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Employer Due Diligence Lessons from UK Share Scheme Case

The recent decision in Ponticelli Limited v Gallagher provides a salient reminder that the right to participate in a share incentive plan can transfer to a new employer under the Transfer of Undertakings (Protection of Employment) Regulations. The right applies even if the employee’s right to participate in the plan arose outside of the contract of employment. The employee will be treated as a leaver under their old employer/transferor’s scheme, and the transferee employer must then provide a scheme of substantial equivalence for the employee to participate in post-transfer.

While this is a Scottish case, the decision is binding on the employment tribunals throughout the UK.

Read more here.

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Why a Careful Review of Outsourcing Agreements is Important in International M&A Transactions

Outsourcing agreements are behind the most important vendor relationships. They therefore require a detailed review as part of the due diligence process of any M&A deal or spinout transaction. With more and more businesses relying on outsourcing, the underlying agreements have become an important factor in M&A transactions.

Read the full article here.

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TUPE Changes for UK Employees: Implementation Date – Confirmed as 31 January 2014

We reported in the autumn on some small but important changes to TUPE planned to take effect in early 2014. We promised to let you know if there was any delay in the proposed implementation date of 1 January 2014. The UK Government has now confirmed that the TUPE changes will in fact take effect from 31 January 2014.

What Are The Key Changes?

A summary of the key changes can be seen in our previous alert here.

What Does This Mean For Employers?

Employers will not be able to rely on any of the new provisions for TUPE transfers occurring before 31 January 2014.

Employers who were planning on undertaking a TUPE transfer on or shortly after 1 January 2014, with a view to relying on some or all of the new provisions, may now, if possible, wish to consider delaying that transfer until the changes take effect on 31 January 2014.

This consideration is particularly relevant for any employers who may be running simultaneous pre-transfer redundancy and TUPE consultations, together with those employers looking to relocate the transferring workforce to existing premises post-transfer.

For more information, or to discuss the impact of the changes to TUPE or the revised implementation date on your business, please contact Katie Clark or any other member of the McDermott employment team in London.

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Qualifying Period for Unfair Dismissal of Employees in the UK to Increase to Two Years’ Continuous Service from April 6, 2012

by Katie L. Clark

What is changing?

From April 6, 2012, the length of continuous service needed by an employee in the UK to qualify:

  • To bring a standard unfair dismissal claim; and
  • To request a written statement setting out the reasons for his/her dismissal will increase from one year to two years. 

Will this affect existing employees?

The new two year qualifying period will apply to an employee who commences work on or after April 6, 2012.

Employees who are already in employment on April 5, 2012, will not be affected by this change.  They will still be able to bring a claim of standard unfair dismissal if they have at least one year’s continuous service.

Employees who transfer to a new employer under TUPE after April 6, 2012, but who were employed by the transferor prior to April 6, 2012, will also be covered by the one year service threshold for standard unfair dismissal.

What about employees who are currently being recruited?

An employee’s period of continuous employment “begins with the day on which the employee starts work.”  This means that the increased qualifying period will only apply to employees who start work on or after April 6, 2012.

The date on which an employee commences a recruitment process, or is offered a job, is not relevant when it comes to calculating continuous employment.

What does this mean for employers?

If commercially possible, employers in the UK may wish to push new joiner start dates back to April 6, 2012 or beyond. 

Ensure that your internal recruitment team, who may be making offers to candidates to start with you in early April 2012, know about the change.

Going forward, the date on which an employee started work will be as important as the date on which their employment ended for the purposes of determining if they are eligible to bring a standard unfair dismissal claim. 

To make the position as certain as possible, ideally both the start date in the employment contract, and the date on which an employee commences work, should fall on or after April 6, 2012.

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