What Happens if the Business You Work for is Acquired?
07 December 2017
If the business or organisation that you work for is acquired by another business or organisation, then there are two potential consequences that this will have on your role. Either your role will be made redundant or you will be transferred across to the new employer under TUPE.
What is TUPE?
The Transfer of Undertakings (Protection of Employment) Regulations 2006, better known as TUPE, often apply when a business is acquired by a new owner. Under TUPE, the employees of the business or organisation which has been acquired are transferred across to become employees of the new owner.
Any employees that are transferred under TUPE will have their terms and conditions of employment protected for an indefinite period of time. This means that the new employer will be prohibited from making any immediate changes to things such as pay, holiday allowance or working hours, providing that the main reason for these changes is the transfer of your employment. Your continuous service will also be protected and will be carried over to your new employer.
It’s important to note that under TUPE, while your existing terms and conditions of employment are protected, you will not be automatically entitled to the same terms and conditions of existing employees of your new employer if those terms are better. If you find that your new colleagues have a better holiday allowance, for example, you will not automatically be entitled to the same as the protection offered under TUPE only applies to your existing terms and conditions of employment.
What Happens to My Pension Under TUPE?
When it comes to pensions, the protection offered under TUPE is slightly different. The pension benefits that you have already built up in your current employment may be protected by the TUPE regulations. However, your new employer is not legally obliged to offer the same terms and conditions that you have in your current pension scheme. It’s a good idea to carefully read any details provided by your new employer in relation to your pension so that you’re fully aware of any changes.
Your new employer will still need to comply with the minimum pension obligations that apply to all employers under automatic enrolment. This requires all employers to enrol their employees onto a pension scheme and make contributions.
If your job is to be transferred under TUPE, your current employer has a responsibility to inform and consult with you about the potential transfer before it takes place.
They should provide confirmation that there is going to be a transfer, give you the reasons for this and details of when the transfer is expected to take place. They should also inform you of any social, legal or economic implications that affected employees might face. This could include a relocation or the risk of redundancy.
Do I Have to Accept the Transfer?
If you decide that you do not want to accept the transfer then you can decline the offer. This essentially means that you are resigning from your job. In those circumstances, you would not be entitled to any redundancy pay.
If you choose to decline to transfer, you will not be required to work your statutory or contractual notice. Simply tell your employer before the day of the transfer of your intention to leave and your employment will end on the day that the transfer takes place.
What Happens if I am Made Redundant?
Sometimes, when a business is acquired by a new owner, roles will be reviewed and redundancies may be made. A restructure can be a valid reason for an employer to make roles redundant and they are legally entitled to do so, providing they consult and follow an appropriate redundancy procedure.
If you are at risk of redundancy and your employer is making 20 or more roles redundant within 90 days, then they are obliged to carry out collective consultation with any recognised trade union or with representatives of affected employees. Your employer should also consult with you on an individual basis.
During the consultation process, your employer should inform you of several key factors. These include the reason for the redundancies, how many roles will be made redundant, which roles are at risk, the terms of redundancy (if this is above the statutory requirement) and how long the process will take (including when the redundancies will take effect).
Being Selected for Redundancy
When selecting which roles will be made redundant, employers must adopt a fair and consistent selection method. Selection criteria can include attendance, disciplinary record, performance and ability. Employees cannot be selected for redundancy based on gender, pregnancy, sexual orientation, age, race, religion, disability, marriage or gender reassignment, as these are protected characteristics.