the refuse collectors was not caused by the government's admitted failure to fully implement the EU directive into domestic law.

The workers' counsel, Mr John Cavanagh, had earlier described the matter as a 'test case', with a total of about 2,000 former council employees making similar claims to the Liverpool refuse collectors.


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