Businesses looking to take over another organisation should watch out for strict rules on transferring across employees, says Peter Jones of the HR Dept.
In what looks to be a busy mergers and acquisitions market, the risks of falling foul of employment regulations are high.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 – known as TUPE – are a set of UK regulations aimed at protecting employees when the business or undertaking they work for is transferred to a new employer.
While TUPE is designed to safeguard employee rights, it can also present several risks and complexities for employers involved in a transfer.
And whether or not employees fall under TUPE rules is not always clear, so those taking on a business and its staff should tread carefully.
The M&A market is currently buoyant, partially fuelled by lowering interest rates.
Across both our Swindon and our London businesses we are seeing more acquisitions in the current economic climate, but these are bringing HR implications.
For example, we are currently supporting a client who took over the assets and lease of another business, where they thought TUPE did not apply. However, when they wanted to change the employees’ working hours they found this wasn’t the case.
There are clear risks to not following TUPE rules, when they apply, including landing in front of an employment tribunal.
The problem with TUPE rules is it’s never obvious when they apply. It isn’t black and white, so it is easy to break the rules completely inadvertently.
Generally, when staff move from one entity to another entity they transfer with the work. The new employer needs to consult on the transfers, and the employees’ terms and conditions are usually protected too. It’s important to remember, these terms and conditions have no time limit too. It really is a complicated area, and each case needs to be looked at individually.
Should redundancies be involved, it is all the more important to go through a consultation process.
Even if you don’t think TUPE rules will apply, it is always worth checking, because the risks are pretty hefty if you get it wrong – it could be very expensive. Do your due diligence first.
Peter Jones, managing director of the HR Dept Swindon & Wiltshire, works with businesses across Swindon, Chippenham, Hungerford, Marlborough, Calne, Devizes, Burford, Lechlade and Carterton.
