What are our rights when our company is taken over?

If a business is transferred from one owner to another, your terms and conditions of employment are automatically transferred as well. The position with regards to occupational pensions is more complex.  

Your rights derive from legislation called the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The effect is that your contract of employment continues as if it had been agreed with the new owner at the start of your original employment. Not only are your terms and conditions of employment transferred but all the liabilities of the previous employer are also transferred. There is an exception for pension rights.  

The effect of TUPE on pensions 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. You can check the position on the website of the Money and Pensions Service.   

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.  

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 only applies where the identity of your employer changes. It does not normally apply where the owner of the shares in your employer changes but the identity of your employer stays the same.  

Your employer must give you proper advance notice of any takeover before it happens, if it means your employer will change.  

If your employer expects your terms and conditions (including your pension) or the way in which you work to change as a result of any takeover or merger, 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.