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Employees and employers will benefit from new clearer rules governing ...
Employees and employers will benefit from new clearer rules governing

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

promote a partnership approach to business restructuring, by ensuring

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

case law.

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

successful outcome.'


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.

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