As an employee, it can be very unsettling when the company you work for is part of a take-over. But what should you do if your company is involved in a change of ownership, and your employment will potentially be transferring to a new employer?

Much will depend on whether the take-over, or change of ownership is by way of share purchase or because assets of the business are being bought. This would certainly be a good question to ask management if a take-over appears to be going to happen.

It is also important to know that you will have greater protection if you have been continuously employed for more than two years. If so, we are more likely to be able to help you protect your position.

One way of getting a rough clue as to whether the take-over is by way of share or asset purchase is to see how much of the business is being taken over. If the business is being taken over lock stock & barrel this will usually be a share acquisition i.e. the new company will simply buy the shares in yours. If, on the other hand, only part of that business is being taken over, this will usually be an asset purchase.

If the take-over is by way of a share purchase, your employment will continue as it was before. Although there will be new owners of the business, the identity of your employer will essentially stay the same, and your employment will continue as normal.

If there is an asset purchase, however, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) will apply. These give you some very important rights which we will set out below.

TUPE may also apply if you are working to provide a distinct service to one company, and this becomes taken on by another company. If those services are outsourced, taken back in-house, or given to another company to do, you could have the protection of TUPE as well. This will usually be the case when a contract for a business service is awarded to another contractor (for instance, cleaning or facilities management)

Whether or not TUPE actually applies where in any given scenario is very complex, and you should contact us to find out.

At this stage, it is enough that you are aware that TUPE potentially applies, however.

If TUPE does apply what rights do you have as an employee?

1. The most important right you have is the right to continue in your old job under the same terms and conditions as you had before. If you have more than two years’ continuous service, you may have the right to claim if your employment comes to an end. If your service is less than two years, your options are limited, and it may not be cost-effective to seek legal advice. 
2. The new employer may try to change these in order to harmonise them with the terms of the new company. However, they are only able to do this in limited circumstances, when there is an economic technical or organisational (ETO) reason. Again, whether an ETO reason applies is a technical matter, and it is enough you are aware that, on the face of it, your terms of employment should not change. If they are being changed and this is against your will, and you have more than two years’ serviceyou should contact us to discuss what is happening.
3. You also have the right to be given certain information about the transfer of your employment namely the fact that it will happen and when, the reasons for it, what impact it will have on you, and any changes that are proposed to your work.
4. Another key right is the right to be consulted (as opposed to informed) about any changes that there might be in the way that you work, your terms of employment, or in terms of any potential redundancy. TUPE requires the outgoing and incoming employer to share this information, and it should be forthcoming in good time before the transfer takes place so there is adequate time for consultation. This right exists for all employees affected by the transfer, whether incoming or outgoing.
5. There should also be an opportunity to elect a representative if this is happening, and the group affected is more than 10 employees.
6. The penalties for getting the information and consultation process wrong can be severe for the company, and if there have been breaches, you can claim for up to 13 weeks’ wages. Again, it is well worth contacting specialist employment lawyers to see whether you are affected in this way.
7. Finally, you do have the option of objecting to the transfer. You should be very careful before you do so, however, and we would not usually recommend this, because it would mean foregoing your normal unfair dismissal rights. Again, give us a call if this is something you are thinking of doing.

With TUPE, the main claims generally fall into three categories:

Unfair dismissal

If your employment ends as a result of the TUPE transfer, and you have more than two years’ continuous service, you may have a claim for unfair dismissal. If so, please contact us for expert advice.

Failure to consult

If there has been a failure by either business to consult with you before the transfer, you (and your affected colleagues), may each be able to claim for a ‘Protective Award’ of up to 90 days’ pay. Generally, if there are multiple people affected (or this claim is available with unfair dismissal above) it can be worth seeking legal advice from us.

Harmonisation

If your new employer seeks to change your terms of employment to your detriment, you can enforce your old terms. Again, the terms being changed and the value of them will dictate whether it is cost effective to seek legal advice.

Our expert employment law solicitors all have many years’ experience advising individuals who are in your position. We will be able to guide you through the process and to help you secure the best possible outcome.

We offer a range of services, so please contact our friendly customer services team to discuss further via hello@kilgannonlaw.co.uk or 0800 915 7777.

Disclaimer 

The above provides a general overview relating to TUPE and is not intended nor construed as providing specific legal advice.

This article is for information purposes only and is correct at the time of publication. It does not constitute legal advice.

26.08.23