Transfer of Business

Related legislation:

Employment & Industrial Relations Act, 2002 

1. a) What constitutes a Transfer of Business?

“Transfer” means a transfer of an undertaking which retains its identity as an organised group of resources having the objective of pursuing an economic activity and shall include a service provision change in accordance with the regulations;

b) Does the term apply when part of a business’s activities are subcontracted to a new company?

The Legal Notice was amended and widened in scope to include service provision changes. This refers to a situation in which:

(i) activities cease to be carried out by a person, hereinafter referred to as a “client”, on his own behalf and are carried out instead by another person on the client’s behalf, hereinafter referred to as a “contractor”;

(ii activities cease to be carried out by a contractor on a client’s behalf, whether or not those activities had previously been carried out by the client on his own behalf, and are carried out instead by another subsequent contractor on the client’s behalf; or 

(iii) activities cease to be carried out by a contractor or a subsequent contractor on a client’s behalf, whether or not those activities had previously been carried out by the client on his own behalf, and are carried out instead by the client on his own behalf;

2. Do employees with the old employer have an automatic right to be employed with the transferee?

Yes employees retain all rights and obligations including that of seniority.

3. Does the transferor have to give notice to any employees that are being transferred to the transferee?

No.  This is a continuation of employment and nothing changes for employees except that they have a new employer.

4. What happens to seniority with the previous employer?

It is retained.

5. a) Can employees transferred with the transferee be made redundant?

Due to restructuring redundancies may be effected. Nevertheless the Last in first out rule applies within the pool of employees of the transferor and transferee within the same grade.

b) In such cases, who makes them redundant – the transferor or the transferee?  

It is illegal for the transferor to make redundancies due to a transfer. Nevertheless the transferee can.

6. a) If transferred employees have different conditions of employment than current employees, what happens?

Transferred employees retain the same terms and conditions.

b) can these conditions be changed as a result of the transfer?

No.

c) How does this affect the principle of equal pay for work of equal value?

Employees’ rights can be ameliorated but they cannot be decreased. 

7. Do employers have to fill in ETC forms of engagement and termination as a result of a transfer of undertaking?

Yes.  Termination and engagement forms have to be filled in.

8. Can transferred employees be given alternative employment with the transferee?

Yes but they retain their same pay packet.

9. If transferred employees are covered by a collective agreement, will this still be in force once they are transferred to the new company?

Upon transfer the employee’s conditions continue being regulated by the collective agreement until its expiry.

10. Is the transferee entitled to give a probationary period to the transferred employees?

No since it is continuous employment.

11. Can transferred employees be employed on a definite period contract?

No it is a continuation of employment.

12. If an employee is employed under a definite period contract which has not expired at the time of the transfer, what happens?

The contract will continue running and the new employer may decide not to renew the contract upon its expiry.

13. How do the regulations on information and consultation to employees apply to a transfer of business?  

If the transferor employs more than 50 employees then there is the obligation to have information and consultation representatives. In this case the employees have to be informed about the transfer prior to it being effected.