Lords to rule on jobs safeguard

A TEST case begins today in the House of Lords which could alter the employment rights of thousands of workers but help save scores of businesses from being put into liquidation. Two employers intend to challenge the legislation governing employee protection when companies contract out services or dispose of businesses altogether.

Under the Transfer of Undertakings (Protection of Employment) Regulations, it is illegal to change employment contracts of staff when businesses change hands, even if the workforce involved agrees to pay cuts and new terms and conditions. British Fuels and St Helens Borough Council are now seeking to reverse a Court of Appeal ruling upholding the right of employees to obtain compensation under the TUPE regulations.

In one case a children's home under the control of Lancashire County Council was transferred to St Helens Borough Council. The staff were dismissed and then offered new contracts, some on lower pay. Eighteen months later they successfully sued the council for the loss of pay suffered.

British Fuels is appealing to the Lords against a similar ruling which arose after it merged two businesses and reduced rates of pay for employees in one of the businesses.