The chatroom

A: If a contract which is moving over to another company forms a key element of business of your company and will be an ongoing contract then the Transfer of Undertakings Regulations (TUPE) may apply. These essentially provide that all employees, unless dismissal can be justified, will automatically move over to the new employer and that new employer must accept their past periods of service as part of their continuous period of employment. The new employer will be liable for all contractual obligations and any other obligations such as disability discrimination or other discrimination claims other than any occupational pension scheme. However, as from July arrangements are likely to be brought in to provide that occupational pension scheme rights will also transfer.

The transfer will happen automatically with no need for the employee to do anything unless the employee objects. If the employee objects and does not transfer over, then the employment will end. He will not be deemed to have been dismissed by either the new employer or the existing employer but will effectively have resigned.

The new employer would normally expect all employees to transfer over. If any employees refuse to transfer at that stage, if there is an agreement between the two companies, those employees should form part of the agreement. However that would not alter the fact that the individuals would be deemed to have resigned and that the employer must accept the resignation.

There are two options for the employer. First, move the employee to another division of the company well before the transfer. We say 'well before the transfer', because dismissals or other changes made around the time of the transfer may be caught up in the regulations and the individual will technically be the responsibility of the new employer.

Second, accept the resignation and then offer to re-employ on new terms in a new job. The new employer will have no obligations. In either case the employee will be redundant. The employee will be redundant if it is simply a case of a one-off contract being lost and there is a need to make employees redundant.

If an employee is redundant then the employer must consider suitable, reasonable, alternative positions in the company, or any other group company. This must be carried out otherwise the redundant employee may claim unfair dismissal.

If the job is reasonable then the employee will not be entitled to redundancy pay if the job is rejected. If the job is not really suitable (it is far better if the employee is given the chance of rejection than the employer unilaterally deciding) then the employee will be entitled to redundancy pay.

The technical position is complex. The individual may be the responsibility of the new employer, or of the old employer or of no one at all, whatever is the strict legal position under TUPE. However, the existing employer is likely to have to accept that such an individual, if offered continued employment, without a suitable break in employment, is likely to have continuity of employment with them.