Isle of Man • London

Transfers of Employment from the Public Sector and Redundancy Costs

In recent times, this topic has assumed increased importance in the case of the supply by the private sector (directly or on behalf of government) of services some of which may previously have been supplied directly by the public sector, in many areas. Local examples, in the Isle of Man, might include the Glenside Resource Centre and nursery education which has been a hotly debated topic recently. Similar issues apply to the management of other publicly owned assets and facilities on the Island.

A common reaction to the perceived need to reduce the scope of government is that savings can often only be achieved at the cost of redundancy. There may be, of course, situations in which some redundancies may be unavoidable. However, in the UK and other EU countries where there is formal transfer of undertakings legislation - which transfers the rights of workers when the business which employs them is transferred to a new owner -  redundancy would probably not be first item on the agenda. If some part of an activity previously carried out by government is to be supplied in future in the private sector then the initial question is whether a transfer of an undertaking will occur. If so, the legislation applies, and the acquiring party will take over the continuity of service of the staff concerned. Otherwise the liability remains with the employing government body.
However, there are dangers in taking the transfer of undertakings legislation for granted. For example, in a recent case in the UK involving the closure of a care home for the elderly, the transferring NHS Trust felt that the arrangements it had made for the ongoing care of its residents involved a transfer of its activities. Nevertheless, the Employment Appeal Tribunal disagreed (Nottinghamshire NHS Trust v Hamshaw 2011) with the result that the Trust remained liable for the employment costs. On the other side of the coin, there is anecdotal evidence in UK with regard to redundancy payments being made to public sector workers whose services it turns out are still required and have to be purchased perhaps at higher cost and perhaps also from an entity which has been gratuitously relieved, at tax payer expense, from the costs associated with continuity of employment.

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