The Regulations apply when a business or undertaking, or a part of one, is transferred to a new employer regardless of its size and whether or not it operates for profit.
If there are no union representatives then you must inform and consult with appropriate employee representatives, and if there are none, arrange an election of representatives.
As the seller, you also have an obligation to provide certain information in writing to the buyer at least 14 days before the transfer. This information includes:
Any failure to comply with the obligations could lead to an Employment Tribunal ordering a financial penalty of up to 13 weeks pay plus £500 against you in respect of each affected employee.
As a buyer, you also have obligations under the Regulations. All employees who transfer to your employment do so on their previous terms and conditions, and with their continuous employment preserved. Any variation to the transferring employees’ contracts of employment (including changes agreed with the employees) will be void if the principal reason for the change is the transfer or a reason connected with it. However, variations in terms and conditions can be achieved in certain very limited circumstances.
You also have obligations to inform and, if taking “measures”, consult with representatives of existing employees that will be affected by the transfer. For example, if a new acquisition will mean an increased workload, or a change in working practices, for your existing head office staff then you are obliged to consult. Although this obligation is often overlooked in practice, the potential sanction is 13 weeks pay for each affected employee.
We can help and advise you, as seller or buyer, on all of your obligations and responsibilities under the Regulations to ensure a smooth transfer. For further information in relation to this article, please contact Louise Connacher.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.