Author: Colin Blears at Plus HR 

When to use this guide:
When your business is contemplating - selling whole or part of its business or outsourcing a business function to a third party

The basic principle of business transfers is that when a transfer occurs, employees’ contractual terms and their continuity of service are protected.  There are also duties in relation to information and consultation to affected employees and their representatives.

In essence, the company buying or acquiring a new business inherits the contracts of employment, duties and obligations.

10 steps to manage outgoing business transfers

1. Check sale agreement
It is important to check the contract which has been signed by senior management from both business concerns.  This will give you two important details:

• the date when the transfer is to take place.
• The details of whether it is a relevant transfer

The Transfer of Undertakings Regulations (sometimes known as TUPE) stipulate that transfers have to occur at a single point in time and not over a period of time.  Relevant transfers are when there is a transfer of an economic entity or a going concern.  Share transfers or sale of equipment do not in themselves constitute a transfer of an undertaking.

2. Prepare the information for Employee Representatives early
Ensure that you gather information regarding the transfer early on.  Make sure you get approval from your senior management group or specialist advisors.  When this information is given to your employee representatives, it will not inspire confidence if, later on, you have to make amendments.  Details you have to supply are: 

• the relevant transfer
• the date of transfer
• the reason for the transfer
• the legal, economic and social implications of the transfer
• whether the Transferee (the company that you are transferring the business activity to) intends to take any measures following the transfer in relation to employees

3. Prepare information for the Transferee
You also have to supply the Transferee with detailed information.  Prepare this early so that any potential problems can be dealt with before the plans are unveiled to your employees.  You have to provide the following information:

• identity and age of affected employees
• employment contract details
• information on any disciplinary or Tribunal cases over the past two years
• details of any collective agreement in force
• any pension provisions you have in force and their funding rate

4. Meet with the Transferee
In order to be able to tell your Employee Representatives of any measures the Transferee may take, it is important to meet with the appropriate manager of the Transferee company as soon as possible.  Additionally, you can then give the Transferee details of your employees.  It is also an ideal opportunity to plan your communications and agree the details with the Transferee. 

5. Map out your overall plan
Remember, there will often be technical problems when there is a sale of the whole or part of a business or even when outsourcing.  These problems can escalate very quickly if not dealt with which can be very upsetting to affected employees.  So ensure that all senior managers from your company know the details of the plan and meet regularly to check that everything that needs to be acted on has been accomplished.  Appoint someone to manage the project and ensure that they regularly give feedback to all on the management team.

6. Prepare your communications
It is essential for a successful transfer of staff to have well-planned communications that have been agreed by all members of senior management.  Ensure your middle managers are well briefed – they are the group that have to manage their staff’s questions and expectations i.e. they are on the front line.
Have your script prepared early for the first of the information and consultation meetings and have someone else sit in to take all meeting notes – conducting a meeting and taking accurate notes are too much for one person to handle effectively.

7. Plan and organise your information and consultation meetings
Have written and agreed plans for holding these meetings.  Make sure you have frequent meetings, perhaps even weekly.  If you let some of these meetings slip, it can build up suspicion in your representatives and affected staff.  So even if there is no news or developments to discuss, give your reps the opportunity of sitting down with you.  Also, ensure all minutes are quickly distributed to reps after any meeting.  Reduce suspicion by being transparent and having face-to- face meetings. 

8. Be prepared for some affected staff to refuse to transfer
Sometimes, for emotional reasons, affected staff refuse to transfer over to the Transferee.  If this happens, their contract of employment comes to an end and they leave their employment.  They cannot seek any redress at an Employment Tribunal.  Cover this possibility at your initial employee reps’ meeting.

9. Maintain contact with the Transferee.
It is as important to have regular meetings with the Transferee’s management representatives as it is with your own employee reps.   You can invite the Transferee’s management reps to meetings with your employee reps.  Face-to-face contact with representatives from the Transferee will reduce misinformation being spread and lead to greater confidence amongst your employees about the whole process.

10. Be prepared to deal with ETO issues
The Transferee company may want to take measures based on an economic, technical or organisational (ETO) reason.   You can facilitate this by inviting the Transferee management reps to your employee reps’ meetings.  Remember, if an employee resigns before the transfer takes place as a result of changes to terms that the Transferee proposes, liability for constructive dismissal will remain with you.  So it is in your interests to facilitate this process effectively.  

Typical outcomes from successfully managed outgoing business transfers

• Upon the date of transfer, all staff transfer seamlessly to the new company
• The newly-transferred business continues to operate successfully
• No hidden staff issues are raised by the Transferee following the transfer
• No Employment Tribunal applications are made by transferred staff to either company

This guide was prepared by Colin Blears, Partner of plusHR Consulting.  Colin has 28 years’ experience in industrial and employee relations and has managed many high-profile mergers, acquisitions, disposals and outsourcing projects.   Visit www.plusHR.com for details of plusHR’s project and change management solutions.

Disclaimer:
This guide is provided for guidance only. The provided information, whether ‘How to guides’, policies, procedures, samples, examples, or guidelines, while authoritative, is not guaranteed for accuracy and legality. While we make every effort to provide and link to accurate, legal, and complete information, we cannot guarantee it is correct for a worldwide audience. Please seek legal assistance, or assistance from your local or international governmental resources, to make certain that your legal interpretation and decisions are correct.