The following Share Incentives guidance note Produced in partnership with Sam Whitaker of Shearman & Sterling LLP provides comprehensive and up to date legal information covering:
The purpose of this Practice Note is to explain the key issues that arise in relation to employee share schemes on a transaction to which the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply.
TUPE applies where there is a ‘relevant transfer’. In very broad terms, this covers two key situations:
business transfers ie a transfer of an undertaking, business or part of an undertaking or business, situated immediately before the transfer in the UK to another person where there is a transfer of an economic entity which retains its identity
a service provision change involving a change in the provider of a service, ie a client ‘outsourcing’ work to a contractor, bringing work back in-house or re-assigning that work to another contractor where certain conditions are satisfied.
If TUPE applies, it:
automatically transfers all the employees assigned to the undertaking together with their contracts of employment (subject to their individual right to object and excluding certain rights in relation to occupational pension schemes) to the transferee
transfers liability, in respect of employees dismissed by the transferor in advance of the transfer, if the reason for dismissal was connected with the transfer
renders automatically unfair any dismissal where the reason for that dismissal is the transfer (unless there is an 'economic, technical or organisational reason'
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