My Employment Rights

What is This?

This deals broadly with the situation where the employer's business is sold to a new owner and is designed to provide protection to the employees who might otherwise lose their jobs.
 
A "transfer of undertakings" applies to two basic scenarios:

• where the assets of a business (or part of a business) are sold or otherwise transferred to a new owner as a going concern, that leads to the business retaining its identity;
• where a service provided by "an organised grouping of employees" is either outsourced, insourced or there is a change in the service provider.

Effect on Employees

Where a transfer occurs, any employees:

• who work within the business (or part of the business transferred),
• or who are engaged in providing the services in question,
• are employed immediately before the transfer takes place (or would have been if they had not been dismissed because of the transfer)

are deemed to automatically transfer to the new employer on the same terms and conditions as they had previously. Any attempt to change the terms will be invalid, even where the employee gives consent.

Employees are entitled to object to the transfer, in which case they do not transfer and their employment immediately terminates on the transfer date. This will not trigger entitlement to stay with the old employer, unless it agrees to move the employee to another part of the business. Nor is the objecting employee entitled to notice or redundancy pay. In some cases, the employee may be able to pursue constructive dismissal cases against the old or new employer.

Effect on Contracts

Where employees transfer, the new employer takes over the existing contracts of employment. Employees' existing terms are protected and the new employer cannot make changes, even if employees agree to it, if is deemed to be for a reason connected to the transfer. In other words, the new employer cannot reduce wages.

Liability for any outstanding employment issues, for examples, pre-transfer acts of discrimination, also become the responsibility of the new employer.

Occupational pension rights do not transfer, although there are now obligations on employers to put alternative minimum arrangements in place instead.

Transfer Related Dismissals

Any employee dismissed for a reason connected to the transfer, at any time, will be deemed to have been automatically unfairly dismissed, unless the new employer can demonstrate an "Economic, Technical or Organisational" reason for the dismissal. This will typically be where there are to be redundancies as a result of a downsizing of the workforce, relocation of the workforce or similar.

For unfair dismissal purposes, a fair redundancy procedure would have to be followed.

The remedy for being unfairly or constructively dismissed is shown in unfair dismissal.

Consultations

In the event of a transfer of undertakings, employers are required to consult with "appropriate representatives". Where there is a recognised union that represents the affected employees, the union will be the appropriate representatives for those employees. If no union is recognised, the employees must elect representatives.

Consultation should cover the fact and reason for the transfer, the identity of the new employer, the timing of the transfer and the measures that are envisaged by the new employer.

Failure to consult can lead to an employment tribunal making an award of up to 13 weeks pay for each affected employee.