A WARNING has gone out from the Yorkshire engineering industry to the Government: "Your plans for new laws to safeguard workers in firms involved in takeovers and mergers could backfire on you."

Ian Hughes, director of the Yorkshire and Humberside Engineering Employers Federation (EEF), said the original intention was to protect the rights of employees faced with a new employer, usually through merger or takeover.

But the Government - bowing to European demands for tighter legislation - wanted to extend this to cover cases where the company's owners remained the same but arrangements for providing business services were changed.

While well-meaning, he argued that the proposed extension was "excessive", and would inevitably cause new uncertainties in the British labour market.

"It also threatens to stifle innovation, and handicap the established system of sub-contracting," he said.

Updated: 09:44 Tuesday, April 29, 2003