When a person or company buys a business, it’s important to remember that they’re taking over responsibility for, and obligations to, the people that make up that business, as well as the brand and bricks and mortar.
The law surrounding the transfer of businesses (or ‘undertakings’) in relation to human resources is geared toward strengthening the rights of these employees. These regulations, which came into effect in their original form in 1981, are known as TUPE, and today Howells Solicitors examines them from the perspective of the buying company.
The Transfer of Undertakings Protection of Employment Regulations 2006 (TUPE)
As mentioned previously, TUPE regulations protect the rights of employees when the organisation they work for is sold to another, and broadly, they relate to the following:
Terms and Conditions
When a company sells its business to another company, its employees automatically transfer to the buying company. When this happens, they retain their existing terms and conditions, and carry with them their continuous service.
These terms and conditions are protected under TUPE, which means that if the new employer wished to change them, their reason for doing so must be unrelated to the transfer. Any changes made in relation to the transfer of ownership (for example, to bring bought employees terms and conditions in line with previously owned employees) will be void.
Employers that wish to change terms unrelated to the transfer should seek legal advice to ensure this is the case.
In addition to terms and conditions, any claims that employees might have brought against their original employer will be transferred to the new one.
This means, for example, that if a claim was brought against the original employer for harassment or discrimination, responsibility for this would be taken on by the buyer.
Communicating With New Staff
Throughout the transfer process, both previous and new employers must keep employees informed. Where possible this should be done through elected representatives. Where no recognised representatives are in place, employers should arrange for affected employees to elect representatives.
Information that needs to be given to employees includes:
• News that the transfer is taking place, as well as approximately when and why.
• Any social, legal and economic implications
• Any measures either employers will take in respect of their employees
• The outgoing (selling) employer, must inform their employees of any measures the incoming (buying) employer is taking
The timing of the information and consultation process is important. It should begin as early as possible to maximise the opportunity that employees have to impact on decision making.
Howells Solicitors – Specialists in Business Sales & Purchase
Howells Solicitors’ specialist commercial team has extensive experience in the sale and acquisition of a wide variety of businesses. From independent retail outlets to large manufacturing plants, our commercial solicitors ensure a timely and seamless transaction.
The expertise of both our commercial and employment law solicitors ensure we are able to spot any potential problems before they arise, particularly in relation to human resources.
To find out more about our HELP package, or for a free initial consultation, call 0808 178 2773 today.