Effects on staff when company bought out

Sully

Hey,

Out of curiosity, if a company was bought out and the staff were told there jobs were not secure - ie the new owner is bringing in replacement staff - is it true that exsisting staff have the right to stay on unless the new owner provides a valid reason why they are being let go?

So..

Company X - 5 Staff

Company Y buys out Company X and informs all staff "Your jobs are not secure. We are replacing some of the staff here".

Can company Y legaly do this?

Always wondered..

Cheers.

johnnyskeleton

When a company takes over another company (as oppsed to, for example, buying out some of the assets) they take over all the rights and responsibilities that the former company had. So the employees of company X can only be let go when their contract of employment is validly terminated e.g. redundancy, end of term, etc. The contracts are transferred over to company Y and company Y can only terminate the contracts in the same way that company X could have done.

dermot_sheehan

Transfer of Undertaking Regulations also kick in if the "undertaking" is transferred, so a new employer can't get around prior employment contracts by establishing a new company

http://www.irishstatutebook.ie/2003/en/si/0131.html

Sully

johnnyskeleton wrote:

When a company takes over another company (as oppsed to, for example, buying out some of the assets) they take over all the rights and responsibilities that the former company had. So the employees of company X can only be let go when their contract of employment is validly terminated e.g. redundancy, end of term, etc. The contracts are transferred over to company Y and company Y can only terminate the contracts in the same way that company X could have done.

I imagine this means if an employee has a contract ending in January and the company takes over in June - they have no way at all they can remove the staff whos contracts expire in June?

I take it "verbal" agreements (ie the boss told you "Your hired for X dates") are different then signed agreements (ie you signed what the boss said on a document)

johnnyskeleton

Sully wrote:

I imagine this means if an employee has a contract ending in January and the company takes over in June - they have no way at all they can remove the staff whos contracts expire in June?

I'm not sure I follow. If an employee's contact expires after the company takes over, the company are obliged to honour that contract until the date of expiry. So if an employee's contract is until August, and the company takes over in June, the company will have to honour the contract until August. However, many conracts have notice terms which the employer can use, or the employee can be made redundant.

If the employee's contract expires in January and he keeps working by agreement with the employer but there is no formal contract then the courts might consider this to be a contract of indefinite duration (see the Protection of Workers (Fixed Term Contracts) Act, 2003) which I think the new company will have to honour. Again, the employee can be offered redundancy or made redundant.

Sully wrote:

I take it "verbal" agreements (ie the boss told you "Your hired for X dates") are different then signed agreements (ie you signed what the boss said on a document)

They are the same in terms of both being legally binding, but they are different in that - 1) it is harder to prove the subject of an oral contract, especially if the former employer has run off to St. Kitts or somewhere and 2) usually oral contracts are not as extensive or detailed as written contracts.

Sully

Thanks for that. What are these notice terms you refer to?

Cheers.

johnnyskeleton

A lot of fixed term contracts state that the employer may give notice that the employment will terminate within a certain amount of time..

jubi lee

Not all transfers are relevant transfers. TUPE does not apply in the following instances:

-Transfer by share takeover. When a company's shares are sold to new shareholders, there is no transfer of the business - the same company continues to be the employer.
-When a business transfers assets only, eg if equipment is sold.
-When a business transfers a contract to provide goods or services that doesn't involve the transfer of a business or part of a business.
-Change of business identity, eg if the work or organisational structure changes radically.

Whether TUPE applies in any particular case depends on all relevant circumstances. In the event of a dispute, only an employment tribunal or, on appeal - a higher court, can decide this.

Sully

When the company is being taken over, is it true that Company X must inform there staff that the company has been sold - and give 30 days notice? If this is the case, what happens if this is ignored?

Also, what acts could be taken into consideration if Company Y ignored the contract, removed all non-foreign staff and replaced them with foreign staff (ie cheaper labour, like Polish)? I take it the Equality Act and Unfair Dismissal?

haz

How things have changed! I remember when it was all grass around here and beer cost thruppence (etc):

"When I [Andrew Hogarth] appeared in the Court of Appeal in 1990 as counsel for the employees in the case of James W Cook (Wivenhoe) Ltd v Tipper one of the judges was Sir Roger Ormrod. The case concerned the treatment of employees by an employer who was closing his business. Sir Roger had been born in 1911, was 78 years old when the hearing took place, had been called to the bar in 1936 and had been a judge since 1961. (Ten years before there was a right to complain of unfair dismissal.) His social attitudes reflected his era. I remember him asking, "Are you suggesting that when an employer closes his business he has to take into account the interests of his employees?" When I replied that that was one of the purposes behind the employment legislation of the last twenty years, he commented "I find that a quite extraordinary proposition."" (from http://www.industriallawsociety.org.uk/papers/hogarth.htm)

Tom Young

Statute has touched on but not clarified this issue:
S.52 1990 CA
• Directors to have regard for interests of employees in general and members in the performance of their functions
• The duty imposed by this section on the Directors shall be owed by them to the Company (and the Co alone)

Duty to employees under statuts is of “dubious value” what it gave by one subsection it took away by another.