According to Christopher Hope, business correspondent, the Shanghai Automotive Industry Corporation is being prevented from buying parts of MG Rover out of administration by "union-supported TUPE employment regulations."
If the Chinese now took over the company, and took on 3,000 Rover workers as well as the Rover production line at Longbridge, it would have to pay for the cost of sacking the remaining 3,000 in the company. One source "close to SAIC" is cited as saying: "If we wanted to pick up the business and some employees, the cost of redundancies, pensions and warranties will follow us around like a bad smell."
The Telegraph then cites "employment experts" saying that the TUPE rules - Transfer of Undertakings (Protection of Employment) Regulations 1981 - were an obstacle for the Chinese, and any other potential buyer while MG Rover was in administration.
But a spokesman for the Department of Trade and Industry rejected any suggestion that the Government could suspend the TUPE rules to assist the Chinese in buying Rover. She said: "TUPE regulations are legislation. It is not in the Government's gift to waive them, because it is up to Parliament to consider changes to the legislation."
However, that spokesman is not exactly telling the whole truth. The Transfer of Undertakings (Protection of Employment) Regulations 1981 (plus copious amendments) actually implement Directive 77/187/EEC on the approximation of the laws of Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses., known as the “Acquired Rights Directive”.
This has been amended and consolidated with Council Directive 98/50/EC of 29 June 1998 the collective effect of which is to create the problem now facing the MG Rover administrators.
Yet Neil Collins, in his editorial in the "City Comment" section opines:
Ah, the Law of Unintended Consequences. Little can the earnest men who encouraged successive governments to tighten up the rules on employee rights in companies being sold have thought that one day they would be tight enough to throttle any solution helpful to the workforce.He should be ashamed of himself. It is not "successive governments" but the EU that has created the laws. Thus, while the DTI spokesperson correctly asserts that it is "not in the Government's gift to waive them", he should have noted that neither is it is "up to Parliament to consider changes to the legislation." As EU law, it is beyond the scope of our Parliament – yet another example of "hidden Europe".