New regulations to provide employers with more rights during takeovers

Businesses who are considering, or are subject to, mergers or acquisitions will have more flexibility with regards to transferring employees following recent changes to TUPE Regulations which came into effect on 31st January.

First introduced in 1981 and previously updated in 2006, TUPE sets out guidance for businesses on how to effectively manage the transfer of employees in the event that they either takeover another business or are themselves acquired or are merging to facilitate growth.

David Southern, employment partner at Linder Myers in Lancashire, said: “The economic environment has changed considerably since TUPE was last reviewed and updated in 2006. With a growing number of mergers and acquisitions, the new regulations are timely and should make transfers easier for employers with greater flexibility provided while continuing to protect employees’ rights.

“The changes to TUPE include significant amendments relating to changing contracts of employment and managing dismissals and redundancies. Employers who are acquiring another business can now renegotiate the terms and conditions from collective employee agreements one year after the transfer completes provided that the new contracts are no less favourable to the individuals involved.

“Any dismissals which take place as a result of a change in the location of the workplace will now not be automatically treated as unfair, while any redundancy consultations can now commence before a transfer and continue following completion of the deal giving employers more time to properly and fairly consult with affected staff. Overall, the changes are good news for business owners while continuing to protect individuals in these circumstances.” Business owners should also be aware that the new regulations include provisions protecting employees from being dismissed if the sole or principal reason is the transfer. Employers also need to be aware that whilst the changes to TUPE do provide greater flexibility, employees will continue to be protected by the ordinary laws relating to unfair dismissal, changes to contracts of employment and redundancies, which remain unaffected.