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09. Transfer of Undertakings

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09. Transfer of Undertakings

Employees’ Rights in Case of a Transfer of Undertaking

The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (“TUPE”) provide that on a transfer of a business which constitutes a “transfer” of “an undertaking”, employees wholly or fully engaged in that transferring business automatically transfer to the acquiring entity (the transferee).  This may arise on the sale of the assets of a business, the lease of a business or the contracting out of specific services.  TUPE does not generally apply to share sales.

Where TUPE applies, all rights and obligations arising from contracts of employment (with the exception of certain pension rights), and any rights under collective agreements, are automatically transferred to the transferee.

As set out in more detail below, where TUPE applies, the transferor and transferee are required to conduct a statutory information and consultation process with employee representatives not later than 30 days before the transfer is carried out or otherwise in good time before the transfer is carried out.

Requirements for Predecessor and Successor Parties

Where TUPE applies, both the transferor and transferee are obliged to inform ‘employee representatives’ (e.g., a trade union, staff association, etc.) of their respective employees affected by the transfer of:

  • the date or proposed date of the transfer;
  • the reasons for the transfer;
  • the legal, social and economic implications of the transfer for the employees; and any ‘measures envisaged’ by the transferee (e.g., changes to headcount, location, terms and benefits, administrative changes or other work organisation, including the possibility of redundancies) in relation to employees.

If either the transferor or the transferee envisages any measures in relation to their employees as a result of the TUPE transfer, 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.  There is however no requirement to reach an agreement.

If no employee representatives exist within the organisation, the transferor and transferee are required to put in place a procedure under which their respective employees can elect one or more representatives from amongst their number for the purposes of consultation.

Under Irish law, a dismissal is automatically unfair where the sole or principal reason for an employee’s dismissal is the TUPE transfer – e.g., if the transferee does not want certain employees or requests the transferor to dismiss a certain number of employees.  This is the case whether the terminations occur before or after the transfer.  Employees may be made redundant later – as long as it is not related to the transfer and there is a genuine redundancy situation.

It may be legally possible to dismiss employees under TUPE if an ‘ETO’ (economic, technical or organisational reason) reason exists e.g., where there are genuine redundancies such as a reduced need for a role or as a result of a change arising from the transfer.

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