Buying a business will usually engage the Transfer of Undertakings (Protection of Employment) Regulations 2006. These Regulations, commonly known as TUPE, were put into place to protect the employees who currently work for the company you are buying when such a ‘transfer’ occurs. They are complicated and specific advice should always be taken.
Fundamentally, the Regulations work to prevent the dismissal of an employee where the reason for the dismissal is the transfer itself. To do this would be an automatically unfair dismissal. You are also obliged to preserve the incoming employees’ terms and conditions.
This may obviously result in a two tier workforce where your staff, whilst performing the same role, may be paid at different rates. However, this is simply the operation of the legislation. It is not permissible to change the employment terms and conditions of the staff you inherit from the company you buy merely to match their terms with those of your existing employee so that, for example, you have one pay system in operation, or one level of annual leave entitlement across the whole company. This is known as harmonisation.
If the employees in the company you are buying are covered by a collective agreement involving a trade union, you will remain bound by the terms of the collective agreement as they are at the time of the transfer. However, if any of the terms are renegotiated and you are not party to the renegotiation, you are not bound to provide the renegotiated terms to the employees. You can also look to amend the collective agreement a year after the transfer.
There is some flexibility to amend terms and dismiss employees upon a transfer, and this is when the reason for the dismissal or the change in terms is an economic, technical or organisation reason which entails changes in the workforce. This may mean that you can make some redundancies where you have an overlap of employees for the amount of work you have. The restrictions do not mean that changes cannot be introduced in any circumstance; but it does mean that bringing them in is more complicated. Ultimately your ability to change the terms and conditions will come down to the distinct reason you wish to implement them.
If you need any clarification on this issue then contact the Peninsula Advice Service on 0844 892 2772.