How will a business transfer affect my pay and other terms and conditions of employment?

If a business is transferred from one owner to another, your terms and conditions of employment (except for pensions) are automatically transferred as well. Your rights derive from the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).  

If you are transferred to the new business, your terms and conditions of employment, including your continuity of service, are protected. The effect of the transfer is that your employment continues as if you were still employed by your previous employer.  

Your new employer will take over responsibility for all the employment duties owed to you by your old employer. There is an exemption for occupational pensions, where special rules apply.  

In practical terms this means, for example, that if your old employer discriminated against you, or if your old employer has not been paying you the National Minimum Wage, legal liability for these wrongs passes automatically to your new employer on the transfer date. However, the position is complex, so you should seek advice from your rep, especially if you think you may have a claim. Deadlines are always very short in the employment tribunal, so don’t delay.  

As regards pensions, the effect of TUPE depends on the type of pension arrangements you had with your old employer and whether you worked in the public or the private sector.  

In the private sector, TUPE does not require the new employer to match the occupational pension you had from your old employer but what they must offer depends on your old employer’s pension arrangements. The position is different in the public sector. In most cases, your employer should offer you continued membership of your existing public sector scheme under an arrangement called Fair Deal for Pensions.   

‘Fair Deal’ does not apply yet to local authorities. Instead, new employers on a TUPE transfer of local government employees must provide access to a “broadly comparable” pension scheme.  

There is information available from the Money and Pensions Service and also from individual public service unions.   

TUPE does apply to any contractual promise by your old employer to pay a percentage of your wages into your own personal pension scheme. This type of promise does transfer on a TUPE transfer and must be honoured by your new employer.  

TUPE provides some limited protection to your terms and conditions after a transfer.  

Important changes were made to the law in January 2014. Since that date, the rules depend on whether or not your contract terms were 'incorporated from a collective agreement' negotiated with a trade union.  

Remember that inducing workers to abandon collectively agreed terms is unlawful and carries a significant financial penalty to be paid by the employer to each affected worker.  

TUPE law is complicated so you should speak to a union rep as soon as possible. Time limits are very short.  

Your new employer is not allowed to cut the wages or other contract terms of the incoming workforce just to bring them into line with lower wages or lower benefits being paid to its existing workforce. This would be an unlawful breach of TUPE.  

Strong union organisation offers the best chance of resisting the downgrading of your employment terms following a TUPE transfer.  

Your employer must give you proper advance notice of any business transfer before it happens.   

If your employer expects your terms and conditions (including your pension), or the way in which you work, to change as a result of a business transfer, your employer is legally required to consult in advance about those changes. Consultation must be through your union if one is recognised where you work.