By Globalization PartnersJanuary 2017
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Many U.S. businesses are eager to expand to Ireland where they can tap into the young, well-educated population, take advantage of the low 12.5% corporate tax rate, and gain easy access to the EU market. With English as an official language and a political, judicial, and economic system similar to the U.S., Ireland can feel like an easy place to test out an EU expansion.
However, businesses should be careful because while Ireland is a business-friendly country, its stringent labor regulations favor the employee. From paid time off, to termination notice periods, to health care, U.S. companies should not expect that doing business in Ireland works the same as in the U.S. A clear understanding of the differences will ensure their new business proceeds smoothly.
For companies that want to hire an employee in Ireland, and skip the hassle of figuring out Ireland’s labor laws and registering a full subsidiary before an employee is hired, Globalization Partners offers a PEO in Ireland, via our Global Employer of Record Platform, whereby Globalization Partners hires the employee of a client’s choice on our locally compliant payroll, and assigns services of the employee back to the client. Our Ireland Employer of Record Platform makes it easy to hire employees overseas with minimal time and expense.
One aspect of Irish Labor Law that we are frequently asked about is the TUPE or Transfer of Undertakings Directive of 1977, last updated in 2014, which specifically applies when our clients have acquired another company and want to transfer sales people to the new business. TUPE is a complicated law that was designed to protect employees’ rights and to prevent companies from outsourcing employees in order to cut costs. TUPE comes into play when a business, or a part of a business, is transferred to a new owner or merges with another business to form a new entity. Typically there must be a change of management, but the full ownership of the business does not need to change. In other words, if a unit of a company were transferred to a subsidiary, that action would fall under TUPE. TUPE also applies to service organizations, as in these cases:
- When activities are outsourced to a contractor
- When activities are moved from one contractor to another
- When activities are moved in-house from a contractor
Under TUPE in Ireland, employees retain all the rights they had in their employment contract with the originating employer. Additionally, they retain the following rights:
- Employee and trade union contractual entitlements
- Employee representatives continue to have standing
- Employees are entitled to be notified and consulted about the transfer before it happens
- Employees cannot be dismissed because of the transfer of the entity
- Their length of service includes their time with the original business
Pension entitlements are not protected under TUPE, and the responsibility to comply with TUPE rests with the new business. If the first business is insolvent, or becomes part of the second solely through transfer of shares, then TUPE does not apply.
The point of the TUPE legislation is to protect workers’ jobs, their record of length of service, and their working conditions when the business they are working for changes ownership. The employee’s start date is considered to be when he joined the original entity, his accrued vacation and holiday pay transfers with him, and if he had a pension or stock shares, they need to be transferred or the employee should be compensated with cash. The employee’s working condition, pay, and benefits may not be less at the new entity than with the old, nor can they be less than any other employee performing the same role. Additionally, the new employer may not ever change the transferred employee’s working terms and conditions to match those of its existing employees if such change is solely due to the transfer. Such action would be a violation of TUPE.
It can be tricky to document and ensure compliance with TUPE. The legislation is vague at times, and there are subtle nuances, which can affect what is considered to be an entity. U.S. businesses that try to navigate TUPE in Ireland may find themselves mired in paperwork and having to staff up to ensure compliance. Globalization Partners, which is an Employer of Record in Ireland, offers an easy way to complete a TUPE transfer as we have all the processes in place to properly document and carry out contract, payroll, and benefit transfer under our employer of record model in Ireland. Better yet, since we’re an Ireland Employer of Record, it’s important also to us that we ensure that the employee is treated fairly under the local laws. Whether it’s dealing with TUPE or just helping you to quickly and easily open your doors in Ireland, Globalization Partners can help you expand quickly and easily.