Employment Rights in Business Acquisition
You’ve had your eye on a business acquisition for some time now. It seems to be the perfect fit for your expansion plans, and with some strategic changes could offer real potential. You have exciting plans to streamline the workforce to reduce overheads and the restructuring of operations to enable more efficiency. Job done. Or is it?
UK and EU Law protects employees when a business changes hands. TUPE (otherwise known as Transfer of Undertaking (Protection of Employees) was introduced in 1981 as a regulation by the European Acquired Rights Directive.
This means that if you’re considering business acquisition, then there is a raft of employment law obligations you’ll need to meet.
Business Acquisition – A TUPE Guide
The purpose of TUPE is to protect employees when a new employer takes over the business. Safeguarding the employees job, and ensuring that they can continue working under the same terms as they did previously.
Seems simple? If only it were.
TUPE – From the employee’s point of view
Employees should notice no change in relation to their terms of employment. It should be as if nothing fundamental has happened to their job situation.
There may me slight operational changes, but employees should not find their contract of employment changed in any way. The only allowance here is if the new employer wishes to propose improved terms of employment which are advantageous to the employee.
Either way, best practice dictates that the employee seeks legal advice in relation to any changes to their terms of employment proposed by the new employer. Enabling them to have peace of mind over their future employment and ensure the new employer is not overstepping the mark.
For the employer’s point of view
If you are acquiring a business or part of a business (an undertaking) then you must be alert to the fact that there may well be employees that you are obliged to take on. And, whilst post-acquisition restructuring is certainly possible, legal protections afforded to employees could leave you facing employment claims, rather than the business streamlining you’d hoped for.
An experienced solicitor will seek the details of all employees, and the details of their employment contracts as part of the sales process.
If you are conducting the acquisition without a solicitor then take care to ensure the selling company provides this information, and don’t scrimp on the time you take auditing and acquainting yourself with their terms of employment.
Consider also, if you acquire a business you take its existing employees with their contracts as drawn, and any action that you might wish to take to rationalise (cut down) your work force must give equal consideration to both your existing employees and those that you are taking over.
Going it alone is a dangerous strategy. Business acquisition and Transfer of Undertaking (Protection of Employees) is a minefield. The consequences of getting the process wrong could result in an Employment Tribunal Hearing and your business incurring substantial and unnecessary legal costs. All avoidable with sound, knowledgeable legal advice.
BUSINESS ACQUISITION CONSULTATION
About Quality HR – Specialist Employment Law Solicitor
Based in Billericay, Essex, Quality HR is a small and dedicated employment law and human resources solicitors. With many years’ experience, helping small to medium sized companies in their day to day dealings with their employees.
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