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Wednesday, 3 October 2012

Transfers of employment contracts

Your employment rights could be protected if you are involved in a business transfer or takeover. You could also have rights if your current or prospective employer wants to change your employment contract because of the transfer.

How your employment rights are protected

If you are involved in a business transfer or takeover that is protected under the Transfer of Undertakings (Protection of Employment) Regulations, known as 'TUPE', your employment rights are protected.

When a TUPE-protected transfer takes place, the new employer takes over nearly all rights and obligations in your employment contract, including:

  • all the previous terms and condition of your employment
  • failure of the previous employer to observe the terms of your employment contract or rights (meaning, for example, that you could make a claim for sex discrimination against your new employer, even though it took place before the transfer)
  • holiday entitlement you have built up
  • the date on which your period of continuous employment started remains the same and your continuous employment is not broken
  • any collective agreements previously made

If the new employer refuses to meet the terms of your contract, this will be a breach of your employment contract.

If you don't want to work for the new employer

You can refuse to work for the new employer. You must let your current or prospective employer know that you object to the transfer. You will be regarded as having resigned and will have no right to claim unfair dismissal or redundancy pay.

If you find that there has been or will be a ’substantial change‘ for the worse in your working conditions as a result of the transfer, then you have the right to resign and claim unfair dismissal.

Changing your employment contract

The TUPE protections are in place to help stop you being put on worse employment terms and conditions when you are transferred. This means that not only are your pre-existing terms and conditions transferred across on your first day of employment with the new employer, but you shouldn't lose your employment rights.

Before the transfer

The same restrictions apply to your employer before they take part in a business transfer or takeover. For example, if your employer knows your employment will be transferring to another company they can’t change your employment terms and conditions to bring them in line with the employment terms and conditions of the other company.

After the transfer

Your employer cannot change your employment terms and conditions if the reason they want to make the change is because of:

  • the transfer itself
  • a reason connected with the transfer that is not an ‘economic, technical or organisational reason’

This means that if your employer wanted to change your employment terms and conditions for a reason not connected with the transfer they could. For example, if your new employer suddenly lost an expected order by a manufacturing company they might need to change the workforce’s employment terms and conditions.

If your employment terms and conditions are changed for one of these reasons then the changes are void and do not apply. You should get advice from Acas (the Advisory, Conciliation and Arbitration Service).

Positive changes to your employment contract

If your employer wants to change your employment terms and conditions for the better this is allowed, so long as you agree. For example, your employer might want to increase your holiday so that it is a standard amount for all employees across the company.

Your employer cannot validly impose new terms and conditions without the agreement of employees. Any changes have to be agreed by the employee or their trade union representatives on their behalf.

Pension rights

Your company pension (also called occupational pension) rights earned up to the time of any transfer are protected during a transfer or takeover.

However, if your old employer offered you a company pension scheme, your new employer does not have to continue an identical company pension. Your new employer should offer a minimum occupational pension matching your contributions of up to six per cent of your salary into a stakeholder pension, or equivalent alternative.

Rights to redundancy payments

After the transfer, your new employer may want to cut the number of employees. If you are made redundant or dismissed for an economic or technical reason, you may have the right to a redundancy payment.

Your employer cannot select you for redundancy just because you transferred to the company. If your employer has applied fair and objective selection criteria to making redundancies and you are selected for redundancy then this would be fair. For example, if your new employer has to close down part of a company because it is not performing and so has no business need for employees with your specialist skill, you would be entitled to qualify for the same redundancy rights as any other employee.

What to do next

Once the transfer has taken place, make sure you are given an up-to-date written statement of employment particulars. This should give the name of your new employer and say that your terms and conditions haven't changed.

Don't be alarmed if you receive a P45, this often just means your tax records are being updated, not that you are out of job.

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