If a business is taken over by another employer as a result of a legal merger or transfer the rights of the employees are protected by legislation. The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 apply to an undertaking which can be a business but could also be a charity or non-profit-making organisation. All of the business where you work need not be transferred; if the part you work in is being sold off or contracted out, the Regulations will apply.
For a transfer of undertaking to take place:
A transfer under the Regulations does not occur in the case of a compulsory liquidation of the undertaking/business.
Under the Regulations the new employer is legally obliged to take on the existing employees of the business. The terms and conditions and your employer’s obligations in your contract of employment are automatically transferred to your new employer, except for pensions – see below. If there is a collective agreement your new employer must continue to its terms and conditions until it expires or is replaced.
P45: In some circumstances employees involved in a transfer of business may be given a P45 by their old employer. They should give this to their new employer. For the purposes of redundancy legislation a transfer of business does not break the employees’ continuity of service. Instead it is transferred to their new employment.
Employee pension rights, apart from those provided for by social welfare legislation, do not transfer to the new employment. However, where there is a pension scheme in operation in the original employer’s business at the time of the transfer, the legislation provides that:
The transfer of an undertaking, business or part of a business does not in itself constitute grounds for dismissal. However, nothing in the regulations prohibits dismissal if your employer can justify such dismissal for economic, technical or organisational reasons. Whether there are economic, technical or organisational grounds for dismissal will depend on the facts of each case and you can challenge your employer's contention that such grounds exist by bringing a claim for unfair dismissal - see 'How to apply' below.
If your contract of employment is terminated because a transfer involves a substantial change in working conditions to your detriment, the employer concerned is regarded as having been responsible for the termination of the employment. So, for example, if your new employer cuts your wages because he/she feels you are being paid too much and you resign as a result, your new employer will be regarded as being responsible for the dismissal by failing to honour your contract of employment.
The Employees (Provision of Information and Consultation) Act 2006 provides a general right to information and consultation for employees from their employer on matters which directly affect them. The legislation requires employers to inform and consult employees on any decisions likely to lead to substantial changes in work organisation or contractual relations – with particular reference to mergers and acquisitions and to collective redundancies. This means that employers are required to consult with employees before major decisions are made, including transfer of business. Since 23 March 2008 it applies to employers with at least 50 employees.
Under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 employees (including those who are not covered by the Act as they are working for an employer with fewer than 50 employees) must be given details of the transfer as follows:
The employer must also consult with the employees’ union or, in the absence of a union, with the chosen representative(s) of the employees.
If you have been dismissed because of the transfer or if your employer has failed to consult the employees or their representatives, as required by the Regulations, you can bring a complaint within 6 months. You must use the online complaint form available on workplacerelations.ie. The time limit may be extended for up to a further 6 months, but only where there is reasonable cause which prevented the complaint being brought within the normal time limit.
Complaints concerning pensions covered by the Pensions Acts should be referred to the Pensions Authority - see 'Where to apply' below. Complaints concerning other pensions should be referred as above.
Further information on the transfer of undertakings is available from Workplace Relations Commission's Information and Customer Service - see 'Where to apply' below. The Code of Practice on Employee Involvement in the Workplace as well as an explanatory booklet on the transfer of undertakings (pdf) are available on workplacerelations.ie.
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If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.