Employment rights on business transfer

This is one of the most important areas of employment law and it comes up very frequently. The short answer is that your job is protected by law in most cases where a business or part of a business is transferred to a new owner.

The key legal framework:

The Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly known as TUPE, apply when a business or an organised grouping of employees transfers from one employer to another. This includes outright sales of a business, outsourcing arrangements, changes of contractor, and similar situations.

What TUPE means for you:

1. Your employment automatically transfers to the new employer on the same terms and conditions you had with the old employer. You do not need to agree to this or sign a new contract for it to happen.

2. Your continuity of employment is preserved. All the service you built up with the old employer counts as if it had been with the new employer. This matters for things like redundancy pay, unfair dismissal rights, and notice periods.

3. Your existing terms and conditions, including pay, hours, holiday entitlement, benefits, and contractual bonuses, transfer across and the new employer must honour them.

4. If you are dismissed either before or after the transfer, and the sole or principal reason for the dismissal is the transfer itself, that dismissal is automatically unfair unless the employer can show there was an economic, technical, or organisational reason entailing changes in the workforce, often referred to as an ETO reason.

5. Both the old and new employer have a duty to inform and consult with appropriate representatives of affected employees before the transfer takes place. This must include information about when the transfer is happening, why, and any measures the new employer plans to take in relation to the workforce.

What does not transfer:

Occupational pension rights relating to old age, invalidity, or survivor benefits do not automatically transfer under TUPE, though the new employer must provide a minimum level of pension provision under separate legislation. Other pension-related rights, such as early retirement enhancements that are not old age benefits, can be more complex.

Practical points to be aware of:

The new employer cannot simply reduce your pay or change your terms just because they have bought the business. Any changes to terms and conditions that are solely or mainly because of the transfer are void, even if you agree to them, unless there is a genuine ETO reason.

If the new employer tries to make you redundant shortly after the transfer, you should look carefully at whether the real reason is the transfer itself rather than a genuine redundancy situation. If the redundancy is genuinely needed for economic, technical, or organisational reasons and a fair process is followed, it can be lawful, but a sham redundancy designed to clear out the old workforce and replace them would likely be automatically unfair.

You do have the right to object to the transfer, but this is not the same as resigning. If you object, your employment simply ends on the transfer date without it being treated as a dismissal, which means you would not normally be entitled to a redundancy payment or notice pay. This is generally not advisable unless you have a very clear reason for it.

If the new employer fundamentally changes your working conditions to your material detriment, you may be able to treat yourself as having been constructively dismissed and claim that the dismissal was automatically unfair because it was connected to the transfer.

What you should do now:

1. Find out whether TUPE has been confirmed as applying to the sale. Your current employer should be providing you with information about this.

2. Check what information and consultation has taken place or is planned. If none has happened, that is a potential breach of the regulations.

3. Keep a copy of your current contract and all terms and conditions, including any staff handbooks, bonus schemes, and benefits documentation, so you have a clear record of what should transfer.

4. Watch carefully for any attempts by the new employer to change your terms after the transfer. Do not simply accept changes without understanding your rights.

5. If you are told you are being made redundant or your role is changing significantly around the time of the transfer, take advice promptly, as time limits for bringing employment tribunal claims are usually three months less one day from the relevant act.

If you can tell me more about the specific situation, such as what you have been told so far, whether redundancy has been mentioned, or whether the new employer is proposing changes, I can give you more targeted guidance.