Legal advice: Talking takeovers
If you are planning an acquisition or about to be acquired are you aware of the TUPE regulations?
By Anna Mathias of thePublican.com's team of legal experts from London solicitors Joelson Wilson.
Words like "merger", "acquisition" and "takeover" are ones we tend to associate with city slickers who deal in important business transactions. Those of us who do not work within large corporate businesses often think that these transactions will never affect us, but this is not necessarily the case.
Whenever a business, or part of a business, is bought or taken over by another business, it is possible that regulations affecting both employers and employees will apply to the transfer. The regulations in question are called the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). These were updated at the beginning of April this year. The revised regulations may affect any one of us in the future so why not find out what your rights or obligations are in case you become involved one day with the transfer of a business?
TUPE applies where there is a change in employer as a result of transfer. This means that if one business buys the shares in another business, TUPE doesn't apply because the employer will remain the same. In the majority of other cases, however, TUPE is likely to have an effect. So what does this mean in practice?
Keep employee records up to date
If a pub or bar is being bought or taken over, the owners have an existing duty to inform and consult with those employees about the transfer. There is now an additional duty to provide certain information about their employees to the purchaser. The new obligation is important to remember, as a failure to comply could result in an award of compensation to the purchaser of no less than £500 per employee. So it is a good idea for pub and bar owners to make sure employee records are always up to date so that the necessary information can be passed on as soon as required.
If you are an employee of a bar or pub which is being bought or taken over (and TUPE applies) you can choose whether you wish to transfer with the business or to object to the transfer. If you object you will no longer be employed by the pub or bar as from the date of the transfer, but you will not be able to make a claim for redundancy or unfair dismissal as it will be treated as a resignation.
Those employees who do wish to transfer have certain protection under TUPE, including protection from dismissal as a result of the transfer and protection from changes to their terms and conditions of employment (save in very limited circumstances). It is important for employees to know about this and their ability to bring a claim if they feel unfairly treated as a result of a transfer.
The pub or bar's employees can also expect to be informed and consulted with about the transfer to the new employer.
The existing owners should tell them about the fact of the transfer, the date and reasons for the transfer, any legal, economic or social implications of the transfer and any measures which the existing or new employers envisage taking (for example redundancies or dismissals). If this information is not provided or there is no consultation, employers should be aware that compensation may be payable to each affected employee.
Changing terms and conditions
One of the most interesting changes brought in by TUPE 2006 is that the terms and conditions of employment may in limited circumstances be varied around the time of a transfer.
Previously any changes to a contract of employment relating to a transfer were void, even if the employee agreed to them and they were, on the whole, favourable to the employee. Now it will be possible, in limited circumstances, for employers and employees to agree changes to the contract if the reason for those changes is entirely unrelated to the transfer. It is also possible if it is related to the transfer but there is a specific reason justifying the change.
The specific reason is known as an "economic, technical or organisational reason entailing a change in the workforce" and is largely similar to a redundancy situation. This is a considerable change but it should be noted that these changes must always be agreed between employer and employee.
If the pub or bar which is being transferred is insolvent, there is even more flexibility in changing terms and conditions of employment, but this affects insolvency practitioners more than the employers or employees.
So if your pub or bar is about to buy or take over another pub or bar, or is about to be bought or taken over, make sure you know your obligations and more importantly your rights under the new TUPE regulations as the penalties or rewards can be considerable.
Pictured: Gales was acquired by rival brewer Fuller's recently.
