employment rights when the ownership of a business is transferred,
agreed yesterday at the social affairs council in Luxembourg.
These practical amendments to the Acquired Rights Directive aim to
that employers easily understand their obligations and which
safeguard employees rights.
This reduces current uncertainty about the application of the
Directive, without reducing its scope or restricting the current
rights of workers involved in transfers. The changes reflect European
Speaking in Luxembourg after yesterday's council of ministers meeting Mr McCartney, DTI minister of state said:
'This agreement is a major step forward in providing a clear and
practical framework of employment protection rights.
'These amendments will safeguard employees rights when the ownership
of the business in which they work changes, without setting up
barriers to block economic progress.
'Promoting this co-operative partnership approach to business
restructuring will help competitiveness and employment flexibility,
by helping the labour market to adapt to structural change in the
economy without walking over the rights of employees.'
Amendments to the Directive:
- make clear that the Directive applies to subcontracting operations;
specify that it applies to transfers from the public to the private
- enable member states to apply the Directive to pension rights
- spell out the requirements for consultation under the Directive
and give employee representatives the power to negotiate to save
jobs when an insolvent business is transferred
Mr McCartney added:
'The Acquired Rights Directive remains an essential part of the
framework of employment rights in the European Union.
'Case law has shown that the Directive has not been working as
smoothly as it could. These amendments reflect a series of judgements
by the European Court which have provided new interpretations of its
rules. Extensive consultation was conducted on the commission's
'Our presidency of the European Union Council has given us the
opportunity to drive forward negotiations with our European partners
on the European Commission's proposals in this area and reach a
1. The Acquired Rights Directive was adopted in 1977. It was
implemented into UK law by the Transfer of Undertakings (Protection
of Employment) Regulations in 1981. The Directive and regulations
require that when an undertaking or business, or part of one, is
transferred from one employer to another:
- the employment contracts of the employees, along with all the
rights, powers, duties and liabilities of the transferor (ie: the old
employer) under or in connection with those contracts (other than
certain benefits under occupational pension schemes) pass
automatically to the transferee (ie: the new employer);
- employees of the transferor or of the transferee may not be
dismissed in connection with the transfer unless the dismissals are
for economic, technical or organisational reasons entailing a change
in the workforce;
- both the old and the new employer must inform employee
representatives and consult them about any measures envisaged in
relation to any of the employees affected by the transfer.
The employees concerned therefore become employees of the transferee,
but under the same terms and conditions (except as regards certain
occupational pension rights) as applied to them as employees of the
transferor, and are treated as if they had been the transferee's
employees all along.
2. A consultation document issued on 12 January 1998 invited views,
in the UK, on the European Commission's proposals to amend the 1977
Acquired Rights Directive.