How will a business transfer affect my pay and other terms and conditions of employment?

If a business is transferred from one owner to another, your terms and conditions of employment (except for pensions) are automatically transferred as well. Your rights derive from the Transfer of Undertakings (Protection of Employment) Regulations, commonly called TUPE.

If you are transferred to the new business, your terms and conditions of employment, including your continuity of service, are protected. The effect of the transfer is as if you were still employed by your previous employer.

Your new employer will take over responsibility for all the employment duties owed to you by your old employer, except as regards pensions.

In practical terms this means, for example, that if your old employer discriminated against you, or if your old employer has not been paying you the National Minimum Wage, legal liability for those wrongs passes automatically to your new employer on the transfer date. However, the position is complex, so you should seek advice from your rep, especially if you think you may have a claim. Deadlines are always very short in the employment tribunal, so don’t delay.

As regards pensions, if you were entitled to join or were a member of your previous employer's occupational pension scheme, under rules brought in by the Pensions Act 2004, the new employer must offer you the opportunity to participate in an occupational or stakeholder pension scheme. You can find advice about this on the website of the Pensions Advisory Service.

If you are transferred from the public to the private sector, your pension is likely to be subject to a non-statutory code known as the Fair Deal for Pensions. Unions helped to negotiate the protections contained in the Fair Deal. If you need advice or guidance about Fair Deal, ask your union rep.

TUPE provides some limited protection to your terms and conditions after a transfer.

Important changes were made to the law in January 2014. Since that date, the rules depend on whether or not your contract terms were 'incorporated from a collective agreement' negotiated with a trade union.

Remember that inducing workers to abandon collectively agreed terms is unlawful and carries a significant financial penalty to be paid by the employer to each affected worker.

TUPE law is complicated so you should speak to a union rep as soon as possible. Time limits are very short.

Your new employer is not allowed to cut the wages or other contract terms of the incoming workforce just so as to bring them into line with lower wages or lower benefits being paid to its existing workforce. This would be an unlawful breach of TUPE.

Strong union organisation offers the best chance of resisting the downgrading of your employment terms following a TUPE transfer.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.