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 Author: Colin Blears, partner of plusHR Consulting.
Topic: Business transfers
About: plusHR
Colin Blears has 28 years’ experience in industrial and employee relations and has managed many high-profile mergers, acquisitions, disposals and outsourcing projects.
WHEN TO USE THIS GUIDE
When your business is contemplating:
• 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, rights and obligations.
10-STEP ACTION PLAN
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 three important details:
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the date when the transfer is to take place
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the details of whether it is a relevant transfer
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indemnity against potential legal action e.g. employment tribunal applications.
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. Get information from the transferring company
You are, by law, entitled to have certain detailed information supplied from the transferring company (known as the transferor). Make sure you have this information given to you early so that you can manage any potential problems. The transferor has to provide you with the following information:
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identity and age of affected employees
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employment contract details
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information on any disciplinary or tribunal cases over the past two years
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details of any collective agreement in force
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any pension provisions you have in force and their funding rate.
3. Map out your overall plan
• Remember, there will sometimes be technical / logistical problems when a company acquires the whole or part of a business or insourcing a function from a contractor. These problems can escalate very quickly if not dealt with early on.
• 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.
4. Meet management representatives from the transferring company
• It's vital to keep communication channels open with the transferor. Your company will be buying another company or business function and all their affected staff will soon be your employees. On day one, you want a fully functioning business with engaged, informed employees.
• Ensure that the transferor has not ‘creamed off’ their best staff to retain them for themselves: it has been known to happen when insourcing from a contractor. So ensure you get the list of affected staff early on in the process.
5. Prepare your ETO issues
• Your company may want to make changes (known as ‘measures’) to the organisation following the transfer. These have to be based on an economic, technical or organisational (ETO) reason entailing changes in the new workforce.
• Plan out the new organisation structure carefully and ensure this plan has complete buy-in from your senior members of management. Making changes at the twelfth hour to the structure may not be permissible under the regulations, or if they are, they will not inspire confidence in your newly-transferred employees.
6. Prepare your communications
• It's 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 both their existing and transferring staff’s questions and expectations i.e. they are on the front line.
• Have your script prepared early for when you meet the transferor’s staff at their information and consultation meetings which the Transferor has to arrange by law.
7. Plan the integration of the transferring staff with your current organisation
It is imperative to carefully plan how the new organisation will look following the transfer. Before the transfer takes place, you will need to:
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inform and consult with the transferor’s employees of any changes you may wish to make following the transfer
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inform your own staff of any changes
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hold regular meetings with your existing employees or their representatives to keep them up-to-date with the progress of the transfer.
8. Don’t attempt to harmonise terms and conditions of employment
• Following the transfer, it's tempting to harmonise transferring staff’s terms and conditions of employment with those of your own. Be aware that a contractual variation may be agreed, but only if the sole or principal reason is an ETO reason or a reason unconnected with the transfer.
• It's always best to get specialist advice when contemplating making changes to transferring staff’s contracts or when contemplating redundancies.
9. Maintain contact with the transferor’s employee representatives
It's as important to have regular meetings with the transferring employee reps as it is with your own staff / employee reps. You can ask the transferor’s management reps to invite you to meetings with their employee reps. Face-to-face contact with representatives from the transferor will reduce misinformation being spread and lead to greater confidence among their employees about the whole process.
10. Plan what pension provisions you may need to adopt for transferring staff
Strictly speaking, obligations relating to provisions about benefits for old age, invalidity or survivors in employees' occupational pension schemes do not transfer under TUPE.
However, if the transferor provided a pension scheme then your company has to provide some form of pension arrangement for employees who were eligible for, or members of, the old employer's scheme. It will not have to be the same as the arrangement provided by the transferor but the provisions will have to be of a certain minimum standard specified under the Pensions Act.
EXPECTED OUTCOMES | RESULTS
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Upon the date of transfer, all staff transfer seamlessly to your company
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The newly-transferred business / function continues to operate successfully
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No hidden staff issues are raised following the transfer
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No Employment Tribunal applications are made by transferred staff to either company
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.
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