Executive Summary
The purpose of this paper is to provide guidance to management with a plan of action for transferring employees from a newly purchased company into our system. Following the guidelines of the TUPE regulations, there will be some sensitive negotiations to carry out in order to bring them in seamlessly, because TUPE guarantees the transfer of all employment terms and conditions in from their company, provided that the transaction meets the regulatory guidelines.
Contents
Introduction: What is TUPE?
3
4
Works Cited
7
Introduction: What is TUPE?
The purpose of the Transfer of Undertakings (Protection of Employment) Regulations, or TUPE, is to ensure that the employment terms and conditions do not change when an owner sells a business. Per these regulations, the terms do not change just because the employer does; the situation is analogous to one in which the new employer makes new contracts for the same employees. Any and all rights, as well as accrued tenure, carry over to the new position. To ensure that all employees know about this, both the old and the new employer must inform the employees of the change, and be available to answer any questions that the affected employees have about their new status.
Some companies try to finesse downsizing at the point of acquisition by claiming cause for terminating employees right around the point of transfer, because they want to lower the overhead associated with salaries and benefits in the new organization. However, there are specific guidelines in place to help regulators determine whether the rights transfer. The following transactions qualify for TUPE protection:
Instances of the sale of a sole trader’s partnership or enterprise
Instances of one company purchasing the assets (not only the shares) of another company (or part of another company) and then operating the business
Instances of the merger of two or more companies that stop existing and become a new conglomerate
Instances of the transfer of contracts to provide goods or services.
The size of the company, or the part of the company, is not material in this instance. However, there are some instances where TUPE does not apply:
Instances of transfers happening outside the borders of the United Kingdom
Instances of contract transfers that do not also involve the transfer of a business or a part of a business
Instances of asset-only transfer, such as the sale of property, plant or equipment that does not involve the transfer of a company as well
Instances of the sale of shares, because the change in share ownership does not change the company – it is still the same company with different ownership
Case Study
According to this case study, my company has acquired a printing company to handle all of our printing needs, bringing along 87 staff members. In their current company, they receive pay weekly via bank transfer or cash. I receive this notification in early July, and the employees are coming on board for the pay period beginning the first week in October. Currently, our pay software uses a monthly transfer.
TUPE guarantees the preservation of existing working conditions after the employees come over. This is clearly a qualifying transfer, because our company is buying not only the assets but the ongoing operations of the printing house, and bringing their employees along as well. That means that such items as sick pay, maternity pay, paternity pay, and holidays must remain the same. If their terms differ from our own, then we do have the right to consult with them and negotiate potential changes (Directgov). It is good that there is a three-month period between notification and hire, because that will give us time to meet with each of them, or with their union representative, if they have collective bargaining.
Worth noting here is that our company is not required to match the terms of the occupational pension of their former employer. If their former employer offered a pension, ane we do not, we have to set up a minimum pension provision, up to six per cent of salary (Department for Business Innovation and Skills). Other than the occupational pension, though, our company is required to match all of the preexisting terms and conditions of their employment.
With regard to pay, there are several steps to take to resolve the situation. The first is to talk to our software provider and find out if setting up some employees for a weekly draft is possible. Depending on the software application, this may work. If so, then life will be easy. In either event, though, our second step would be to consult with the incoming employees to gauge their feelings about being paid on a monthly basis, as opposed to a weekly basis. If they are amenable to this, we may need to offer some short-term loans to help the new employees float until their next checks arrive (Isidore). If the employees are not initially willing to switch to a monthly pay schedule, we would need to talk with them about setting up an incentive for them to switch over. Regarding the difference between cash and bank transfer, it would be important to look at their existing contracts. If their existing contract offers them the option of cash or bank transfer, we would still have to offer them that option; if their existing contract individually locks them into cash or bank transfer, then we would have to transfer each individual’s condition over. As with the frequency of pay, we could negotiate to see if we could move all employees over to bank transfer. Because of the ease and security of bank transfers, I would recommend pay incentives in order to move potential employees away from cash payments.
Works Cited
Department for Business Innovation and Skills. “Employment Rights on the Transfer of an
Undertaking.” Web. Retrieved 9 March 2012 from
http://www.berr.gov.uk/files/file20761.pdf
Directgov. “Changes to Employment Contracts.” Web. Retrieved 9 March 2012 from
http://www.direct.gov.uk/en/Employment/Employees/EmploymentContractsAndConditions/D
G_10028079
Isidore, Pauline. “Changing the Payroll Date Following TUPE Transfer.” Web. Retrieved 9 March 2012
from http://www.hrzone.co.uk/item/123302
