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TUPE - from concept to practice
Transcript of TUPE - from concept to practice
What is it?
Who & what transfers
TUPE issues in M&A
EU at a glance
Importance of getting employee issues right
Cost of getting employee issues wrong, e.g.
Decisions to proceed can be blocked/delayed in some jurisdictions
Damage to industrial relations
Receive more than you bargained for…
Getting it right
Whether and how employees will transfer
Information and consultation obligations
Proposed changes to terms and conditions of transferring employees
Obligations and liabilities of parties
Exit issues (on an outsourcing)
Why does it matter?
Why does it matter?
What is it?
What transfers and when?
Specific considerations on M&A transactions
EU Acquired Rights Directive affords minimum employee protection across EU
Contracts of target business employees transfer from seller to buyer
Employment liabilities and obligations pass to buyer or, in some countries, parties jointly liable
Obligations to inform/consult triggered for seller/buyer
Complexities in varying terms and conditions
Special dismissal protection
ARD issues on Business acquisitions
Automatic transfer, i.e. straightforward
Non-EU countries with ARD equivalent (e.g. Argentina, Korea and Singapore)
No automatic transfer principle (e.g. US, Hong Kong, Japan and Australia)
Offers of new employment
Risk of termination costs for seller
Transfer of employees
Art. 153 TFEU
To be implemented through Directives. These are different from Regulations.
A regulation is a law that has direct effect. A directive needs to be transposed, within certain limits, into national law;
EU labour law
Treaty on European Union
Principles EU (freedom of movement, services and goods)
Treaty on the Functioning of the European Union (TFEU)
More detailed: role, policies and operation
Employment: art. 151 TFEU
1. Stable organized economic entity;
2. With its own “identity”
ECoJ Süzen 11.3.1997
Resurfacing of Identity
ECoJ Oy Liikenne 25.1.2001
CENTRAL CRITERION FOR TRANSFER =
Type of undertaking CoJ Sodexho 20.11.2003, CoJ Suzen
Tangible and intangible assets
Value of assets; personnel; customers
Degree of (suspension) going concern
WHAT IS DECISIVE FOR THE IDENTITY:
(CoJ Spijkers 18.3.1986)
Likely to apply where significant assets transferred, or where majority of employees and skilled employees are taken on, and where provision of services will continue in much the same way as before transfer
ECJ and domestic courts are making broader application of ARD.
Local extensions, eg Service Change provision in UK
Transfer of employees - EU jurisdictions
CoJ Ziemann 10.12.1998
CoJ Watson Rask 12.11.1992
CoJ Temco 24.1.2002
A group of workers engaged in a joint activity on a permanent basis may constitute an economic entity.
CoJ Oy Liikenne
Sale of business, NOTE: not transfer of shares
TRANSFER OF UNDERTAKING:
Or part of business…
Catering, security, payroll
3. Change of contract (second generation outsourcing):
outsourced activity is transferred to new supplier.
2. Outsourcing: transferring a business activity to a specialized third party.
CoJ “Temco”: Transfer can occur if competitor not only continues the activity, but also takes over a major part of the workforce (in number and skills) or significant tangible or intangible assets.
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