Transfer of Undertakings Requirements

In Ireland if a business or part of a business is taken over by another employer as a result of a merger or transfer the rights of the employees are protected by legislation.

For a transfer of undertaking to take place:

• There must be a change in the person (either an individual or a company) responsible for running the undertaking/business
• The previous economic activity of the undertaking/business must be carried on by the new employer
• The undertaking/business must be transferred as a "going concern".

When a transfer occurs the new employer is legally bound to take on any existing staff, the employees will carry their service forward which has implications for Redundancy entitlements.

Any employee transferring is entitled to employment "terms and conditions" which are no less favourable than those he or she had under the previous employer. Except for employee pension rights, which do not transfer to the new employment. However, where there is a pension scheme in operation in the original employer's business at the time of the transfer, the legislation provides that:

If the scheme is an occupational pension scheme covered by the Pension Acts, then the protections given by that legislation apply

In the case of other pension schemes, the new employer must ensure that rights are protected

Transfer of Undertakings come under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003. For the regulations to apply all of the business need not be transferred; if only part of a business is being sold off or contracted out, the Regulations still apply.

Under the regulations  all employees must be given details of any transfer of undertakings as follows:

• If the employees are in a union, not later than 30 days before the transfer, the employer must provide the union with details of the reasons for the transfer; the date or proposed date of the transfer; and the legal, economic and social implications for the employees
• If the employees are not in a union, the employer must give the details already mentioned in writing to each employee not later than 30 days before the transfer

The employer must also consult with the employees' union or, in the absence of a union, with the chosen representative(s) of the employees.

There is nothing in the regulations which prohibits termination of employment if it can be shown that any termination has taken place for economic, technical or organisational reasons. However the normal dismissal criteria must be applied in these circumstances to avoid any claims for unfair dismissal.

If you are planning the purchase or sale of a business Resolve HR can provide advice and support on the various legal requirements for informing and consulting staff, the rights of employees and your obligations as either the transferor or transferee of the business. For more information please CONTACT US