Select Committee on Enterprise and Economic Strategy debate -
Tuesday, 8 Feb 1994

SECTION 6.

Mr. R. Bruton

I move amendment No. 9:

In page 7, between lines 22 and 23, to insert the following subsection:

"(3) Where there is a substantial change in the ownership of the company the employer shall furnish to the employee a statement under section 3 within two months of that change.".

I want to mention situations where there is change in ownership of the company. At present employers would not, unless requested to do so, be obliged under this Bill to supply terms of employment for existing emmployees. Where there is a takeover by a new employer, should we provide that a clear statement of the conditions of employment be given at that stage? This would presumably confirm the existing conditions. This type of situation could cause some friction and I ask therefore if it would be wiser for people to receive a clear statement of their rights when there is a change in ownership.

Mrs. O'Rourke

Section 5 deals with changes in particulars of the terms of employment. It provides that any changes to a written statement must be notified to the employee. If the change of ownership of a company as envisaged by Deputy Bruton is followed by a change in the name of the employer or a change in the terms of employment of existing employees, an employer is required under the provisions of section 5 to notify any such change in the terms of employment to the employee within a month of the date on which the terms of employment are changed. The Deputy asked about mergers and takeovers, and I understand the reasoning behind his amendment. However, having looked at the Bill and discussed it carefully with my officials, I am reasonably satisfied that the point the Deputy raised is covered in the section.

Mr. McCormack

I support Deputy Bruton's amendment. I ask the Minister what assurance she can give in the case of a takeover. There are many such situations now and I experienced it once during my own working life where a new company took over and immediately let some of the original staff go. This caused friction between the staff and it caused problems in the place of employment. What guarantees are enshrined in the legislation which will protect the employees and maintain the conditions under which they worked for their previous employer where the name of the workplace is the same but there is new owner?

Mr. R. Bruton

In this situation employees will not have had a statement from the previous employer as to the terms of their employment because an automatic issue of such a statement is not required. Where a business is up and running an employer only has to provide a statement of the terms and conditions of employment if requested to do so by the employees. It is conceivable that the employees may not make such a request and when the company is taken over they may not have a written statement of the terms under which they were employed. The new employer would then have a blank sheet and could be in a position to argue that he is not changing anything. Therefore, section 5 may not be applicable. Could there be a Catch-22 in this?

Miss Quill

There is much merit in this amendment. I know from experience employees are often most vulnerable during a takover or merger. Employees whose terms and conditions were clearly spelt out under an old company may suddenly find that they do not know where they stand following a change of ownership or merger. Their interests are not always protected by the law. If the proposed legislation is to have any merit it has to be aimed at those who are or have the potential to be the most vulnerable in the work force. Workers certainly feel unprotected and exposed during a takeover or a merger. They do not always have recourse to the law and this is something we should try to provide in this legislation. I certainly support the amendment.

Mrs. O'Rourke

I appreciate the concern expressed by Deputies Bruton, Quill and McCormack. They are quite rightly interested in protecting the rights of employees. I wish to outline the legal position. As it stands, section 6 applies to existing employees and provides that they may require the employer to furnish them wih a written statement of the particulars of the terms of employment specified in the Bill. That right can be exercised by the employee at his or her discretion and a change of ownership does not interfere with it. The legal position of the employee is unchanged despite new ownership.

Section 5 acts as a sort of buttress. It deals with changes in the particulars of the terms of employment and provides that any changes must be notified to the employee within one month of such a change. If there is a change of ownership followed by a change in the name of the employer or in the terms of employment of existing employees, an employer is required under the provisions of section 5 of the Bill to notify this change to his or her employees within one month of the date on which the terms are changed. One could say that there is a double safeguard provided by section 5 and 6.

I appreciate what the three Deputies have said but, with respect, their concerns are already covered in the legislation and the amendment would not have any additional effect.

Mr. R. Bruton

It may be hypothetical, but one could have a situation where employees did not ask a former employer for a statement of the terms and conditions of employment. The new employer may arrive and they may request that he provide them with a statement. However, there may be a change in the conditions of which the employees would not be notified as they would have nothing with which they could compare the statement from the new employer.

Mr. McCormack

Employees may often be very happy in the place of their employment with good work practices and therefore have no occasion to question anything. I am more concerned about the situation where a large group of companies takes over an individual or smaller group. That larger group may decide it has in its employment people who can do some of the jobs that had been done by employees in the smaller company, I am anxious to know what would happen in that case. It is specifically mentioned that this is provided for where there is a change in the name of the company, but what provision is there where there is no change in the name of the company being taken over? Why is the case where there is a change in the name of the company specifically stated in the Bill?

Mrs. O'Rourke

I will come back to the situation where there is a change of ownership of a company which is followed by a change in the name of the employer, but the first point Deputy McCormack addressed was where there is a change of ownership of a company. In that case the employer is required under the provisions of section 5 to notify any such change in the terms of employment to the employee within one month of the date on which the terms of employment are changed. There is an earlier regulation which I will explain, the transfer of undertakings regulation, which specifically precludes employers from changing terms anyway.

Labour legislation is very interesting. It is like the trick box. You open the box and another box appears, you open that and there is another box inside. I have had to concentrate on the measure in hand, which is specific legislation giving an employee plain information about his or her rights, because once you start to investigate the area other legislation already in existence comes to light and confusion can arise.

Chairman

Is the amendment being pressed?

Mr. R. Bruton

In the light of what the Minister says, that the existing legislation protects the situation, there is no point in pressing it.

Mr. McCormack

I accept that there may be no need to press the amendment now but I am still not exactly clear about the name change. I was working for 25 years before I came to work here and I have seen cases finishing in the High Court. Companies taking over a smaller company will make people redundant or, alternatively, will transfer them to some other section of the company doing a different type of work. I am not clear about how that is catered for in the new legislation.

Mrs. O'Rourke

I respect the Deputy's long industrial experience, but the two matters to which he refers are covered already in different types of legislation. The transfer of undertakings regulation does not allow employers to change the terms of employment if there has been a take-over. The Deputy also asked me about the name and I meant to answer him when I was speaking earlier. We are specifically mentioning the change in the name because on the sheet of paper laying out the terms of employment, the name of the firm is mentioned, so we followed up on that.

Mr. Kemmy

I agree with the Minister in regard to the provision for the change of name by an employer. Sometimes an employer can have ulterior motives in changing the name. I came across one case recently in the building industry where the name of the firm was changed and shortly afterwards the company went into liquidation. There are various reasons why companies change names. They are not always good reasons. In this case, the workers' pension rights were eroded because it was a contributory pension scheme. Even though the workers could show deductions from their wages going back for two or three years, that money had been pocketed by the employer, as had their income tax stoppages. Those workers had no redress. The Construction Industry Federation did not pick up the amount of money paid by the workers to the scheme and all the workers in the firm lost out on their pension rights for all those years. I would agree with leaving in the provision in regard to the change of name because it can be used by unscrupulous employers to evade their responsibilities. It often indicates that the company is not going well when a change of name occurs. I support the Minister's viewpoint there.

Mr. McCormack

Deputy Kemmy's concern and my own are matched, we are not in conflict at all. I am only concerned as to whether we are covered when the name of the company is not changed. That is my concern.

Mrs. O'Rourke

Yes, they are. They are still entitled to the statement. The thrust of the Bill is that they are entitled to a statement and even if the company changes hands and the name does not change the employee is still entitled to his or her clear statement of information.

Mr. R. Bruton

And the regulation also applies to undertakings?

Mrs. O'Rourke

The transfer of undertakings regulations specifically precludes employers from changing the terms even though there would be a situation such as the Deputy is envisaging.

Mr. McCormack

I am satisfied with that. I was not aware that that provision was there.

Amendment, by leave, withdrawn.

Amendment No. 10 not moved.

Section 6 agreed to.