Blog: TUPE and Brexit — a de facto deterioration in working terms and conditions?
Barry Crushell, director and legal counsel at Aperture Partners, writes on a recent case concerning employment rights and Brexit.
Aperture recently represented a number of employees whose company had been acquired by a UK entity, that proposed transferring those employees from Dublin to Belfast. A number of objections were made by the employees (all of whom were non-Irish EU citizens) to the transfer, including the novel proposition that, given the uncertainty concerning, not only their future right to work in the UK itself, but also the prospect of immediate changes to their employment rights, constituted a deterioration in working terms and conditions, so much so that the employer could be reasonably regarded as having been responsible for the termination of their employment. This argument, although rejected by the employer (who came to a settlement with the affected employees) is one employers, proposing a transfer of employees into a pre-Brexit UK, should be mindful of.
Few areas of UK law can boast a level of European influence as considerable as employment law, with relevant provisions from the EU being the leading source of employee protection rights in the UK, rights enjoyed by the estimated 30,000 people who cross the border for work, between the Republic of Ireland and Northern Ireland, on a daily basis.
In the past, the cross-border transfer of employees from another EU jurisdiction would have due regard to the possible conflict of opposing national employment provisions. Employee protection can vary, depending on the Member State in question, but, under various EU provisions, an employee could expect certain universal employment law rights, regardless of the EU jurisdiction in which they were working. With Brexit finally in sight, might it be argued that the UK’s exit from the EU will lead to an erosion of the fundamental rights and freedoms of employees in that jurisdiction? Might this uncertainty alone, constitute fair grounds for an employee to object to a transfer from an existing Member State to the UK? Can it be argued that Brexit itself, and the unpredictability of how the UK’s employment laws may change following it’s exit from the EU, constitute a de-facto deterioration in working terms and conditions?
On 29 March 2017, the UK government served formal notice under Article 50 of The Treaty on European Union to terminate the UK’s membership of the EU. Based on Article 50, the EU Treaties shall cease to apply to the UK and the UK exit will take effect in March 2019.
The UK government published a White Paper on 30 March 2017 relating to the European Union (Withdrawal) Bill (the White Paper) which will repeal the European Communities Act 1972 that currently gives EU law direct effect in the UK and primacy over UK law. Numerous EU employment law concepts have become entrenched in the UK workplace such as provisions relating to equality and non-discrimination (under Directive 2000/78 EC), terms and conditions of employment (under Directive 91/533/EEC), and annual leave (under Directive 93/104/EC). Many aspects of UK employment law are outside the scope of EU law or in excess of, EU requirements, and the White Paper commits, in principle, the UK government to continue to protect and enhance such employment rights post-Brexit.
Transfer of Undertakings
The original Acquired Rights Directive 77/187 (ARD) was implemented in Ireland by S.I. 306 of 1980. The ARD has since been updated by Directive 2001/23 which has been implemented by the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. 131 of 2003) (TUPE) and now amended by the Workplace Relations Act 2015.
Like the relevant provisions in other EU jurisdictions, the main feature of ARD and its implementing Regulations is that in a relevant transfer, employment is preserved, and continuity of employment is continued and any dismissal because of the transfer simpliciter is prohibited and must be justified by economic, technical or organisational reasons.
In general, if a company is taken over by another employer, as a result of a legal merger or transfer, the rights of the employees are protected. It can also apply if part of the company is being sold off or contracted out.
The terms and conditions of employment are automatically transferred to the new employer, except for pensions. If there is a collective agreement the new employer must continue its terms and conditions until it expires or is replaced.
Employees of both relevant companies are entitled to be informed by both the transferor and transferee of:
Dismissals are prohibited except for economic, technical and organisational reasons. 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, in Ireland, an employee who is dismissed in this manner may, under the Unfair Dismissals Acts, refer a case to the Workplace Relations Commission.
Brexit and TUPE
An employee’s contract of employment usually contains a provision referring to an employee’s place of employment. There may be language to the effect that an employer may unilaterally change an employee’s usual place of work, and the courts have typically given effect to such provisions, in circumstances whereby they are reasonably used by the employer. What constitutes “reasonable” under such circumstances would include sufficient prior notice, financial assistance and a genuine commercial reason.
As previously referenced, if an employment relationship is terminated because the transfer involves a substantial change in working conditions to the detriment of the employee, the employer may be regarded as having been responsible for that termination.
Various Member States provide for a right of objection whereby the change in place of work in connection with a cross-border transfer leads to a significant change in the employee’s personal, professional and social circumstances. Given Brexit, the question arises as to whether a cross-border transfer into the UK, given the uncertainty over future working conditions, might be considered a de-facto substantial change in working conditions, to the detriment of the employee?
It is an objection employers, proposing a transfer of employees into a pre-Brexit UK, should be mindful of.