Dealing with existing staff in an acquired business

I am about to acquire a second business which already has existing employees. What do I need to be aware of in terms of HR procedures and inheriting the policies of existing staff?

It is likely that this event will be a business transfer covered by the Transfer of Undertakings (Protection of Employment) Regulations 2006, which are commonly referred to as TUPE. These regulations act to protect an employee when the business in which they work is sold to another party, or when the contract on which they are working is taken over by someone else.

Before the transfer takes place, there a certain procedures that must be fulfilled. The ‘old’ employer must give you information about the staff that you are transferring to you including their terms and conditions and details regarding any disciplinary procedures that have instigated in relation to the employees.

You must undertake a period of consultation with any staff in your current organisation who are affected by the transfer, and also let the ‘old’ employer know if you are planning on taking any ‘measures’ in relation to the staff which will transfer, eg redundancies consequent to the transfer. If you are considering redundancies once the transferred employees have merged with your current staff, you must also consider your current staff for redundancy.

You are obliged under TUPE to preserve the incoming employees’ terms and conditions. As this is a legal obligation you have a defence in relation to any complaint of unfair treatment from your current staff should they raise the point that their terms and conditions are not as favourable as those of the incoming employees. While this situation could result in people doing the same job on different terms this, the fact that a transfer has taken place, will validate the difference. Where the employees are on protected terms they only apply to the job in which they were employed pre-transfer. If they seek to move into a different role in your organisation post-transfer then you have the option to offer any new role on your standard terms.

Harmonisation of terms is something many employers want to do following a transfer in order to ensure that everyone is on equal terms and to make it easier for administration purposes, but changing terms and conditions merely for this reason is not permissible. Any changes implemented connected with the transfer must be attached to an economic, technical or organisational reason.

This doesn’t mean that changes cannot be introduced in any circumstance; but it does mean that bringing them in is more complicated. Ultimately your ability to change the terms and conditions will come down to the distinct reason you wish to implement them.

Further reading on TUPE

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Peter Done

Peter is the founder and group managing director of Peninsula Business Services, established in 1983.

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