Foreign Workers and Business Transfers
If you are considering buying a business, you will now need to ensure that you are not taking on illegal employees following changes in the Law which took effect on 29th February 2008.
Before that date, employers were not expected to check transferring employees' rights to work in the UK. However, under new Guidance produced by the Borders and Immigration Agency, entitled ‘Comprehensive Guidance for Employers on Preventing Illegal Working' :-
‘Employers who acquire staff as a result of a Transfer of Undertakings(Protection of Employment) Regulations transfer, are provided with a grace period of 28 days in which to undertake the appropriate document checks and establish an excuse, following the date of transfer'.
Firstly, if you are purchasing a business or its shares, you must carry out the necessary diligence tests in relation to employees before the transfer. The 28-day comfort period is useful to protect yourself from liability but, if it transpires that you have unwittingly acquired foreign workers who are not entitled to work in the UK, then you will be faced with the cost and inconvenience of their dismissals and you may also suffer from reduced service levels whilst employees are replaced with those who are entitled to work in the UK.
Also, when purchasing a business or its shares, you should consider negotiating suitable warranties and indemnities to protect yourself from the civil penalties that arise under the Act. Unfortunately, you cannot contract out of the criminal penalties that also arise and it is therefore essential that the matter is dealt with prior to any transfer taking place.
For further information, please contact Jon Dunkley on 01271 341021
