Protected Employment Rights where Business are Sold, Transferred, or taken over (TUPE)
If your company is taken over, merged or sold to another employer – or your job is transferred out of a local authority to a private contractor for example – your contractual terms and conditions of employment go with you to the new business. This includes express and implied terms. Your employment is continuous – your service is not broken by the transfer. This law is the Transfer of Undertakings Protection of Employment, hence TUPE! This law has been in force since 1981 in the UK.
If your terms of employment are significantly changed as a result of the transfer, you may have a claim for breach of contract. This is a complex area of law. For further advice, contact our Advice Line for help
If you have been dismissed or made redundant by your old employer, or the new employer, because of the takeover or merger – the dismissal may be automatically unfair and you can claim compensation at Tribunal.
You do require two years service as an Employee to make this claim.
It is possible that you may be made redundant as a result of the transfer. Your employer must follow the correct procedures of communication – both with you as an individual, and collectively – ie. with your union or employee representatives.
Under the Transfer of Undertakings (Protection of Employment) Regulations, wherever a business is transferred, the following rights are automatically taken over by the new employer:
- Your Contract of Employment: pay, hours, start date etc.
- The rights and obligations arising from those contracts
- Any existing collective agreements with trade unions. (However this can be changed subsequently by the new Employer)
There are certain exceptions such as criminal liabilities and some pension rights.
This protection for employees effectively means that the new employer cannot vary any of the terms or conditions of employment of those people who transferred in, unless the employer can demonstrate either:
1) the changes were not connected in any way with the transfer; or
2) the changes are for an economic, technical or organisational reason (ETO) that has to be pushed through, and are not connected with the transfer itself. If the Employer merely wants to put everyone onto the same terms following a merger (a process often called “harmonisation”), this is not an ETO defence
There is no timescale on this protection, so even if the changes come several years after the takeover you may be protected.
This area of law is very complex. If you are in a business that has been sold or transferred and you are not sure of your position contact our Advice Line for further help.