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 (c) the measures envisaged in relation to the employees. 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

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