Following an acquisition, staff may be TUPE’d* immediately if it’s an asset sale, or in the future if it’s a share purchase. The new employer’s pension must be TUPE compliant if the old employer contributed to any type of Defined Contribution arrangement. A TUPE’d employee’s contractual entitlement to pension contributions at the percentage of salary paid by their old employer carries over to their new employer. It’s best to seek legal advice if contribution changes are proposed. This may also apply to their pensionable earnings too – which will often vary between different employers.
The employer will need to assess how their Company Pension operates in comparison to the acquired business. If the pension provider, pension contributions or pensionable earnings differ, some employers choose to operate a separate arrangement to accommodate these differences. Whilst this might be beneficial in the short term by not disrupting the TUPE’d employees, it can lead to issues in the longer term. If businesses are regularly being acquired, then a range of different pension schemes could be created, which makes oversight very difficult and is likely to result in compliance issues, in addition to the extra administration required.
At some stage, the business will need to harmonise all its company pension arrangements which will lead to positive outcomes for the members and business alike.
Doing this soon after acquisition can be difficult, particularly if the company that has been acquired offers more favourable benefits (such as a higher pension contribution % or broader pensionable earnings definition). A common strategy is to honour any existing arrangements for TUPE’d staff, while enrolling any new joiners to that company/division onto the standard basis on which the acquiring company operates.
EMPLOYEE BENEFITS AND TUPE
The same issues as above apply to Employee Benefits too.
Should you acquire a business, care should be taken to notify your insurers, as they may require information about the demographic of the workforce being TUPE’d over. This is often a requirement within the Terms & Conditions, potentially leading to the insurer reviewing your terms.
Operating several different Private Medical Insurance schemes or Group Life Cover schemes is unlikely to benefit the business in the long term, so as before, having a core scheme for each benefit which staff can be TUPE’d into will create efficiencies for the business. Ensuring the benefits are in line with market expectations will also help to reduce concerns about members being worse off following a TUPE and changes to benefits.
If you need an Employee Benefits Consultant, or help with your Workplace Pension, then get in contact with us in Norwich or Ipswich.