So you’ve got a new boss, but what are your rights?

With the number of mergers and acquisitions within the travel industry starting to pick up once again, legal experts Travlaw warn that it’s important for businesses to be aware of their legal obligations to staff when they take over an existing company or contract, and for employees to be aware of their rights.

Below is some of the key information relating to the employment law aspect of an acquisition, prepared by Travlaw.

TUPE

The Transfer of Undertakings or TUPE as it is often referred to is an extremely complicated and difficult to navigate piece of legislation. The question of exactly when TUPE does and does not apply is a very complex one.

If you think that TUPE is likely to apply to a transaction you are involved with, we recommend you take specialist legal advice. 

Identifying when TUPE applies

In essence, TUPE applies when there has been a ‘relevant transfer’ or where there has been ‘transfer of an economic activity that retains its identity.’ The courts when determining whether there has been a transfer will look at:-

• The type of  business transferring;
• Whether the tangible assets transferred eg office equipment;
• Value of the intangible assets E.g. Intellectual property;
• Whether the employees transfer;
• Whether the customers transfer; and
• Whether there is a degree of similarity between the entities pre and post transfer.

What does TUPE mean legally?

The purpose of TUPE is to protect employees’ rights when the business which they work for changes hands. In essence, employees transfer from the outgoing business, to the incoming business and their employment rights remain the same.

One of the most common TUPE errors businesses make is simply ignoring the legislation, or assuming that the legislation doesn’t apply.

Remember TUPE can apply even in the most unexpected circumstances, for example in the takeover of pre-existing bookings with specific staff employed to service those bookings.

Obligations as Transferor

Transferors must provide employees, in good time, with information concerning the transfer such as the date of the transfer, details of the new employer, and details of any contemplated measures, such as redundancy.

The transferor should also provide the transferee with employee liability information.

Obligations as Transferee

There is no obligation on the transferee to consult with the employees pre transfer, however in the event that the transferee intends to take ‘measures’ (such as redundancy or variation of contracts), the transferor should inform the transferee, consult fully with staff and follow all appropriate procedures.

What happens if you don’t comply with TUPE?

Complaints may be brought in an employment tribunal for failure to inform and consult with employees under TUPE.

In addition, failure to comply with TUPE can result in unfair dismissal, wrongful dismissal and discrimination claims.

Depending on the number of employees involved the damages sought by wronged employees can quickly add up to hundreds of thousands of pounds.  

Businesses should always ensure that they take advice as to the applicability of TUPE, it is important to determine what your responsibilities are in the event that it does apply. Getting it wrong can be very costly.