In the first of a new series on common employment issues, Farmers Weekly asked two lawyers for advice on when a business changes hands and on recruiting overseas skilled workers.
Employee rights when business changes hands
The Transfer of Undertakings (Protection of Employment) Regulations 2006, better known as Tupe, protect the rights of employees in two main instances:
- When the business they work in transfers to a new employer
- In the case of contracted-out services, when the services are first contracted out, there is a change of service providers, or if the services are taken back in-house.
John Merry, head of employment law at Lanyon Bowdler, says: “It’s an area of law which can be complex and can catch those involved in commercial property transactions unawares, including when farmland is sold or let or there is a change in tenants.
“Further, the application of Tupe is often overlooked when entering into contract farming arrangements.”
The basics are that when a relevant transfer of ownership takes place, the employees (and also, potentially any other “workers”, such as casual workers) assigned to the relevant business also transfer.
For example, if all of the land of a farm is sold and continues to be used as farmland in fundamentally the same way, in the normal course, the contracts of all those who were employed on the farm immediately before the sale will transfer to the buyer on the same terms.
There will be only limited circumstances in which the seller or the buyer can dismiss employees lawfully or alter their contracts.
Any liabilities of the seller to the employees, such as for unpaid wages, unlawful discrimination or personal injury, also pass to the buyer – although the benefit of any employee liability insurance of the seller (relevant to personal injury claims) will also transfer.
Informing and consulting
When TUPE applies, both the current and incoming employer have an obligation to provide information to, and in certain circumstances consult with, their respective employees.
If there are fewer than 10 employees, they may deal with the workforce directly, but where there are more, they will need to go through appropriate representatives.
These will be representatives of a recognised trade union or will be elected by the affected employees.
In the case of an incoming employer, there will also be an obligation to inform the current employer of any changes it has in mind for employees who are to transfer to it, or to confirm that no changes are envisaged.
“Where an employer fails to comply with any requirement in respect of informing and consulting, an employment tribunal can award each affected employee up to 13 weeks’ pay,” warns Mr Merry.
Tips for incoming employers
Information-gathering can be important. Key questions include: who is, or has recently been, employed in connection with the land, and on what terms?
Tupe requires that the outgoing employer provides certain minimum employee-related information to the incoming employer not less than 28 days before the transfer.
Where possible, however, employee information should be obtained sooner, when it might influence the decision to proceed with the deal and on what terms.
In any event, it would be prudent to get the current employer to warrant the accuracy of the information provided and to indemnify the incoming party in the event that it is inaccurate or incomplete.
Under the law, they will otherwise assume responsibility for the outgoing employer’s liabilities, so it would also be prudent, where possible, for incoming parties to obtain indemnities from the current employer so that any such liabilities would pass back to them.
Tips for a current employer
When preparing for the transaction, ensure that all employees have up-to-date and accurate written particulars of employment: it will make it easier to provide employee information.
If employee information is to be disclosed more than 28 days before an intended transfer, all personal data should be anonymised in line with data protection obligations.
Bear in mind that if an employee resigns before a transfer because of detrimental changes in working conditions that are proposed by the intended new employer, if they have more than two years’ service they can bring an unfair dismissal claim against their original employer.
It would therefore be prudent, if possible, to obtain indemnity protection from the intended new employer in this regard.
If contracting out a farming operation, secure obligations from the contractor regarding:
- Future pay and benefits (so they do not increase out of control)
- The provision of employee information prior to the expiry or termination of the contract, to assist with re-tendering
- Indemnities in favour of future employers in relation to acts or omissions of the contractor to help secure favourable terms upon a change of contractor, or to provide protection in the event the landowner takes back control of the operation.
The labour shortages affecting agriculture are well-known and well-publicised.
However, many farmers remain unaware of the ability to recruit overseas workers, or of the process and costs involved if looking to recruit from abroad using the Skilled Worker Visa Scheme.
Sacha Wooldridge, head of immigration at Birketts, says the Skilled Worker scheme is specifically designed so that a business can bring a worker in for a long period, recruiting them for a permanent position. The scheme can be used by all parts of the agricultural industry.
This is in contrast to the Seasonal Workers Visa Scheme, which is designed for temporary staff working in the UK for up to six months and can be used only by horticulture (including ornamental) businesses.
The Home Office has broadened its definitions of skilled workers to encompass more agricultural industry roles. However, the roles must meet a minimum salary threshold of £25,600 a year (or an hourly rate of £10.10), except where a small handful of exemptions apply.
A business must also register with the Home Office for the right to recruit migrant workers through the Skilled Worker scheme.
“Although in theory they can apply for it independently, it is not that straightforward and people tend to need legal assistance,” Ms Wooldridge says.
If starting from scratch, to get a business licensed and then get someone in post can take four to six months and can be an expensive process, she says.
“To get the business licensed with the Home Office and bring in one individual probably costs £10,000. Once the business is approved to sponsor, the licence lasts for four years, so the costs of bringing in extra workers drops, but will still be about £6,000 in government fees alone for a three-year visa.”
Visa cost pitfalls
Legally, the employer must absorb certain elements of the visa costs, and while other costs may be passed back to the employee, it may be worth taking advice on this.
“Some employers are getting it wrong and trying to push all the costs back to the individual, which is not permitted,” Ms Wooldridge says. The Home Office has been very clear that some elements cannot be passed on.
“Broadly speaking, if a three-year visa costs £6,000, about £3,000 must be absorbed by the employer and the other £3,000 can be passed back to the employee.
“However, if they are a worker on the lower end of the wage spectrum, there is a risk that trying to claw back visa money could push people into the territory of debt bondage under the Modern Slavery Act. There is also a reputational risk to consider.”
English skills requirement
One other requirement of the scheme is that workers must be able to demonstrate English language skills, by taking a test covering reading, writing and listening, as well as speaking.
While there can be some excellent agricultural workers available, they may not have written English skills.
Ms Wooldridge knows of some employers who have recruited from places where English is not generally used, but then found themselves forced to put prospective staff through a language boot camp to get them through the exam.
“It is arguably much easier to try to recruit in territories where you know that English is spoken or is very common. If working with a recruitment agency, it is worth being strategic about what localities you are going to find talent from.”
Skilled Worker Visa Scheme
- For permanent employees
- Minimum salary of £25,600 a year
- First registration and application can take up to six months to process
- Relatively high cost – around £10,000 for registration and first employee
- English language skills must be proven