Company Transactions for SMEs: TUPE impact after buying the business and inheriting employees
As previously mentioned, when you buy a business you are likely to inherit a number of employees following a transfer under TUPE (Transfer of Undertakings (Protection of Employees) Regulations 2006).
Inevitably, bringing new employees to the business may result in some changes taking place but it is important that those are only changes that are made for economic, technical or organisational reasons (“ETO Reason”). This means reasons regarding:
- The profitability of the new employer’s business (economic reason);
- The nature of the equipment or production processes (technical reason); or
- The management or structure of the business (organisational reason).
These are quite limited in scope and do not always fit neatly with the changes that a business may want to make – for example if they want to change the employees’ terms of employment in order to harmonise the workforce to ensure that all employees have the same terms of employment, this needs to be carefully considered and cannot be done just because of the transfer but must have an ETO Reason even if the employees consent to the change. Bear in mind that this may still be the case even if the employees’ contract of employment allows for changes to their terms.
Another important consideration is if any dismissals are made and this goes beyond just those employees that were transferred under the TUPE transfer and also protects the buyer’s existing employees that may face dismissal because of the transfer. In short, any dismissal that is because of the transfer is potentially unfair.
We appreciate that this sounds quite scary and onerous with a lot to think about. So, please do not hesitate to contact myself or our expert employment team to support you:
020 7940 3907
*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*