Business restructuring

Abstract

One of the occasions when a worker is perhaps at his or her most vulnerable, in relation to work, is when the business is reorganised in some way. The reorganisation may be the result of a takeover by another employer, or because the worker’s own employer has become insolvent or there is a perceived need to reduce the number of employees. In such situations a worker’s security of employment and their terms and conditions are often at risk. The European Community recognised this at an early stage. There was a concern that the development of the single market would lead to a large number of mergers and acquisitions as industry and commerce became more European based, rather than nationally based. In order to make these changes more acceptable to workers and their representatives, a number of initiatives emerged from the Community’s Social Action Programme of 1974. These were initiatives concerned with consultation in collective redundancy situations, protection during transfers of undertakings and for those whose employer had become insolvent. In particular there were three Directives that have long been part of national law and provide some protection for employees as a result of business restructuring. These Directives were the Collective Redundancies Directive (Council Directive 75/129/EEC on the approximation of the laws of the Member States relating to collective redundancies OJ 1975 L48/29; amended by Directive 92/56/EEC OJ L245/3; consolidated by Directive 98/59/ EC OJ L225/16), which is incorporated into Part IV Chapter II TULRCA 1992; the Acquired Rights Directive (Council Directive 77/187 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses OJ L61/26; amended by Directive 98/50/EC OJ L201/88; now consolidated into Directive 2001/23/EC OJ L82/16 22.3.2001), which was originally transposed by the Transfer of Undertakings (Protection of Employment) Regulations 1981 (SI 1981/1794; now the Transfers of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246); and the Insolvency Directive (Directive 2002/74/EC amended Council Directive 80/987/EEC on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer OJ L270/10 23.9.2002), which is incorporated into Part XII ERA 1996. Subsequently, the Community has adopted two Directives concerned with information and consultation. These are the European Works Council Directive (Council Directive 94/45/EC on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purpose of informing and consulting employees OJ L254/64; now replaced by Directive 2009/38/EC), whose purpose was the establishment of formal consultation processes in transnational undertakings, and the Information and Consultation Directive (Council Directive 2002/14/EC establishing a general framework for informing and consulting employees in the European Community OJ [2002] L80/29 23.2.2002), which provides for the establishment of information and consultation procedures in all undertakings employing at least 50 employees in one Member State. These Directives were transposed into national law by the Transnational Information and Consultation of Employees Regulations 1999 (TICE Regulations 1999) (SI 1999/3323) and the Information and Consultation of Employees Regulations 2004 (ICE Regulations) (SI 2004/3426).

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