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GOVERNMENT policies on privatising parts of the public sector will be severely damaged if two current legal actions from major trades unions are successful, say employment lawyers.
The actions, both over the question of whether privatised workers’ pension rights can be transferred, could also leave Tupe, the UK legislation meant to enact the European Acquired Rights Directive, in tatters
But they could also have a huge impact on the buying and selling of businesses generally, say lawyers.
Richard Arthur of Unison, Britain’s largest union, says the cases are “absolutely critical”.
“They will blast a hole in the way in which things can be privatised.”
Unison is taking one of the actions, concerning a Rotherham gravedigger, to an industrial tribunal, but will ask for the case to be referred to the European Court of Justice.
The GMB union is taking the other case, involving dinner ladies transferred from Lancashire County Council to private contractors, through the High Court.
Julian Roskill, head of the employment and industrial relations group at Rowe & Maw, says: “This will be of considerable interest to employment lawyers.”
Under Tupe, the Transfer of Undertakings (Protection of Employment) 1981, there is no protection of transferred pension rights. This reflects the position for such rights in situations such as company takeovers, says Roskill.
“There are a number of people who thought it was only a matter of time before there is a serious look at the pensions question,” he says.
“If the European court decides that a buyer of a business has to provide equivalent pensions benefits, that will have a major effect on the buying and selling of businesses generally.
“You may find that privatised workers will also be making considerable claims against the Government under the Francovich principle, where the Government fails to implement European regulations properly,” he says.
In-house lawyers are handling the cases. Arthur says: “Apart from compensation, we will be seeking a declaration on what the law is on this issue.”