LONDON: New regulations - designed primarily to protect public sector staff whose jobs are outsourced to private companies - are creating headaches for British ad agencies. The problems arise when business moves from one shop to another accompanied.

The new law - the Transfer of Undertakings (Protection of Employment) Act - gives employees a prima facie right to follow the contract to its new home, there by sparking a dispute between London shops McCann Erickson and Euro RSCG.

The furore began in June when Euro RSCG won the Boots International Healthcare account from McCann, the latter agency telling its disconsolate staff that they had a legal right to follow the business to Euro.

As interpreted by McCann's lawyers, the Act provides staff who spend a majority of their time acting for one client with the right to continue doing so on the same terms and conditions if the business is moved elsewhere at the client's behest.

The legal eagles advised McCann it could be in breach of the law if it offered redundancy to staff formerly working on the BIH account and whom it could not redeploy.

Euro RSCG declined to comment, although insiders say the agency believes the Act does not apply in this case. McCann managing director Chris MacDonald was likewise zip-lipped.

Multinational chemicals and pharma giant Reckitt Benckiser, of which BIH is a unit, says it is aware of the dispute. Quoth a spokesman, clearly well versed in non sequiturs: "The responsibility we put on Euro is to provide an appropriate level of service consistent with the contract we have signed with them."

Data sourced from; additional content by WARC staff