Sale of company, loss of job?

We live in an age in which hardly any companies or organisations are safe from being taken over or sold on. In fact, you could argue that our willingness to buy and sell companies is part of our economic strength in that good companies flourish and bad companies change or die.

However, when the company you work for is sold or the part of the business you work for is transferred to someone else, it can be a very worrying time. Most of us like job security and the uncertainty that new ownership brings can threaten this.

Our legislators have tried to protect workers when there is a sale or transfer of a business, by passing regulations that require both the transferor of the business and, effectively, the potential new owner to consult with employee representatives about what will happen to employees after the transfer.

The regulations limit the circumstances in which workers can be dismissed after a transfer. As a general rule, dismissals will only be justified if there is a genuine redundancy situation.

A failure to consult with elected worker representatives, even if there is no trade union, can lead to penalties of up to 13 weeks’ full pay for each employee on top of any other compensation for, say, unfair dismissal.

The contracts of workers who transfer are also protected in that they can object to any changes that the new owner tries to introduce because of the transfer. This means that if your company is bought by new owners you do not have to agree to any changes in your contract if you don’t want to and your period of employment does not start from the date of the purchase, it starts from the date you began working for the old owners.

Employees who do not like the new owners can object to being transferred and can leave. However, this is not much good for most employees because they lose their right to claim unfair dismissal and are not entitled to any redundancy payment.

The transfer regulations are complicated. People thinking of buying a business with employees should take advice before leaping in.

Employees who feel threatened by a transfer should think about clubbing together and taking advice on their rights and risks.

Published 04/12/2007. The author of this article is Jon Loney