M&A employment law support – TUPE and changes to terms - Lewis Silkin
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) can raise some difficult employment law issues during mergers and acquisitions. This Inbrief examines the challenge for a buyer of changing employees’ terms and conditions once the deal is done.
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Inside
Buying a business – does TUPE apply?
When a business is sold, employees may become employed by the buyer under TUPE as a result of the transaction. TUPE provides that where there is a transfer of assets amounting to “an economic activity which retains its identity”, any of the seller’s employees assigned to that economic activity will transfer with it. This would include a business sold as a going concern, where there will be an element of continuity in what the business does once the buyer owns it.
By contrast, in a share purchase, the default position is that TUPE will not be triggered, because the identity of the employer remains the same before and after the sale - it is simply ownership of the target company which changes hands. However, it is fairly common for a buyer to move the business and employees of the new subsidiary to one of its own entities as part of its post-completion integration plans,...
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