TMA European Conference 2012

Labour & Human Issues inEuropean Restructuring

Sonia JordanPartnerSalans LLPMillennium Bridge House2 Lambeth HillLondon EC4V 4AJEmail: sjordan@salans.com

Tension between the “Rescue Culture” and the protection of employee rights

TRANSFER OF UNDERTAKING (PROTECTION OF EMPLOYMENT) REGULATIONS 2006 (“TUPE”)

Regulations 3, 4 & 7 TUPE

Upon transfer of an economic entity that retains its identity all employment contracts (together with liabilities) automatically transfer to the purchaser.

EXCEPTION TO THE ABOVE

Regulation 8(7)

Where the vendor is subject to “bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor employee contracts are not automatically transferred to the purchaser.

Problem

The Court of Appeal has held that the exception in Regulation 8(7) does not apply to a transfer by a vendor in administration.

2

Potential Changes

Department of Business, Innovation & Skills Consultation

In November 2011, dBIS issued a call for evidence seeking views on the operation of the rules for collective redundancy consultation. In particular, the government is seeking views on the consultation process itself, the minimum periods for consultation and notification, and the impact of the process.  The call for evidence closed on 31 January 2012 and detailed analysis of the responses is now being undertaken with a view to formal consultation on policy proposals in late 2012.

“The Perfect Recipe”

Business rescue & employment protection goals are not inevitably incompatible.An alternative to collective bargaining:-

Highly sensitive or time urgent restructurings, pre-restructuring approval by the Regulator sanctioning a scheme of employee reorganisation (to include variation of employment terms and dismissals) where the employer/office holder can show the alternative would be more prejudicial to the business enterprise and employees as a whole.

3