In these troubled times some thought should be spared for the workers at Cadbury. 

Cadbury and Redundancies Following a Takeover

In these troubled times some thought should be spared for the workers at Cadbury.  The company having fought valiantly to avoid a takeover appears now to have accepted defeat. This leaves hundreds of loyal, hardworking employees fearing for their future, especially given the announcement that job losses are inevitable.  Whilst we cannot comment upon the specifics of the Cadbury situation it may be worth reflecting on some of the issues which typically arise in a takeover situation:-

Does TUPE apply? 

Most will have heard of TUPE. These are European employment regulations which broadly mean that when a new company takes over a business the employees transfer to the new employer on the same terms and conditions as they were previously employed under.   TUPE does not always apply.  Where a company changes hands by a share transfer i.e. by a sale of shares to a new controlling shareholder, TUPE doesn’t apply. This is not regarded as a “transfer” at all and the employees remain employed by the existing employer on their same terms and conditions. This does not mean that the new employer will not wish to make changes down the line.

If there is a TUPE transfer are jobs protected?

Not necessarily .  Whilst the law prevents employers terminating for reasons directly connected with the transfer, there is an exception.  This is in relation to dismissals for “economic, technical or organisational” reasons and basically means that redundancies and other dismissals arising from re-organisation are permissible. 

How will redundancy be approached?

It usually appears to be the case that following a takeover the majority of the job cuts are in the acquired company.  However, employers must look at those undertaking comparable roles in the non-acquired part of the business as otherwise any resulting dismissal may be unfair.

How long will any consultation process take?

If there are twenty or more employees whom the employer is proposing to dismiss within 90 days there is a minimum 30 day consultation period.  If it is 100 or more the consultation period must be at least 90 days.  The calculation isn’t simple though. When counting it is necessary to look at the number of employees that the employer is proposing to dismiss at any one establishment.   There is a lot of case law concerning the meaning of “establishment”.  Basically it is a location where there is at least some degree of management and autonomy. 

What payments would be due if redundancies are confirmed?

The basic entitlements are to contractual notice or pay in lieu of it,  holiday pay and for those with at least two years’ service a redundancy payment as well.  The redundancy payment required by law is based on the number of years service x gross weekly pay, but with a cap on this currently of £380, x an age based multiple.  Sometimes employers pay more.  Occasionally employers make a contractual commitment to pay enhanced redundancy. In a TUPE situation the contractual term would remain in place following a transfer.   There are numerous different enhanced redundancy arrangements and it is therefore necessary to look carefully at each particular situation to determine whether or not there is a contractual commitment to pay it or whether there is no such obligation. Again there is copious case law surrounding this issue.

Whatever the legal issues arising, takeover situations are inevitably troubling times for the employees involved, whether they are based at Cadbury or elsewhere.