Close-Up: Euro vs McCann will test new employment laws

McCann's face-off with Euro over responsibility for staff should show how TUPE affects advertising.

It was inevitable that a first TUPE case would arise in adland after the April expansion of this aspect of employment law, although the IPA did petition the Government valiantly for a derogation. That it should involve two agencies as large as McCann Erickson London and Euro RSCG London is more surprising. Most industry pundits predicted the law would affect small agencies, those incapable of redeploying staff once an account had departed.

TUPE is a piece of European Union legislation that was created to protect employees such as hospital and local authority workers when their jobs were taken over by new contractors. Now that it applies to service industries such as advertising, law and design, employees who work "wholly or predominantly" on a piece of business may be entitled to continuity of employment when that business moves to a new agency or practice.

McCann's and Euro's case stems from Interpublic's edict that the McCann London office pull out of the Reckitt Benckiser pitch in May after SC Johnson, a longstanding FCB client, expressed concerns over a competitor represented by the same holding company.

Euro went on to win the entire Reckitt account, including the Boots Healthcare International business that McCann was defending. A McCann insider says the company did its best to redeploy staff who worked on the account, but couldn't accommodate three, one of whom is understood to be a very senior suit, whose time was 100 per cent dedicated to the account. It has informed these three they may have rights to the same positions at Euro under TUPE.

Euro is reluctant to take on three new staff. An insider at the agency feels McCann is using the legislation as a way to avoid paying redundancy packages. "It would be extraordinary for an agency of the quality of McCann to try to use TUPE to offload staff," he says. "No agency worried about its reputation would seek to do this."

Such a stance is disingenuous. Before April, McCann would have had to make the three redundant. However, TUPE could apply - they worked "wholly or predominantly" on BHI. If it does, the three are technically now Euro employees and McCann's hands are tied. "It's up to the courts to decide whether TUPE applies in this situation. If it does, the employees go. If not, they stay," the IPA employment affairs advisor, Mary Budd, says.

A McCann insider says: "Had we made them redundant, they might be able to sue us for wrongful dismissal, because that would have denied them their TUPE rights." Confused? Both Euro and McCann are. Until a test case is judged, both agencies are feeling their way towards a resolution that neither is able to predict.

Meanwhile, the staff in question remain in a legal limbo, (the responsibility of neither agency until an agreement is reached), an absurd irony given that TUPE was created to protect their rights.

- Leader, page 18.