§ Mr. Teddy Taylor
asked the Secretary of State for Employment whether he expects that the Transfer of Undertakings (Protection of Employment) Regulations will restrict or otherwise influence the taking over of businesses by new employers; and if he will make a statement.195W
§ Mr. Waddington
Although these regulations, which implement our obligations under the European Community acquired rights directive, introduce a change of principle, they are not expected to have a significant effect in practice on the commercial decision of employers or to restrict the taking over of businesses by new employers.
The regulations have effect in relation to transfers of businesses, parts of businesses and undertakings of a commercial nature to a new employer but do not apply to transfers effected by the transfer of shares which is the method by which most transfers are made in this country.
The main effects of the regulations on those transfers to which they do apply are as follows:
- (1)employees' contracts of employment will continue as if they were made between the transferee—the new employer—and the employees; this provision will come into operation on 1 May.
- (2)rights and obligations stemming from the contracts of employment will be automatically transferred from the transferor—the old employer—to the transferee; this provision also comes into operation on 1 May.
- (3)The transferor and the transferee are required sufficiently long before the transfer to consult and give certain information to the representatives of the independent recognised trade unions. This provision has already come into operation on 1 February.
In practice the obligation imposed on the transferee to take over the liabilities of the transferor under the contracts of employment is not likely to matter greatly as the cost of such liabilities will no doubt be reflected in the purchase price of the business. The new employer will, moreover, be free to dismiss employees fairly for economic, technical or organisational reasons.
Nor do I believe that the additional obligations imposed by the regulations to consult and give certain information to the representatives to the independent recognised trade union will prove to be unduly onerous.