| Mergers and Acquisitions viz employment rights |
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| Category: Employers Area |
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Employers must be aware that in terms of mergers or acquisitons the terms and conditions of exisitng employees must be secured. There are a number of exceptions to this general rule with regard insolvent companies. The rights of the employees on the transfer of a business is covered by the European Communities (Protection of Employees Rights on Transfer of Undertakings)(Amendment) Regulations, 2003. In terms of dismissal of employees that are surplus to requirements, these dismmissals can be justified on the grounds of the so called economic technical (or social) and reorganisation grounds. This concept is difficult to grasp as courts and tribunals have taken differing interpretations of what this entails. The most accurate interpretaion of the defence is that the dismissals are permitted if the business plan shows that the dismissals are necessary to give effect to it. The employers are protected if they consult fully and show that the business plan requires a reduction in numbers. That is why the consultation process is very importnant as it will show full disclosure and also notify the employees concerned that their jobs are in jeopardy. If there is no consultation and or insufficent information to the employees then the dismissals may be held to be unfair. Failure to consult can give rise to a claim under the regulations and an award of four weeks salary to the employees concerned. In a transfer situation, both the original employer and the new employer must inform the representatives of their employees affected by the transfer, of - (i) the date or proposed date of the transfer; (ii) the reasons for the transfer; (iii) the legal implications of the transfer for the employees and a summary of any relevant economic and social implications of the transfer for them, and any measures envisaged in relation to the employees. The original employer must give this information to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer and in any event, in good time before the transfer occurs. The new employer must give the information to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer occurs and in any event, in good time before the employees are directly affected by the transfer as regards their conditions of work and employment. If either employer envisage measures in relation to their employees, the employees’ representatives must be consulted, where reasonably practicable, not later than 30 days before the transfer occurs and, in any event in good time before the transfer about such measures, with a view to reaching agreement. Where there are no employee representatives, the employers must arrange for the employees to choose (including by means of an election) representatives for this purpose. However, if there are still no employees’ representatives in the undertaking through no fault of the employees, the employees concerned must be notified in writing, where reasonably practicable, not later than 30 days before the transfer and, in any event, in good time before the transfer, with the particulars described at (i), (ii) and (iii) above. These obligations apply whether the decision resulting in the transfer is taken by the employer or another undertaking controlling the employer. The fact that the information concerned was not provided to the employer by the controlling undertaking will not release the employer from those obligations. If an employment is terminated because a transfer involves a substantial deterioration in the working conditions of the employee, the employer concerned is regarded as having been responsible for the termination. In this regard, it should be noted that an employee who is dismissed within the meaning of the Unfair Dismissals Acts 1973 to 2001 with - less than one year’s service may refer a case to a Rights Commissioner under the Regulations; more than one year’s service may refer a complaint to a Rights Commissioner under the Regulations or under the Unfair Dismissals Acts 1973 to 2001. However, an employee may not obtain relief in respect of that dismissal under both the Regulations and those Acts.
it was recently held in the High Court (Symantec -v Lyons & Leddy June 2009) that when employees refuse to transfer over to the new undertaking they are not entitled to redundancy and have resigned their emplyment. It is left open that they may pursue unfair sdismissals under TUPE if their terms and conditions are less favourable than previously enjoyed.
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