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.
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, iIt is enough that you are aware that TUPE potentially applies, however.
If TUPE does apply what rights do you have as an employee?
- 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. 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, you should contact us to discuss what is happening.
- 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.
- 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.
- There should also be an opportunity to elect a representative if this is happening, and the group affected is more than 10 employees.
- 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.
- 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.