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Consolidating the Workforce

Consolidation of the workforce may be necessary following an acquisition or TUPE transfer.

On an acquisition or TUPE transfer an employer may acquire more employees than it needs. Care must be taken when considering whether to consolidating the workforce.

Consolidating a workforce can be necessary for a variety of reasons. Reductions in customer demand and seeking increased efficiencies, for example. These will commonly qualify as redundancy situations (see our pages on redundancy).

On occasion consolidation becomes necessary following a business acquisition. If this applies, additional considerations must be borne in mind. When considering consolidation in these situations, it is important to understand the reasons and mechanics behind the relevant acquisition. If the acquisition falls within TUPE an employer’s ability to dismiss incoming employees will be heavily limited.

TUPE does not commonly apply to share purchases and it may be assumed that employees of the target company can be dismissed fairly provided any applicable redundancy process is followed. However, this will not always be the case. The purchase of shares in a company may attract obligations under TUPE, for example, where it is intended that the target company’s employees will be integrated into the wider business of the purchaser shortly after the acquisition.

However the need for consolidation arises, careful management will be necessary. Detailed planning should be undertaken to ensure any necessary consultation processes are undertaken at an early stage. Employers would be well advised to seek to engage with any recognised unions as soon as possible and to position the changes in favourable terms, focussing on what will be on offer for remaining employees – this could include job security, streamlined work processes and better opportunities for progression. Where the workforce is protected under TUPE consideration may need to be given to settling employee claims under the terms of a Settlement Agreement. Attention should also be paid to those employees who you wish to retain but who may find the process of consolidation unsettling and become a ‘flight risk’. Retention payments may prove a useful tool to encourage these employees to stay and remain motivated.

Whatever the scenario, our experienced lawyers can guide you through, avoiding the pitfalls and reaching a pragmatic solution which enables your business to grow and develop.

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