Terms of Employment
The EU has enacted a number of directives designed to keep employees informed of basic information in respect of their employment.
There is a directive which requires that employees be told details of their terms of employment. It applies to all paid employees with a contract of the employment relationship. Some exclusions are permitted for employment relationships not exceeding one month or with a working week not exceeding 8 hours or casual or specific nature employment where there are objective considerations justifying non-application.
Employers must provide basic information in relation to a range of matters including
- legal identity of the parties,
- place of work,
- title, grade, nature, or category of work,
- a brief job specification,
- date of commencement,
- expected duration of a temporary contract of employment,
- amount of paid leave or procedures for allocating and determining leave,
- periods of notice to be observed by the employer and employee for termination or indicative terms,
- basic amounts or other components of remuneration,
- the frequency of payment,
- normal working hours,
- relevant collective
The information must be set out in a written contract or in a letter of engagement or one or more other written documents. The information must be given to the employee within two months of commencement of employment. Saving this, the employee must be given a written declaration signed by the employer.
An employee required to work in another country must be in possession of the information before departure of one of the documents which include the following additional information.
- duration of employment abroad.
- the currency of payment.
- any attendant benefits.
The provisions do not apply where employment abroad is for less than one month.
Any changes in the terms of employment must be recorded in writing. More favorable provisions may be introduced by state.
General Consultation
There is a directive on the general framework for informing and consulting employees. There are two important principles of the directive. Practical arrangements for information and consultation must be defined and implemented in accordance with industrial relation practices in the state. When defining or implementing the framework, employers and employee’s representatives must work in a spirit of cooperation with due regard to rights and obligations.
The directive applies to all businesses with at least 50 employees in a state or to establishments with at least 20 employees as member states decide. States have the option of limiting information and consultation obligations of businesses with fewer than 50 or 20 employees. Member states lay down how the numbers are calculated.
There are particular provisions for businesses pursuing political, professional, educational, scientific, artistic aims, or aims involving information or the expression of opinions, which may be adopted on condition that such provisions already exist in national legislation at the date of the directive.
States may authorise social partners to define and agree procedures for implementing employee information and consultation requirements.
- Employee information and consultation cover three areas in relation to the business concerned.
- Economic, financial, and strategic developments.
- Structure and foreseeable development of employee and related measures
- Decisions likely to lead to substantial changes in work organizations or contractual relations.
There are provisions for the protection of confidentiality to the effect that experts and employee’s representatives must not disclose information which has been provided in confidence, even after expiry of their office.
Within conditions provided for by national legislation, an employer may be exempt from the information and consultation obligation where compliance with it would seriously harm the functioning of the business or would be prejudicial to it.
When carrying out functions, employee’s representatives must have adequate protection and guarantees to enable them to perform their duties. States must ensure compliance with the provisions through adequate administrative or judicial procedures at a national level.
The following are regarded as serious breaches of the obligations.
- The total absence of information or consultation prior to a decision being taken or announced publicly.
- Withholding of important information or provision of inaccurate information, rendering ineffective the exercise of the right to information and consultation.
If there has been a serious breach with direct and immediate consequences in terms of substantial change to, or termination of employment contracts, the decisions have no legal effect. This continues until the employer has fulfilled his obligation and consultation obligations. If this is not possible, the employer must establish adequate redress in accordance with procedures in place in the state.
The provisions are without prejudice to the obligations in respect of European Work Councils or procedures in European scale undertakings or groups of undertaking for informing employees and consulting them.
Works Council
EU directive requires the establishment of Work Councils from 2011. The directive seeks to provide for employees’ transnational information and consultation rights. European Work Councils are a procedure for informing and consulting employees in Community-scale undertakings and groups.
All establishments i.e. branches of a business are subject to the requirements of a work council.
The central management of a business or group is responsible for establishing a council or an information and consultation procedure. If a representative is not appointed or the management is not located in an EEA state, it is the responsibility of the establishment or undertaking which employs the largest number of workers within a member state.
The central management must initiate negotiations to establish a European Work Council or employee information and consultation procedure. It must act on its own initiative or at the request of at least 100 employees or the representatives in at least 2 undertakings in at least 2 member states.
A special negotiation party must be formed by employee’s representatives. They may be elected or appointed according to the number of employees in each state where the business is present to negotiate an agreement with management in order to define the operation of the European Works Council and the arrangements for implementing a procedure for information and consultation of employees. The members shall receive the same protection as employee’s representatives as laid down in national legislation.
Transfer of Undertakings
The so-called TUPE regulations derive from the Acquired Rights Directive. This directive is designed to protect the position of employees when a business is sold or transferred.
The transfer itself does not constitute a valid ground for dismissal. Dismissals may occur for economic, technical, or organisational reasons or for categories of worker that are not covered by legislation protecting against dismissal.
Rights and obligations attached to the employment contract are transferred to the transferee when the business is transferred. States may provide that transferor and transferee are both jointly and separately liable for the obligations which arise before the date of transfer.
States may adopt measures to ensure that the transferor notifies the transferee of all rights and obligations that are transferred, insofar as they are known. Failure to notify does not affect the transfer of the rights or obligations concerned.
The terms and conditions in collective agreements must continue to be observed up to the date of termination or expiry of the agreement or entry into force of the substituted agreement.
Unless member states otherwise provide, the continued observation of rights does not apply in relation to old age, invalidity, or survivors benefits under supplementary pension schemes outside the statutory social security schemes. Member states may, however, adopt measures to protect rights conferring immediate or prospective entitlement on employees or persons no longer employed.
Unless states otherwise provide, the provisions do not apply where the transferor is subject to bankruptcy or insolvency proceedings, which have been instituted due to the liquidation of the assets under the supervision of a public authority.
Transfer in Insolvency
Similar provisions apply to a transfer during insolvency proceedings which have been opened in relation to a transferor whether or not they have been instituted with a view to the liquidation of the assets of the transferor. A member state may provide that the transferor’s debt payable before the opening of the insolvency are not transferred to the transferee, provided such proceedings give rise to protections for the employee that is at least equivalent to that in council directive regarding the protection of employment rights on insolvency.
The transferor and transferee on the one hand, and the representatives of the employee, on the other hand, may agree to alterations to the employee’s terms and conditions in order to safeguard employment opportunities by ensuring the survival of the economic entity.
Member states may take measures to prevent misuse of insolvency proceedings in a way as to deprive employees of their rights in the event of a transfer.
Where the transferor is subject to bankruptcy or insolvency proceedings, states may make the necessary steps to ensure that transferred employees are properly represented until the new representatives of the employee are elected or appointed. If the entity does not preserve its autonomy, the states must take the necessary measures to ensure the transferred employees continue to be properly represented during the period necessary for the new appointment.
If the representative’s term of office expires as a result of the transfer, they must continue to enjoy the protection provided.
The transferor and transferee must inform the representatives of their employees in good time of the proposed date of the transfer, reasons for transfer, legal, economic, and social implications and any measures envisaged in relation to the employees.
The transferor must forward such information before the transfer is carried out and the transferee must do so before the employees are directly affected by the transfer as regards to the conditions of employment.
Where transferor and transferee envisage measures in relation to employees, they must consult with the representatives in good time on such measures with a view to reaching an agreement.
The requirements apply irrespective of whether the transfer is decided by the employer or by an undertaking controlling the employer. It is not permissible to argue that the failure to provide the information is due to the failure by the seller to provide the requisite information.
States may introduce provisions which are more favorable to employees or promote or permit collective agreements between social partners which are more favorable.
States must introduce measures as necessary to enable all employees and representatives of employees to pursue their claims by legal process. The rules apply to part-time workers, temporary employees, and employment relationships governed by fixed-term contracts.
Securing Employees’ Rights on Insolvency
An EU directive provides for protection of employees in the event of employer’s insolvency. Rules must also apply to part-time, fixed-term employees on temporary contracts.
States must provide institutions to guarantee payment of outstanding employee claims related to pay for a period fixed by the member states. They may limit liability under conditions.
The minimum guarantee must be 3 months pay in a reference period of 6 months or 8 weeks in a reference period of 18 months. The states may apply rules to the organization financing the operation of the guarantee institution in accordance with certain principles provided in the directive.
The states may stipulate that the payment guarantee does not apply to contributions due under social security and supplementary schemes. They may take steps to ensure that non-payment of compulsory contributions due from the employer before the onset of his insolvency does not adversely affect the employees’ benefits in respect of those insurance institutions insofar as the employee’s contributions are deducted at source and the remuneration paid.
The interests of employees and persons who have already left the undertaking at the start of insolvency must be protected as regards to rights conferring on them immediate or prospective entitlement to old age benefits, survivor benefits, supplementary company or intra-company pension schemes outside national statutory schemes.
If an undertaking operating in at least two states is in insolvency, the employer’s outstanding claim must be met by the institution in the state where the employee works. States must exchange information on their guarantee schemes, forward such information to the Commission, and make it accessible to the public.
States may introduce more favorable measures for employees. Measures may be taken to avoid abuse or refuse the liability of the guarantee obligations if it appears that the fulfillment is unjustifiable because of the existence of special links between the employer and employee.
Collective Redundancies
EU directives provide for consultation on the occasion of collective redundancies. Employers contemplating collective redundancies must hold consultations with representatives with a view to reaching an agreement. They must at least cover ways and means of avoiding collective redundancies or reducing the number of workers affected and mitigating the consequence by resort to accompanying social measures and redeploying or retraining employees made redundant.
States may make provision for employee representatives to call on the services of experts in accordance with measures under national law. Employee representatives must be furnished with all relevant information during the course of consultation to notify them of
- Reasons
- The period during which redundancies are to be effected
- Number and category of workers normally employed
- Numbers to be made redundant
- Criteria used for selection
- Method of calculation of compensation
The directive lays down the procedures to be followed. The employer notifies the competent public authority in writing of the projected – collective redundancies. The notifications must contain all relevant information concerning redundancies, consultations, and methods used to calculate compensation. Where the cessation of activity as a result of a judicial decision, e.g. solvency, notification, it is only necessary at the request of the authority. The employer forwards a copy of the notification to employee representatives who may send comments to the authority.
Collective redundancies take effect at the earliest of 30 days after the notification of the competent authority. The authority may use this period to seek solutions. States may grant the authority the power to reduce this period or extend it to 60 days following notification in cases where the problems cannot be resolved. This is not compulsory for collective redundancies following a cessation of activity resulting from a judicial decision. Extensions may be granted.
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