»Ê¹ÚÌåÓýapp

If an employer takes over a business and Regulation 14(a) of the SMP (General) Regulations 1986 applies, the employees� contracts of service will not be broken.

»Ê¹ÚÌåÓýapp regulations apply when an undertaking is transferred from one person to another as a going concern.

Definition of terms

An undertaking is a trade or business. It can also be a part of a trade or business, which need not be self-contained.

»Ê¹ÚÌåÓýapp transferor is the legal entity, for example the person, partnership or company that currently owns the trade or business and is transferring it to the transferee.

»Ê¹ÚÌåÓýapp transferee is the legal entity, for example the person, partnership or company that wants the trade or business.

What constitutes a going concern

If there is a dispute about continuous employment and a Transfer of Undertaking is involved, it is vital that a copy of the Deed of Transfer is obtained, if one exists. This should clearly define exactly what is being transferred and the intentions of the two parties.

Factors that indicate a transfer of undertaking as a going concern has taken place include:

• the transferee has taken over

• the contract(s) of employment of some or all of those employed in the undertaking immediately before the transfer
• all rights and obligations arising from those contracts such as annual leave entitlement or salary based on length of service - but not occupational pension rights

• the transferee carries on the business in the same manner as before:
• there is an express assignment of:

• goodwill
• premises
• stock-in-trade, and/or
• outstanding contracts

• the undertaking is protected from future competition by the transferor.