The Gazette 1983

GAZETTE

JULY/AUGUST

1983

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; thereafter 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 Department, 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

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