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IT staff and trade unions are planning to take outsourcing companies, Compaq and Atos Origin, to employment tribunals in a dispute over employment protection laws that has left 60 IT support staff facing the prospect of redundancy without compensation.
The suppliers are embroiled in a row over which firm is responsible for employing 30 former Atos support staff in the UK and another 30 overseas, following a decision by Lucent to transfer an outsourcing contract from Atos Origin to Compaq, now part of Hewlett-Packard.
The disput goes to the heart of Europe's employment protection laws and the UK's Transfer of Undertakings Protection of Employment (Tupe) regulations.
These guarantee staff employment under existing terms when their work is outsourced to a third party.
With the continued boom in the outsourcing market the dispute highlights the legal uncertainty surrounding the Tupe regulations, and the risk facing IT departments that they will lose access to experienced staff, when they end an outsourcing agreement early or transfer work to another firm.
Unless Compaq and Atos can come to some agreement, Atos support staff will be left in limbo, with no jobs and no redundancy payments, union officials said this week.
"These people are going to be 'not employed' for some time. If they go down to the benefit office and they are asked whether they are unemployed, how can they answer?
"Both firms are saying they are definitely employed by the other," said Graham Briggs, national organiser of the Association of Management and Professional Staffs.
The dispute began in April when Lucent decided to end its outsourcing contract with Atos Origin and to transfer the work solely to Compaq. Both suppliers had been contracted to provide desktop and network support services to Lucent in July 2000.
Atos managing director, Paul Bingham, told Computer Weekly that under Tupe regulations, Atos staff in the UK, Netherlands and Germany, should automatically transfer to Compaq, but Compaq was blocking the move, he said.
Compaq has since e-mailed the Atos staff affected, denying responsibility for their employment.
Compaq argues that Tupe rules do not apply because it plans to use a different operational model from Atos, services fewer users, and will provide services in fewer countries.
But Bingham said that Atos' own legal advice shows that Compaq is obliged to hire the Atos staff.
"We took legal advice from our internal lawyers. When Compaq was not prepared to agree it was a Tupe transfer we also sought external legal advice both on a pan-European and individual country basis.
"We have taken advice in Germany, the Netherlands and the UK. All the legal advice that we have received has said that this is a Tupe transfer," Bingham said.
Employment lawyers say that the case highlights the confusion arising from conflicting Tupe case law, and will place further pressure on the government to clarify the legislation. A government update on Tupe is expected by the end of the year.
Julian Hemming, partner in employment law at Osborne Clark said, "Until the government does that we are going to have arguments running on and on."
Progress of the dispute
July 2000: Lucent outsources its infrastructure and desktop services operations to Atos Origin and Compaq
April 2002: Lucent informs Atos of plans to end outsourcing contract and to transfer the work to Compaq, following difficult trading conditions in telecoms. Atos staff are told that they will transfer to Compaq under the Tupe rules
19 July 2002: Atos e-mails affected staff confirming that under European law they should transfer to Compaq. Despite lengthy negotiations Compaq has refused to co-operate: 30 Atos IT staff in the UK and 30 overseas face redundancy
22 August 2002: Compaq e-mails Atos staff explaining its refusal to hire them
September 2002: Trade unions begin preparations for an industrial tribunal case against Compaq, Atos and Lucent.