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PAGE EUROPEAN REVIEW
Recent cases heard at the European Court of Justice (ECJ) have continued a long line since the original Transfer of Undertakings directive in 1977. Last year an amendment to that directive was adopted. The European Review provides a potted history of TUPE and looks forward to the new law.
In 1977 the European Economic Community, now the EU, adopted a directive entitled 'on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses (77/187/EEC)'. This became known as the' acquired rights' or 'transfer of undertakings' directive. It had been adopted in order to protect the rights of workers who were transferred from one employer to another in an increasingly fluid labour market.
As with all European directives, it had to be transposed into the law of all the member states. In the U.K. this took four years: the Conservative government passed the 'Transfer of Undertakings (Protection of Employment) Regulations' in 1981. These laws, which soon acquired the acronym TUPE, were subsequently found to be an inadequate version of the original directive as they became of great importance to the U.K. trade union movement as the last government favoured privatisation, contracting out, compulsory competitive tendering and the private finance initiative. If workers were transferred due to these changes, the trade unions used the regulations creatively to ameliorate the injury to conditions and pay.
Not surprisingly, there were plenty of disputes about when the TUPE regulations applied and what exactly they said and, as well as the judgements of U.K. employment appeals tribunals, the European Court of Justice ruled on the basis of the original directive. The Conservative government steadfastly maintained that TUPE should not apply to the public sector in the face of many U.K. and European court decisions to the opposite effect. When, eventually, the Commission was in the process of taking the U.K. government to court over its non-implementation of their directive a new law (Trade Union and Employment Rights Act, 1993) was passed to include the public sector, although it was not retrospective. The incoming Labour government eventually admitted that TUPE had not properly implemented the directive and opened the way for workers to claim compensation in cases dating from before the change in the law.
Cases continued to be heard at the ECJ which caused problems for other national governments and, under pressure from them, the Commission proposed a new directive in 1994. However it was not possible to achieve unanimity in the Council of Ministers until last year, the new directive being adopted in June. It expands the definition of a transfer and of an employee, confirms its application to public, private and non-profit making concerns, requires member states to protect pension rights, requires consultation of employees including unrepresented workers and specifies what information must be supplied to them. Possibly less helpful to the employee are provisions to exclude insolvent businesses from the directive and to allow agreements to change contracts to 'help business survival'. The directive must be implemented by member states by July 2001.
Since the adoption of the new directive, cases under the old one have continued to be heard at the ECJ. In November 1998, in a case from Belgium, Mr. Wilfried Sanders was told by the court that he could object to his job being transferred to another company due to voluntary liquidation, which did not exclude the transfer from the directive, but that it was up to the national court to decide if the transfer was to his detriment and whether to hold the employer responsible for this. In several cases from Spain and Germany, heard in December, it was established that the directive covers the termination of a contracting out arrangement by a public body and a switch from one contractor to another, even if the only tangible assets to be transferred were the workers themselves.
The court has ruled that it is not lawful for a member state to restrict the operation of claims for equal pay so that there is no possibility of bringing a claim later than two years after the events in question. Ms. B.S. Levez was employed by T.H. Jennings (Harlow Pools) Ltd. as a betting shop manager from February 1991. In December of that year she was appointed manager of another shop and her salary raised from £10,000 to £10,800 per annum which the employer stated was the salary of the male employee whom she was replacing. In April 1992 her salary was raised to £11,400. However on leaving the job in March 1993 Ms. Levez discovered that her predecessor had been payed £11,400. She therefore made a claim, in September 1993, before a U.K. industrial tribunal which decided that, as all managers at Jennings bookmakers had the same contract terms, she was entitled to payment of arrears backdated to February 1991. The employer, invoking the 2 year limit, claimed that she was only entitled to arrears backdated to September 1991. The ECJ felt that where there had been deliberate misrepresentation by the employer and where other lawful remedies (county courts) involved less favourable procedures, an exception to the 2 year rule must be possible.
The judgement on this case is slightly more favourable than the opinion reported in our last issue. The contention that the rule restricting claims for unfair dismissal to employees with 2 years' service discriminates against women must be decided by the House of Lords. They must consider both the statistics on gender employment and in which year they are relevant while the approximately 5,000 claimants who have filed similar claims must wait to hear their fate.
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