A survey published on 17th March 09, opined that the financial climate for charities is worsening, with more than half hit by the economic downturn. As the start of another financial year draws near, many Charities will find out that they have lost their funding and many will consider headcount reduction.Â However they must also consider the decision of the ECJ in DR SOPHIE REDMOND STICHTING v BARTOL & ORS 1992. The facts of the case are very simple. B was employed by the SR foundation, whose activities included the provision of assistance to drug addicts, alcoholics and others suffering from chemical dependency. Assistance was provided in particular to those from the Surinamese and Antillean ethnic groups in the Netherlands. It had always relied on grants from the local authority for the totality of its funding. From 1st January 1991 the local authority terminated funding to SR and switched the grants to the S foundation, which was also active in the field of providing assistance to those dependent on drugs. The subsidy provided that assistance should be given to those of Surinamese and Antillean ethnic groups. SR applied to the relevant court for permission to terminate the contracts of employment of its employees- as they were obliged to do by Dutch law. B and the other employees claimed that the circumstances were covered by the law on the transfer of undertakings. They argued that they should have been transferred to S foundation. The ECJ agreed with the employees, holding that a legal transfer should be deemed to occur where a public body decides to terminate a subsidy paid to one body or foundation as a result of which the activities of the body or foundation are terminated, and to transfer the subsidy to another body or foundation with similar aims.Of note is also Regulation 3(1)(b) of the Transfer of Undertaking (Protection of Employment) Regulations 2006 on service provision change. The implication of this decision and Regulation 3(1)(b) of the Transfer of Undertaking (Protection of Employment) Regulations 2006 are the following:
- Consideration must be given to whether there is a service provision change, entitling the employees who were dedicated to the provision of the funded service to be transferred to the successful organization under TUPE.
Dismissal without considering the above point could lead to a finding of automatic unfair dismissal and breach of the collective consultation requirements against both sets of organizations.