Transfer of an undertaking

In simple terms, this is where an existing business (an undertaking) or part of that business is transferred to a new employer. The affected employees become employees of the new employer under their existing contracts. The aim being a seamless change of employer.

Employees representatives or a recognised trade union must be informed when and why the transfer is to happen and consulted fully on any proposed action that may impact on the employees concerned.

The protection of employees existing contracts during a transfer depends on the type of transfer and does not apply to all transfers. It would apply where one company bought the assets of another and then continued to run the business.
It would not apply if that company only purchased shares without there being any transfer of business, the original company still remains the employer.

Under the Transfer of Undertakings Regulations, the new employer must take over the contracts of the entire workforce as it stands prior to the transfer. If dismissal becomes unavoidable, then the usual redundancy procedures should take effect.
The new employer is obliged to take over any collective agreements in place on behalf of the employees and all rights and obligations, except that of criminal liability, obligation for provision for old age, invalidity or survivors in employee's occupational pension schemes. In summary, the new employer must provide similar overall terms and conditions.

If as a result of a transfer, an employee feels that his or her terms and conditions of employment have changed for the worse, he or she has the right to apply to an employment tribunal for unfair dismissal.
However, unfair dismissal can not be claimed purely on the fact that the identity of employer has changed.

The transfer of an undertaking does not affect an employee's period of continuous employment (used for calculation of entitlements, for example, redundancy). The start of the continuous employment period is taken from the date on which the employee commenced work with the old employer.

The Department of Trade and Industry publish a booklet PL700, written Statement of Employment Particulars.