The Gazette 1984

GAZETTE SUPPLEMENT

APRIL. 1984

problem of employees' rights to old age, invalidity, or

survivors' benefits under supplementary Company or

inter-Company pension schemes outside the Social

Welfare Acts 1952 to 1979 (now the Social Welfare

Consolidation Act 1981). This sub-paragraph is most

unfortunately worded, but the poor draftsmanship

cannot be laid totally at the door of the Irish draftsman, as

a reference to the provisions of the Directive itself will

show that the wording is identical to our Regulations. The

wording concerned states "Regulation 3 of these

Regulations and paragraph (1) above of this regulation

shall not apply in relation to employees' rights to old age,

invalidity, or survivors benefits under supplementary

company or inter-company pension schemes outside the

Social Welfare Acts 1952 to 1979, but the transferee shall

ensure that the interests of employees and of persons no

longer employed in the transferor's business at the time of

the transfer in respect of rights conferring on them

immediate or prospective entitlement to old age benefit

including survivor's benefits under such supplementary

company pension schemes are protected". The net effect

of this Regulation would appear to be that employees'

and former employees' rights existing on the date of

transfer are effectively frozen. The transferee is under an

obligation to ensure that rights existing on the date of

transfer are capable of being fully honoured. There would

seem to be no obligation on the transferee to continue

whatever arrangement was in existence prior to the date

of transfer. It must be the duty therefore, of the transferee

fully to investigate the nature and extent of such rights as

exist on the date of transfer and to satisfy himself that

such rights are capable of being honoured; therefore he

would seem to be free to consider whatever future

arrangement he considers appropriate. This view is borne

out by the Commission's amended proposal for the

Council Directive dated 25th July 1975, which states that

it is not possible to lay down specific community rules in

the Directive as to employees' acquired and future rights

arising out of company, or inter-company schemes and,

for this reason, the proposed Directive confined itself to

requiring member states to ensure that employees do not

lose accrued rights. There remains, however, a possibility

that this sub-paragraph could be interpreted to oblige the

transferee to continue such schemes. The interpretation

by various countries of the community, in their domestic

enforcement of the Directive, bears out the view that

employees' rights are frozen as at the time of transfer and

that the new employer is not obliged to continue the old

pension arrangements. This is specifically provided in the

British and Danish Regulations. The German

Regulations do not deal with former employee's rights,

but do make specific provisions to protect and maintain

(continue) the rights of existing employees. The

Department of Labour's explanatory memorandum

simply states that protection of employees' and former

employees' rights to . . . . benefits . . . . must be ensured by

the new owner. Despite repeated requests to the Depart-

ment, they have not elaborated on this statement.

Paragraph 5 of the Regulations provides that the

transfer of an undertaking cannot in itself constitute

grounds for dismissal. This would obviously also be the

case under the Unfair Dismissals Act, 1977. The

Regulation, however, goes on to state that nothing in the

Regulation shall be construed as prohibiting dismissals

for "economic, technical, or organisational reasons

entailing changes in the workforce". This allows for

redundancies to be effected, consequent on a transfer, as

would comply with the provisions of our Redundancy

Payments Acts. The Regulations, therefore, would have

no effect on redundancies. This Regulation further

provides that, if a contract of employment is terminated

because the transfer involves a substantial change in

working conditions to the detriment of the employee

concerned, the employer concerned shall be regarded as

having been responsible for termination of the contract of

employment. It would appear, therefore, that an

employee who suffers a substantial change, not coming

within the statutory definition of redundancy, is in a

position to claim unfair dismissal against the party

responsible for initiating the change. This Regulation

could allow an employee who is unsure as to the source or

reason for the substantial change to claim under the

Unfair Dismissals Act, 1977, against both transferor and

transferee on the basis that they could be jointly and

severally liable. Reasons for changes can be requested by

the employee pursuant to Regulation 7, below.

Regulation 6 protects the status and function of

employee representatives following a transfer. This

Regulation should be of considerable interest in Ireland,

in view of the many and varied agreements that exist

between employers and trade unions on the right to

recognition and negotiation. This regulation preserves

the trade union's position after the date of transfer in the

same position it was prior to the date of transfer.

Regulation 7 provides that the transferor and

transferee concerned must inform the representatives of

their employees affected by the transfer or, if there are no

representatives, the employees themselves, of the

following:

(a) the reasons for the transfer

(b) the legal, economic and social implications of the

transfer for the employees and

The Regulations do not specify the exact extent, nature

or detail of such information and appear to leave it to the

parties to agree. In the event of no agreement being

reached or in the event of no such information being

furnished, it would appear that employees or their

representatives are in a position to apply for injunctive

relief to prevent the transfer being effected until the

transferor and transferee have complied with this

regulation.

The Regulation further requires that this information

shall be given by the transferor in good time before the

transfer is carried out and by the transferee "in good

time" and, in any event, before the employees are directly

affected by the transfer. There is a further requirement

that if the transferor or transferee "envisage measures in

relation to the employees" they shall consult in good time

on such measures with a view to seeking agreement. In the

event of there not being employee representatives, it is a

requirement of the Regulation that a statement in writing

containing the required information be given to

individual employees and that notices containing these

particulars be displayed prominently at positions in the

work-places of employees, where they can be read

conveniently by the employees.

Regulation 8 empowers an Officer of the Minister,

where he is of the opinion that a transaction constitutes a