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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
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Taking over a business that Includes continuation of Employees.

Resolved Question:

Taking over a business that Includes continuation of Employees. Since I plan hiring my own management team and changing how the business is run how do I avoid redundancy payment if I terminate the existing management team.
Submitted: 2 years ago.
Category: Employment Law
Expert:  Ben Jones replied 2 years ago.
Ben Jones : Hello, my name is ***** ***** it is my pleasure to assist you with your question today. Do you know how long the affected employees have worked there for?
Customer:

Unfortunately I don't. I would estimate 8 years simply based on the number of years the business has been established.

Ben Jones :

Hi, sorry I was offline by the time you had replied. The first thing to check if there are any employees who have worked for less than two years. These will be the easiest to remove as they will not be entitled to protection against unfair dismissal and also will not get a redundancy payment.

However, assuming that the majority have more than 2 years’ service then it does get a bit complicated due to the protection they get under TUPE (this is the law that protects their employment rights when a business transfer occurs).

Avoiding having to pay a redundancy payment will not be easy and you will inevitably be exposed to potential risks, should the affected employees decide to take this further and claim that they should have received a redundancy payment or that they should not have been dismissed.

The concern is that even if you are changing the management team because of how you intend to run the business, it does not mean that the old employees would have been incompatible. You may have been expected to give them training for example and going straight for a dismissal can be seen as unfair. You also cannot just pick the old employees because they were the ones that transferred over because that would make the dismissal automatically unfair as it would be due to the transfer itself, which is unlawful.

So it is not an envious position I’m afraid, the employees get pretty good protection in the circumstances and even if you managed to fairly select the previous employees because they are not compatible to the new structure you are still looking at redundancy and that would incur the liability of having to pay a redundancy payment. You could try and refuse to pay them in the hope that they will not pursue this further but as you can imagine, depending on the amount they are owed, many could try and get this money by claiming against you.

Hope this clarifies your position? If you could please let me know that would be great, thank you

Customer:

Hi, Thank you for the detailed response. Would we also have to honor the existing employment contracts and conditions or are we allowed to restructure the remuneration package of individual employees.

Ben Jones :

The TUPE protection also includes a right for the employees to keep their existing terms and conditions. There are very limited circumstances which allow you to change their existing terms but none are likely to apply here, so you would have to take them on with their existing terms and retain them. Hope this clarifies things for you?

Ben Jones :

Please let me know if this has answered your original question or if you need me to clarify anything else for you in relation to this? Thanks

Customer: Thank you!
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