LEGALLY PARKED
EMPLOYMENT LAW
WORKING
What happens to staff and their contracts when one company is taken over by another?
T
he parking profession is constantly evolving. Many local authorities are outsourcing their management
and debt recovery functions and private sector providers are often offered contracts for a relatively small number of years; hence (re)tendering is rife. In reality, this means that the incumbent can change with comparative regularity as one company is awarded the contract while another business loses it. The next question is, what happens to the staff? Does the new service provider now become their employer or is it a case of redundancies?
European legislation set out in
Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) establishes the position. An employee who performed a role on a contract that will
Top5tips
1. It is critical when tendering for contracts that the comprehensive due diligence is completed. Often the staff represent the largest fi nancial liability and, without full understanding of this risk (current cost and on-going disputes and disciplinaries), profi table contracts can quickly turn sour.
ABOUT the AUTHOR:
Carrie Beaumont is a specialist employment solicitor with Ortolan Legal
26 NOVEMBER 2012
2. For incoming suppliers: seek indemnities for redundancy and dismissal costs from the local authority/company to which these services are going to be provided,
harmony IN
now be performed by the incoming supplier will become an employee of the new contractor. The employees have the right to be informed about this transfer; however, they will automatically transfer into the employment of the bid winner on the same employment terms as they had with their previous employer. For the incoming service provider, this is
often helpful in terms of recruitment and site knowledge. At the same time, the contractor sometimes has different work practices or perhaps intends to replace some staff with technology. If the necessary due diligence has not been performed in advance of the bid, then incorrect fi nancial assumptions may have been used with potentially dire fi nancial consequences. Certain questions often arise: Can the
3. Consult with staff as soon as a TUPE transfer is imminent. Staff will be more likely to agree minor changes in their contracts if they feel involved.
4. Include variations such as payroll date changes as a ‘measure’ in the pre- transfer consultation letters.
5. Remember that once they have transferred , individuals have a right not to be dismissed for any reason relating to the transfer itself, and that any variations are likely to be deemed invalid unless they are for an ETO (economic, technical or organisational reason).
www.britishparking.co.uk
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