On the face of it, TUPE should not be a relevant factor in the sale of shares. Ownership of a company`s share capital can change ownership without affecting the employees of that company: the identity of their employer remains the same before and after the sale. In general, tupe is generally considered an applicability when the company or part of a business (or service) moves from Company A to Company B. However, when Company B takes over Company A by purchasing its shares, the identity of Company A does not change and TUPE generally does not apply. Q But what do employees miss when buying share? If the employer remains the same, are his employment contracts not intact? The High Court in recently confirmed that the 2013 Regulations on Business Transfers (Employment Protection) do not apply to a simple sale of shares. But this case has drawn our attention to the fact that this will not always be the case. TUPE rules do not apply to the purchase of a business through a share acquisition. This is because the legal identity of the company actually remains the same when it buys a company as an action; It`s just that ownership of his share capital has changed ownership. However, it is important to be aware that in addition to the staff, you will also assume responsibility for complying with all existing employment contracts and employee working conditions. They also take responsibility for ongoing litigation, legal rights and collective agreements involving employees.
A TUPE does not apply to the takeover of a business by acquiring the share capital. Because TUPE requires the transfer of a company “from one person to another.” In other words, the legal identity of the employer must change. In the case of the acquisition of a business through the sale of shares, the legal identity of the company remains the same; It`s just that ownership of one`s social capital changes ownership. Employees in share sale transactions have few remedies under business transfer regulations, says John McMullen, professor of labor law at the University of Leeds and author of Business Transfers and Employee Rights You can change employee terms and conditions after purchase because TUPE rules don`t apply. It is important to recognize that the terms of sale cannot be changed unilaterally without consultation with the staff concerned. While workers` rights related to transfers of TUPE from share purchases are currently rare, they are likely to become more frequent, as labour law experts are more aware that there are possible grounds for claim. In this context, purchasers may take steps to protect themselves, including: the High Court found that there had been no transfer of TUPE in the assessment of the facts and that Mr. Berry could object to it. Mr. Justice Garnham, however, provided some useful guidance on when a transfer of TUPE would have taken place in connection with a share sale. In particular, there will be no transfer of TUPE, unless one-third does so: from a practical point of view, when integration is proposed after the purchase of shares, the parties should think about how they structure integration and the extent to which they go with such integration. In some circumstances, it may indeed be advantageous to structure the amendments so that a transfer of TUPE actually occurs.
However, the parties should take this into account. For example, the obligation to provide information (and potential consultation) of pre-broadcasting is required when TUPE is an application.