Government publishes reforms to simplify business transfers

The Government has announced a new scheme to make it easier for businesses to change ownership.

Reforms unveiled by Employment Relations Minister Jo Swinson are designed to make transferring the ownership of firms simpler for employers and staff. Workers may be protected under the Transfer of Undertakings (Protection of Employment) Regulations (Tupe), which sets out rules that should mean they don't lose out in employment terms when businesses change hands.

Following consultation on Tupe this year, the Government has acted to improve the laws to ensure workers and employers are treated fairly. Ms Swinson describes the new rules as essential in the effective and fair transfer of business ownership and says they rectify some areas of the regulations that have caused much confusion and uncertainty in the past for businesses trying to meet them.

Under Tupe the workers employed by the previous owner of a business become employees of the new owner under similar terms and conditions and their continuity of service and rights are preserved. The rules also mean that both the old and new owners must talk to staff to let them know what is happening.

The Tupe regulations can apply to businesses of all sizes as long as they provide jobs for at least one member of staff, from large companies with thousands of employees to a small enterprise with just one other worker. Tupe does not apply when there is a transfer of shares because the company remains the employer of its workforce.

She said the rules are being changed as a part of the Government's Red Tape Challenge to cut unnecessary obstacles to business and economic growth, while maintaining the protections employees need to be confident in their careers.

The Government has confirmed that businesses can renegotiate terms in collective agreements after the transfer of ownership as long as the changes are no less favourable to their staff. In most cases Tupe prevents changes to employees' terms and conditions, but the Acquired Rights Directive does allow some alterations up to 12 months after transfers. The Government wants the new legislation to be passed by Parliament in December this year.

Copyright Press Association 2013