Does employment law cease to exist when Lord Rothermere sells an ailing newspaper?

Yesterday, the Guardian ran a story describing how Evening Standard employees fear that their new boss, Alexander Lebedev, will offer redundancy payments that are ‘far less generous’than those they would have received from DMGT.

The original story was written by James Robinson. In short order, Roy Greenslade laid into Lord Rothermere on his Guardian blog:

About a fifth of them face mandatory redundancy on terms far more disadvantageous than they would have expected under DMGT’s employ. All of them have lost their previous pension rights.

Fulminating royally, Greenslade called Rothermere a ‘disgrace’and ‘contemptible”. He went on to compare the chairman of DMGT to Pontius Pilate.

Some Standard journalists, Greenslade suggested, ‘face financial ruin if their pay-offs do not match those previously agreed, or if forced into retirement.” 

No doubt they would. But is this really likely to happen?

According to Robinson’s story, DMGT routinely offers redundnacy terms of two weeks’ pay for every year worked, with no upper limit. (Presumably, DMGT uses actual weekly pay in its calculations, rather than HM Government’s derisory statutory yardstick of £350 per week.)

By contrast, Robinson hints darkly that Lebedev might be considering capping redundancy payments at £12,000.

Now I’m no lawyer, but the Transfer of Undertakings (Protection of Employment) Regulations – otherwise known as TUPE — do seem relevant here.

On this score, the news isn’t all good. TUPE probably would allow Lebedev to move Standard staff off DMGT’s old final salary pensions. This, however, is a fate they would share with millions of other British employees.

In addition, Greenslade’s suggestion that Standard staff would lose their “previous pension rights” needs to be handled with care. Under Lebedev, the contributions paid into DMGT’s old-style pensions would be protected by law. 

The situation on redundancy payments is different, however.

TUPE suggests that currently-employed Standard hacks should receive the same redundancy payments from Lebedev that they would have received from Daily Mail & General Trust. As the legal site Outlaw puts it

TUPE states that “all the transferor’s rights, powers, duties and liabilities under or in connection with the transferring employees’ contracts of employment are transferred to the transferee”.

It’s possible, I suppose, that DMGT’s sale of the Evening Standard might have been structured in such a way that TUPE doesn’t apply. This might be the case if the deal was configured as a ‘share take-over”.

A spokesperson for the Lebedevs views this as ‘very unlikely’–- especially given the ‘commitments’Alexander Lebedev has made to Standard staff. Not to mention the £25m he expects to plough into the Standard between now and 2012.

Oddly, however, no-one involved in this controversy seems very interested in shedding further light on the situation.

DMGT’s response to Greenslade’s original post isn’t particularly informative. The company has yet to respond to my calls.

Predictably, Simmons & Simmons, the City law firm acting for the Lebedevs, isn’t feeling very talkative, either. As I write this, Mr Lebedev’s PRs are still working on eliciting some kind of clarification from their client.

So the mystery remains: why would DMGT and the Lebedevs try to engineer a situation in which Standard employees lose a significant slug of the employment rights they thought they enjoyed?

It makes no sense. For that noted paternalist Lord Rothermere, the internal fallout would be highly damaging. For Alexander Lebedev, there could hardly be a worse way of starting life as press baron.

UPDATE: 3/2/2009: I’ve just seen my editor’s suggestion that the Lebedevs might be arguing that [DMGT’s standard redundancy terms] are “not a contractual benefit”. If this is Lebedev’s position, a bitter legal fight seems inevitable.

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