Business transfers and contracting out. Compulsory competitive tendering in tatters?
| Published date | 01 December 1995 |
| Date | 01 December 1995 |
| Pages | 21-28 |
| DOI | https://doi.org/10.1108/01425459510103460 |
| Author | Nick Adnett,Stephen Hard,Richard Painter |
| Subject Matter | HR & organizational behaviour |
Business
transfers and
contracting out
21
Business transfers and
contracting out
Compulsory competitive tendering in
tatters?
Nick Adnett, Stephen Hardy and Richard Painter
Staffordshire University, Stoke-on-Trent, UK
Introduction
Recent cases concerning conflicts between employment protection available to
workers under European Union (EU) and UK law have threatened to undermine
two central planks of government economic policy: market testing and
compulsory competitive tendering (CCT). The cases centre on the scope of the
employment protection open to employees involved in business transfers.
In 1977 the Council of the European Communities adopted the Acquired
Rights Directive 77/187 (ARD) which was aimed at safeguarding the rights of
employees on the transfer of a business or part of a business. The directive was
implemented in the UK by the Transfer of Undertakings (Protection of
Employment) Regulations 1981 (TUPE). The regulations provide for, inter alia,
the automatic transfer of employees and their existing terms and conditions
from one employer to another on the transfer of an undertaking. They render
dismissals in connection with the transfer automatically unfair unless they are
justified by “economic, technical or organisational” reason.
The catalogue of cases recently before the Court of Appeal and European
Court of Justice (ECJ) has exposed the inadequacy of the current law. These
recent decisions go further than the Government’s reluctant amendment to
TUPE Regulations 1981 by s.33 of the Trade Union Reform and Employment
Rights Act 1993 (TURERA). This reform made it clear that non-commercial
ventures could be covered by TUPE but government ministers still denied that
contracting out of services was within the scope of the regulations.
The emphasis on competition and deregulation which has recently driven the
development of employment law in the UK is in stark contrast to the social
cohesion emphasis of EU social policy. The latter policy is unashamedly
interventionist, drawing on the Roman-Germanic system in which the state
guarantees fundamental worker rights and regulates minimum acceptable
standards for remuneration and working conditions. EU social policies reflect a
belief in the need to promote long-term, stable employment relationships
conducive to investments in training: relationships where employers and
employees share a common goal of achieving high skill, high productivity Employee Relations, Vol. 17 No. 8,
1995, pp. 21-28 © MCBUniversity
Press, 0142-5455
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