New UK law to hit Indian BPOs

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from
http://economictimes.indiatimes.com/art ... 479977.cms

New UK law to hit Indian BPOs
RASHMEE ROSHAN LALL

TIMES NEWS NETWORK[ THURSDAY, APRIL 06, 2006 12:27:09 AM]

LONDON: Britain is introducing new legislation on Thursday to safeguard the rights of workers made redundant by offshoring and outsourcing to overseas companies in a move that could potentially leave Indian contractors with millions of pounds in liabilities.

New rules on Britain’s existing Transfer of Undertakings (Protection of Employment) regulation or TUPE, will now slap overseas contractors with legal and financial responsibility for the British workers who lost their livelihood when jobs were transferred overseas.

“The change will have a very definite economic impact and we’ll probably see it happening in about a year,’’ said Yvonne Gallagher, head of employment practice at Lawrence Graham LLP, a legal firm which specialises in outsourcing.

Gallagher who objected to the change during the British government’s four-month consultation process last year, told that Indian contractors accepting outsourcing contracts from British companies would now be forced to negotiate a proper indemnity against legal challenges for redundancy payments.

Alternatively, she said, the Indian firm would have to build into its cost structure the risk of being sued in a British court by redundant employees or unions.

The new rules on Britain’s Transfer of Undertakings (Protection of Employment) regulation (TUPE) would result in Indian outsourcing contracts becoming more expensive, thus hacking at India’s definite cost-advantage.

Yvonne Gallagher, head of employment practice at Lawrence Graham LLP — a leading corporate law firm which specialises in outsourcing — cautioned that it was “only a matter of time before we start seeing cases brought by British employees against Indian companies.”

Employment law experts and offshoring pundits alike agree that the change is the biggest overhaul of TUPE laws since their introduction, and effectively signals a change in Britain’s legal attitude to outsourcing.

Till now, the British government, politicians and corporate sector have resolutely stuck to the argument that off-shoring is good for UK’s economic health.

But now, the government is seen to be keen to safeguard the rights of its workers, particularly in the service industries, even at the risk of adverse impact on the process of offshoring.

The risk to Indian contractors could run into millions of pounds, experts warn.