Mergers and acquisitions are aspects of reconstructing a business in order to provide growth and add positive value.
Mergers occur when two companies come together to form a completely new enterprise and neither company remains independent.
An acquisition is the purchase of one business or company by another. This purchase could be up to 100% of the assets or ownership of the business.
Employment Protection During Business Takeover
If a business or part of a business is changing from one owner to another, their employees existing employment contract should be protected under the Transfer of Undertaking (Protection of Employment) Regulations, known as ‘TUPE’.
There are two different types of transfers that are protected under ‘TUPE’:
- Business Transfers
- Service provision changes
In business transfers, part of the business is transferred from one employer to another. This can include mergers (where two companies combine to form a new company). To be protected under a business transfer your employer must change.
Service provision change normally happens when:
- A service that was previously provided by an employer is outsourced to a contractor
- A contract ends with the service being performed in-house
You can only fully be protected under a service provision change if you are working on the service that is being transferred. For more information please do not hesitate to contact us.