Transfer rules warning
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• Hauliers who fail to observe the Transfer of Undertakings regulations when acquiring other companies or distribution contracts, could face penalties running into thousands of pounds.
Victor Ross, employee relations director at BRS, warns that acquisitions involving as few as three employees could be viewed as transfers by industrial relations tribunals. "The issue needs clarifying for the transport industry," he says.
The company acquiring the business in a transfer is obliged to employ staff on existing terms and conditions — or meet redundancy payments based on the agreement at their former company. Staff are also entitled to transfer their trade union agreement to the new employer.
Ross says that transfer regu lations are gaining a wider interpretation throughout industry since the House of Lords ruled in 1989 that the UK regulations had to be interpreted in the spirit of the European directive.
The Transfer of Undertakings Regulations were introduced in the UK in 1981 as a result of the 1977 European Community's Acquired Rights Directive. They are intended to safeguard employees' rights.
This means that a company contracting out its distribution may insist that the third party operator takes on its drivers at their current pay and conditions.
Ross believes this could be an incentive to contracting out, but he doubts that the regulations are a disincentive to operators bidding for contracts. "Contracts change hands for reasons of service and quality," he says.
Ross says small haulage firms should realise they are bound by the regulations as much as large operators. Penalties for noncompliance include employees being able to prove unfair dismissal if they were not of fered a job by the new company. Industrial tribunals can award two weeks' salary to each employee not offered a job.
NFC employees have three cases pending, represented by the Transport and General Workers' Union, where they seek to prove contract switches were transfers. A tribunal will decide in September whether Wincanton, which picked up the £75m Texaco contract from Tankfreight, is responsible for over 200 drivers.
Cases are also outstanding against United Transport Tankers which took an Esso contract from Tankfreight and Walon, which took the Toyota business from BRS Automotive.
El A guide to the regulations is available from BRS.