The laws in Europe that govern the legal transfer of employees during the transition of services from one company to another can look confusing and restrictive. However, many of these laws have been in place for years and are firmly embedded in a business ecosystem in which companies operate legally and according to best practice.
Much of the relevant legislation currently implemented by the European Union as “directives” is enacted in each member state by local legislative bodies. Although the directives ensure that there is similar legislation across the region, implementation can vary between countries and companies.
Consider the following Top 5 European employment laws when considering transferring employees.
1. Transfer employees to service providers with the same or similar contract terms and conditions. The Acquired Rights Directive (ARD), also known as TUPE (Transfer of Undertakings, Protection of Employment), stipulates that, in some countries, an employee’s contract of employment will be transferred automatically on the same terms as before in the event of a transfer of the undertaking. The new employer, therefore, cannot reduce an employee’s terms and conditions unless it meets the directive’s exception criteria. But be warned, this is not a get out of jail free card! Plenty of case law in each country challenges the law and attempts to use this derogation but rarely succeeds in expanding the restrictive criteria.
2. Keep employees informed of matters that affect their employment. Employee consultation – technically part of the Acquired Rights Directive but enacted in each country by a separate national law – gives employees the right to request their employer to inform them of business matters that affect their employment. Most multinationals, including large service providers, already have consultation arrangements in place and are familiar with the local requirements. Be sure to integrate HR representatives and employee committees along with local employment lawyers when addressing country and company-wide projects that may impact employees.
3. Transfer employee data during the transfer window, not before. The Data Protection Directive allows only a short period of time before contract signature for receiving service providers to see the data of employees in scope. The national legislation prevails here, too; in the UK this transfer window is two weeks before the contract is to be signed. An alternative is to use either estimated or aggregated data, which is much easier to manage. A new and updated Data Protection Regulation, which should reduce the diversity between country laws, will be introduced in the next few years. Current proposals include a mandate for regulators to levy much higher fines for late data transfer (up to 2 percent of Gross Sales Revenue).
4. Understand local laws governing employee rights regarding unfair dismissal. National employment law gives all employees the right to sue their employers if they believe they’ve been unfairly dismissed, even if they’ve received a redundancy payment. There are statutory minimums for redundancy payments; however, corporate terms in individual employee contracts may override these. Estimating total redundancy exposure can be a difficult exercise, especially if employees have been through the ARD process several times, bringing their original employment rights with them.
5. Collaborate with a specialist in employment law and the HR department for each of the countries and legal entities in scope for employee transfer. Because this mix of European and national case law has accumulated over time, and in places is a little vague, or has slipped behind in addressing the needs of the modern world, each country has various test cases that provide clarification. An individual advisor could never have full knowledge of all the applicable case law in Europe; the number of countries involved is too great and the laws are recorded in local languages. Consult experts in these areas.
To discuss employee transfer laws further, contact Sarah Seabury.