“I am an HR Manager in a company which is acquiring a small business where some of the transferring employees have written contracts and others do not.  We would like to issue new contracts of employment and also to introduce additional clauses like non-compete for a number of key staff – How do I handle it?”

On the information you have provided, I have assumed that the Transfer of Employment (Protection of Employment) Regulations 2006 (TUPE) applies to the proposed acquisition. Therefore, you should be involved in an information and consultation process with the current employer, the Transferor.  As part of that process, under the TUPE Regulations, you are required to provide to the Transferor details of any measures you may implement on the transfer of this business.  You will be aware that affected employees will transfer on their existing terms and conditions of employment, details of which ought to have been provided to you by the Transferor in accordance with the TUPE regulations.  You should therefore have details of the employees’ terms and conditions of employment and be aware how those provisions may differ to those of your existing staff.

If there are transferring employees who do not have a written contract, you should ask for further details of their employment relationship, e.g. usual terms and conditions, custom and practice etc. and these existing arrangements, custom and practice etc. will pass to you, in the absence of a written contract, under the TUPE regulations.

You should also remember that it is a legal requirement for an employer to provide written details of terms and conditions to their employees and I suggest therefore on transfer of the business, you issue written contracts to those transferring employees who do not currently have a written contract of employment.  This however is not an opportunity for you to issue a contract which comprises your existing terms and conditions: rather, this written contract should mirror the transferring employees’ terms and conditions provided to you by the Transferor.

If, as you say you do wish to introduce new terms for transferring employees, as indicated above, under Reg 13 of TUPE Regulations, you must provide details of any proposed changes as part of the consultation process, with a view to reaching agreement to those new terms and conditions, with the employees’ representatives.  Initially, you will provide details of these changes to the Transferor who in turn will relay them to the employee representatives.  Depending on your relationship with the Transferor, sometimes the Transferee’s representatives can participate in the information and consultation process to provide further details of the proposed measures, answer any questions etc.

It might be possible to agree the addition of new terms via this consultation process.  Regulation 4(5) of the TUPE Regulations provides for an agreed variation of terms where the change is not connected to the transfer or is due to an economic, technical or organisational reason. It is not possible to simply push through new terms and conditions in order to harmonise the terms of transferring employees’ contracts with those of your existing staff.

You have suggested you may wish to introduce post-termination restrictions and I suggest you closely examine the existing terms and conditions, considering the reason for introducing such a clause.  Even considering the requirements of Reg 4(5), for the restriction to be enforceable you must be able to demonstrate that the proposed post-termination restriction is reasonable and goes no further than necessary to protect the company’s legitimate business interests, always taking into account the particular employee, their duties, responsibilities etc. and risk to the Company should they leave. You should also take into account if some consideration is required to introduce a new post-termination restriction and again, this will depend on the individual circumstances of the employee.

You should be aware that under Reg 4(9), if there are substantial changes to an employment contact which is to the detriment of an employee, that employee can resign and will be taken to have been dismissed. Therefore, I suggest you consider if your proposed changes are necessary, rather than a desire to harmonise terms, and to remember to provide details of the proposed changes to the Transferor as part of the information and consultation process. This is a complex area and you should seek further advice taking into account the specific nature of the proposed variation of terms.