The transfer of a business from one undertaking to another.
The transfer of an undertaking is regulated by the Transfer of Undertakings (Protection of Employment) Regulations 2006. Broadly speaking, the Regulations provide that in a transfer of an undertaking situation, the employment and employment rights of the transferring employees remain protected and transfer to the new owner on the same terms and conditions. The intention behind the Regulations is to prevent any abuse of employee terms and conditions in such a scenario. The Regulations apply to the sale of a business or a service provision change (commonly known as outsourcing). The Regulations also require the transferor to inform and consult with employees about any impact of the transfer on their employment and terms and conditions.
Relevant transfers under the Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246 (TUPE 2006) are:•business transfers—involving the transfer of an undertaking or business, or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity that retains its identity following the transfer•service provision changes—involving a change in the provider of a service (outsourcing, insourcing or a change in contractor) where certain conditions are satisfiedThis Practice Note considers business transfers. Service provision change transfers are considered separately, in Practice Note: TUPE—service provision changes. For further information on TUPE and other employment issues in an outsourcing context, see Practice Note: Outsourcing—employment issues.However, it is important to note that a transfer may be both a business transfer and a service provision change transfer: a putative transfer should be analysed under both tests.This Practice Note contains references to case law of the Court of Justice of the European Union (CJEU). Broadly, EU judgments handed down on or before the end of the Brexit transition period/IP completion day (11 pm on 31 December 2020) continue to be binding on UK courts and tribunals (even if the EU courts later depart from them) until the UK courts exercise their powers to diverge. For the most part, EU case law made
This Practice Note examines which employees transfer to the transferee under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006), SI 2006/246, reg 4.The Practice Note contains references to case law of the Court of Justice of the European Union (CJEU). Broadly, EU judgments handed down on or before the end of the Brexit transition period/completion-day'>IP completion day (11 pm on 31 December 2020) continue to be binding on UK courts and tribunals (even if the EU courts later depart from them) until the UK courts exercise their powers to diverge. For the most part, EU case law made after that date is not binding on the UK, although the UK courts and tribunals may continue to ‘have regard to’ EU judgments if relevant. For more detailed information on the treatment of EU case law, see Practice Note: Introduction to retained EU law—Retained case law.EU-derived laws, such as much of TUPE 2006, that have been made to implement UK obligations under EU law (such as the obligation to implement Directive 2001/23/EC, the Acquired Rights Directive (ARD)), applicable in the UK at the end of the Brexit transition period/IP completion day are preserved in the UK’s domestic legal framework as retained EU law. For further information, see Practice Note: Brexit and IP completion day—implications for employment lawyers—Retained EU law.Where there is a
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SIP Partnership share agreement including matching shares style="caps">Parties 1 Participant Name: [insert name of participant] Home Address: [insert address of participant] Payroll Number: [insert payroll number of participant] 2 Company Name: [insert name of company] Registered Address: [insert registered address of company] Registered Number: [insert registered number of company] 3 Trustee Name: [insert name of trustee] Registered Address: [insert registered address of trustee] Registered Number: [insert registered number of company] This agreement sets out the terms on which the Participant agrees to buy Shares[, and receive Matching Shares,] under the terms of the Plan. The definitions in the Plan Rules apply to this agreement. In the event of any conflict between this agreement and the Rules, the terms of the Trust Deed or any relevant legislation, the Rules, the Trust Deed or the relevant legislation (as applicable) will prevail. Notice to participant about possible effect on benefits Deductions from your pay to buy Partnership Shares under this agreement may affect your entitlement to or the level of, some contributory social security benefits, statutory maternity pay and statutory sick pay. They may also have a similar effect in respect of any contributory social security benefits paid to your spouse or civil partner. With this agreement you should have been given information on the effect of deductions from your pay to buy Partnership Shares on your entitlement to social security benefits, statutory sick pay and statutory maternity pay. The effect is
SIP Free share agreement This agreement is between: style="caps">Parties 1 Participant Name: [insert name of participant] Home Address: [insert address of participant] Payroll Number: [insert payroll number of participant] 2 Company Name: [insert name of company] Registered Address: [insert registered address of company] Registered Number: [insert registered number of company] 3 Trustee Name: [insert name of trustee] Registered Address: [insert registered address of trustee] This agreement sets out the terms on which the Participant agrees to take part in Awards of Free Shares under the terms of the Plan. The definitions in the Plan Rules apply to this agreement. In the event of any conflict between this agreement and the Rules, the terms of the Trust Deed or any relevant legislation, the Rules, the Trust Deed or the relevant legislation (as applicable) will prevail. Participant 1 I agree to accept the Free Shares in the Company awarded to me under the Plan and to leave them in the hands of the Trustee, and not to assign, charge or otherwise dispose of my beneficial interest in the Shares for the whole of the Holding Period of [insert length of Holding Period]. 2 [ [If I have elected for the reinvestment of dividends] I agree that [the specified amount of [insert amount] OR all] cash dividends paid on my Shares will be used by the Trustee to buy more Shares for me according to the rules of the Plan. I agree to accept
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Can shares be awarded to employees completely tax-free? Even shares awarded pursuant to enterprise management incentives (EMI) schemes, still at best, result in capital gains tax (CGT) payable at a rate of 10% on any gains made on the shares. The only way an employee can receive shares with zero income tax, National Insurance contributions (NICs) and CGT to pay (when gains are made) is by using a qualifying Schedule 2 share incentive plan (SIP) and operating it in a particular manner. SIPs give employees the opportunity to acquire shares in their employer or a parent company of the employer on a tax-efficient basis. The legislative framework governing the SIP is mostly contained in: • Schedule 2 to the Income tax (Earnings and Pensions) Act 2003 (ITEPA 2003), which sets out how the SIP can be operated and the main conditions that have to be satisfied for the SIP to be a ‘Schedule 2 SIP’, and • ITEPA 2003, Pt 7, Ch 6, which sets out how shares acquired under a SIP are treated for income tax purposes ITEPA 2003, Sch 2 provides for three different types of awards that can be made (with the additional ability for the participant to acquire dividend shares), and companies can choose which of those awards it will offer to employees at any particular time. However, the legislation is also very prescriptive on how
Does regulation 10 of the TUPE Regulations apply to pension contributions where there is a TUPE transfer between associated companies? In a TUPE transfer, regulation 10 of the TUPE Regulations prevents contractual rights relating to old age, invalidity or survivors' benefits under occupational pension schemes from transferring across to the new employer (the transferee). This is known as TUPE's pension exception. The application of regulation 10 is determined not by the nature of the particular TUPE transfer concerned but instead by the nature of the pension scheme concerned. Regulation 10 specifically applies only to occupational pension schemes. As a result, the exception does not apply to personal pension schemes or group personal pension schemes (since they are not occupational pension schemes). Thus, where the transferor's pension scheme is a personal or group personal pension scheme, contractual rights relating to such a scheme (including any contractual rights relating to employer contributions) will not be covered by the pension exception and will transfer under TUPE, including where the transferor and transferee are associated companies. Conversely, where the transferor's pension scheme is an occupational pension scheme, contractual rights relating to old age, invalidity or survivors' benefits (including contractual rights to employer contributions) will not transfer under TUPE, including where the transferor and transferee are associated companies. However, this is subject to various considerations, including the following: • the transferee is required by
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This week’s edition of Restructuring & Insolvency weekly highlights includes: R3’s new president’s (Christina Fitzgerald’s) thoughts on the latest insolvency statistics, the sentencing of Boris Becker following his conviction for offences relating to his bankruptcy, default and acceleration issues in Lombard v Skyjets, plus a round-up of other news and cases for restructuring and insolvency professionals.
Restructuring and insolvency analysis: On 28 April 2022, the Court of Justice published its long awaited Heiploeg ruling. In this ruling, the Court of Justice ruled that a Dutch pre-pack is possible without a transfer of undertaking, even if it results in the business and employment being preserved. Written by Anita de Jong, Maria Benbrahim, Imane Azdad, and Daan Koenrades of Hogan Lovells.
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138. Notification of employee liability information, and remedy for failure to do so. The transferor1 must notify to the transferee2 the employee liability information3 of any person employed by him who is assigned to the organised grouping of resources or employees4 that is the subject of a relevant transfer5. The notification: (1) must be made either in writing6, or by making it available to the transferee in a readily accessible form7; (2) must be given not less than 28 days before the relevant transfer (or, if special circumstances make this not reasonably practicable, as soon as reasonably
136. Transfers where transferor is subject to relevant insolvency proceedings. If, at the time of a relevant transfer1, the transferor2 is subject to relevant insolvency proceedings3: (1) the relevant statutory scheme under the Employment Rights Act 1996 that applies where an employer has become insolvent4 applies in the case of a relevant employee5, irrespective of the fact that the qualifying requirement that the employee's employment has been terminated is not met, and for those purposes the date of the transfer must be treated as the date of the termination and the transferor must be treated as the
Transfer of undertaking is referenced 2 in Halsbury's Laws of England
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