My boss is selling his business. Is my job safe?

21 January 2013

In a 'TUPE' scenario, when a business is sold as a going concern existing employees should be consulted about the sale and any proposed alteration to your contract of employment.

When a business is being sold employees of the previous owner automatically become employees of the new owner under the provisions of The Transfer of Undertakings (Protection of Employment) Regulations (known as TUPE).

It is therefore as if your employment contract had originally been made with the new owner who will become your employer. Your continuity of service and other terms of your employment are all preserved. The new owner cannot pick and choose which employees to take. However TUPE does not apply where the sale is not of a business as a 'going concern', the most common example being where equipment only is being sold and TUPE is not relevant where the sale is one of shares in a limited company as in these circumstances your employer remains the company and thus there is no requirement to protect your contract under the TUPE regulations.

In a TUPE scenario you should be consulted about the sale and any proposed alteration. You can object to this automatic transfer of your contract in which case you will be deemed to have resigned and not entitled to any redundancy payment. If you don’t object and your contract therefore automatically transfers, the new owner will take over all your rights and obligations arising from your employment contract, except for criminal liabilities and some benefits under any occupational pension scheme relevant to you.

You should be aware that TUPE does allow some opportunity for your old, or your new employer to vary, with your agreement, the terms and conditions of your employment contract. Such a variation with your agreement is not automatically void where the reason is due to an economical, technical or organisational reason.

Also TUPE does not prevent changes to terms and conditions agreed to by the parties which are entirely positive. However your old or new employer cannot alter your terms for a reason purely connected to the transfer and an attempt by your new employer to alter your employment terms to your detriment to harmonise employment contracts for staff in the combined workplace could allow you to bring a claim for unfair dismissal. After a period of time an employer may be able to introduce agreed changes but whether this could still be held to be connected to the transfer of the business is down to individual circumstances. It is worth noting that there are special TUPE provisions where the business being sold is insolvent and that TUPE can apply in circumstances where there is a change in a service provider.

If you are an Employer with concerns about your obligations under TUPE, or an Employee with concerns about changes to your employment terms such as those set out above, you should seek legal advise without delay.  Should you wish to submit a query in the form below, a member of our Employment law team will contact you as soon as possible.

 

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