Acquired Rights Directive
Encyclopedia
The Business Transfers Directive 2001/23/EC is a European Union law
that protects the contracts of employment of people working in businesses that are transferred between owners. It replaced and updated the law previously known as the Acquired Rights Directive 77/187/EC.
Chapter I - Scope and definitions
Article 1
This says the directive applies to legal transfers and mergers of an undertaking. The point to note is that it excludes transfers of company control through a simple purchase of share
s, which is the most common way to effect a change in the market for corporate control
.
Article 2
This gives definitions of transferor, transferee and the like.
Chapter II - Safeguarding of employees' rights
Article 3
This states the principle that the transferee is bound to the contractual and employment law obligations of the transferor. The transferor has to state what these are beforehand.
Article 4
This provides the idea that dismissals should not take place just because there is a transfer. But dismissals can be made for 'any economic, technical and organisational reason'.
Article 5
Member states can derogate from Art. 3 and 4 where the company is insolvent.
Article 6
This states that employee representatives positions should not change where the undertaking retains autonomy through the transfer. It is talking mainly about union
s.
Chapter III - Information and consultation
Article 7
This provides that employers thinking of transfers must consult with the workforce beforehand, through employee representatives.
Chapter IV - Final provisions
Article 8-14
These articles are addressed to the Member States, and talk about implementation maps, and notifications to the Commission of opinions or changes.
European Union law
European Union law is a body of treaties and legislation, such as Regulations and Directives, which have direct effect or indirect effect on the laws of European Union member states. The three sources of European Union law are primary law, secondary law and supplementary law...
that protects the contracts of employment of people working in businesses that are transferred between owners. It replaced and updated the law previously known as the Acquired Rights Directive 77/187/EC.
Overview
The Directive stipulates that any employee's contract of employment will be transferred automatically on the same terms as before in the event of a transfer of the undertaking. This means that if an employer changes control of the business, the new employer cannot reduce the employees' terms and conditions, unless the Directive's exception criteria are met. This is that there must be a good economic, technical or organisational reason for the change.Chapter I - Scope and definitions
Article 1
This says the directive applies to legal transfers and mergers of an undertaking. The point to note is that it excludes transfers of company control through a simple purchase of share
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...
s, which is the most common way to effect a change in the market for corporate control
Market for corporate control
The market for corporate control is a description of the role of equity markets in facilitating corporate takeovers first put forward in an article by HG Manne, ‘Mergers and the Market for Corporate Control’...
.
Article 2
This gives definitions of transferor, transferee and the like.
Chapter II - Safeguarding of employees' rights
Article 3
This states the principle that the transferee is bound to the contractual and employment law obligations of the transferor. The transferor has to state what these are beforehand.
Article 4
This provides the idea that dismissals should not take place just because there is a transfer. But dismissals can be made for 'any economic, technical and organisational reason'.
Article 5
Member states can derogate from Art. 3 and 4 where the company is insolvent.
Article 6
This states that employee representatives positions should not change where the undertaking retains autonomy through the transfer. It is talking mainly about union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
s.
Chapter III - Information and consultation
Article 7
This provides that employers thinking of transfers must consult with the workforce beforehand, through employee representatives.
Chapter IV - Final provisions
Article 8-14
These articles are addressed to the Member States, and talk about implementation maps, and notifications to the Commission of opinions or changes.
See also
- UK labour law
- European labour lawEuropean labour lawEuropean labour law is the developing field of laws relating to rights of employment and partnership at work within the European Union and countries adhering to the European Convention on Human Rights.-Treaties:...
- Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) replacing the Transfer of Undertakings (Protection of Employment) Regulations 1981, the UK labour law