Imagine you are an employee working as a waiter in a restaurant? It is sold to another employer. What happens to you? Can your employer dismiss you if he wants to make changes to the restaurant?
Imagine you are the employer. You have just brought this new restaurant. You are very excited. You have big plans for the place. However what obligations do you have to the staff who already work there?
The answers to these questions lie in the Transfer of Undertakings (Protection of Employment) Regulations and the relevant EU directive. The law is generally referred to as TUPE.
Generally following a transfer the contractual rights and continuity of service of the employees will remain in force. Furthermore, the new employer will inherit all liabilities and any dismissal in connection with the transfer will usually be unfair.
However there are many pitfalls and problems. Firstly not all transfers are covered by TUPE. For example administrative transfers and transfers of shares fall outside the legislation. In any case what is an undertaking? Can an undertaking simply be, say, a cleaner and their mop and bucket? Or must there be a significant group of workers and assets for TUPE to apply?
If TUPE does apply what then? Whilst any dismissal in connection with the transfer may be unfair that will not mean that the new employer cannot, in any circumstances, at some point in the future make the changes he was planning on making.
Further problems lie in what steps must be carried out before a transfer. The employer must carry out a process of due diligence informing himself of the liabilities he is to inherit. Otherwise he may walk unaware into a hornet's nest.
In brief TUPE is complex and challenging both for employers and employees. It is an area which often requires careful advice and guidance.