HR Expert: Getting it right when a business is sold

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My client owns a flower shop, employing a dozen people. They recently put the business up for sale and have been approached with a good offer they want to accept. The new owners will continue to run the business as a flower shop, and they’re happy to take the staff too. Does my client need to say anything to the staff?

Your client has found themselves in the early stages of a TUPE transfer, and they need to act soon to avoid liability under these regulations.

Under the Transfer of Undertakings (Protection of employees) Regulations 2006 (TUPE), when a business is sold and continues to operate in the same or similar way, then the employees of that business employed prior to the sale will transfer to the new owner. This means they become the employers of the new employer (or transferee), under the same contract as before and with the same rights and entitlements, including their length of service.

Prior to the sale (the transfer), your client (the transferor) is required to go through a process of information and consultation with the employees that a TUPE transfer is going to happen. Under TUPE this must take place “long enough before the relevant transfer to enable the employer of any affected employees to consult the appropriate representatives of any affected employees”.

According to recently released employment tribunal statistics, in the tax year 2022 / 2023, 269 employers were taken to tribunal for failing to follow the process of information and consultation with their staff. As the sale is nearing completion, your client needs to begin this process now or risk being taken to an employment tribunal and being part of these statistics.

A duty to inform

As they employee more than 10 people (where there are less than 10 representatives aren’t needed), they will need to assist their employees with electing representatives with whom information about the transfer will be shared and consultation will take place. Alternatively, if there is a recognised trade union in the business, your client will need to provide them with the information and consult, if necessary.

The information they must provide is:

– Fact of the transfer
– Legal, economic and social implications
– Measures that will be taken as a result of the transfer

This means that your client will need to provide information to the representatives on the fact the transfer is happening, when it is anticipated it will happen, and to whom the business is transferring.

With regard to the implications, this would be that TUPE applies to the situation. Economic implications could be any impact they might see on their pay, for example if any of the employees work variable hours and the transferor has indicated that more or less hours will be available for them. Social implications might include changes to the opening hours of the shop, or a change to how shifts are organised.

Measures would include any changes that are expected to be made as a result of the transfer. Your client will need to find out from the transferee what this might be. If none are intended, your client should inform the representatives of this.

A duty to consult

If the transferee indicates they are going to make changes that affect the employees post transfer, your client will need to consult with the representatives about these changes. They do not however have to come to any agreement with the representatives about them.

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