Issues in the Laws of Labor and Employment for UK and EU that You Should Know Of

Lee Harding, a partner in Morgan Lewis’s labor and employment practice, was interviewed to discuss the essential labor and employment issues concerning the outsourcing transactions, particularly in the United Kingdom and European Union.

Lee’s job is to assist clients in predicting, responding to, and directing personnel difficulties. He helps clients with complicated, often innovative integration and outsourcing projects, collaborating smoothly with local lawyers on any cross-border challenges. His job description also focuses on the intersection of employment law and regulatory challenges, particularly in the insurance and financial services industries.

Global Outsourcing Arrangement

There are numerous and differing labor and employment law considerations in a global outsourcing arrangement. The foremost thing is the legal consideration. In many countries, the usage of the automatic transfer principle will not be well-defined and will primarily be based on facts. Legal complications may arise even in countries where employees do not move with their jobs because of the law and where “fire and rehire” is applied. There might be several methods to manage events to avoid costly severance liabilities at the commencement of the transaction.

Work Council and Trade Unions

Another issue related to these HR and employee considerations is the viewpoint of customers affected by the transactions. In most countries, work councils, trade unions in some industries, and other employee representative groups are consulted and informed. At times, the need to safeguard the secrecy concerning these transactions arises, which becomes difficult because you have to maintain a balance of the commercial demand for confidentiality against the need to make sure there is a peaceful employee relation and minimum chances of the clash lawsuit, and industry action.

One question that arises is what will happen to the staff affected by this. This will depend on what the supplier and customer want to accomplish. There might be necessary commercial or operational reasons why customers would seek to make sure that there is a smooth transfer of knowledge as part of an outsourcing transaction.

This means that the customer would not want the vital person to leave the supplier and raise questions concerning the customer’s ability to meet its business requirements. Then it becomes essential for the supplier to duplicate salary and benefits for a specific time and encourage those critical employees.

The Other Side

On the flip side, more attention might be required to save money and improve efficiency. If this happens, a discussion would be needed to decide who will bear the restructuring expenses and the required time needed to accomplish this. Regarding restructuring, location will be important in determining to what extent it will be performed because laws will vary in different countries.

Working backward from any significant business turning point is, at times, necessary to ensure enough time is given to any outsourcing scenario. However, it depends on the countries included in the discussion and what the parties want to accomplish. The more HR or people-related changes the parties wish to make, the more time they will need, which can be months away from the go-live date.

Several automatic transfer countries have legal requirements to copy the current benefits and outlaw the benefits agreement with the existing employees. Despite having some legal solutions that can be used to meet the parties’ goals, it is justified to anticipate some opposition. For this reason, the parties should not expect to adhere to any legal timeframes; instead, they will have to be flexible and respond to employee issues as they occur.

It is apparent that discussing necessary things on time, creating a deliberate audit, and a written trail that reduces legal risk will require time and can be administratively troublesome.

Labor and employment concerns should not be overlooked; if the parties want a smooth transfer from the customer to the supplier, start early in the process. In some cases, like when parties fail to interact with the pension scheme trustees of an unfunded pension scheme until later, regulatory intervention becomes necessary. Choosing not to do so to protect sensitive information will rarely be considered a sufficient defense by a regulatory agency.