Under the US Volcker rule, which forms part of the Dodd-Frank Act, there have been a recent spate of hedge fund spin offs from investment banks who have been restricted from making certain kinds of speculative investments. These include proprietary trading and interests in hedge funds. So what has this meant for those affected employees?
For some, where prop trading desks have been closed, it has meant Redundancy but for others their employment has transferred to separate companies.
If your employment has transferred to another company you should seek advice as to whether the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) apply. The significance of this is that if TUPE does apply, broadly speaking, you have the right to transfer under the same terms and conditions of your existing employment and have the right to be consulted.
Sometimes employers are not always clear with their staff as to whether TUPE applies or not. If you need advice on this it can be more cost-effective to seek advice as a group.
To guide you through the process, we have set out some of the issues to consider carefully on a transfer of your employment:
• Are the new terms proposed less favourable? If so, you could negotiate to bring those terms in line with your existing terms. Bear in mind that if you accept less favourable terms and TUPE does apply, the new terms will be void if the only reason for the change is the transfer itself. However, it can be preferable to negotiate at the outset.
• Has your employer tried to use the opportunity of the transfer to issue additional onerous terms and conditions, such as post termination restrictions (Restrictive Covenants) preventing you from working for a competitor for a period following the termination of your employment? If so, you should resist these if they will have an adverse effect on your future employment prospects.
• Is this an opportunity for you to improve on your existing terms? It may be and it is always worth negotiating.
• Make sure that your continuity of employment is preserved and there are no gaps between your periods of employment.
• Make sure your employer consults with you properly and follows due process. Consultation should be with elected employee representatives (or, if there is one, a recognised trade union). If you are not transferring, but your role may be affected by the transfer, you still have the right to consultation. If any consultation obligation is not complied with under TUPE, you could be entitled to an award of up to 13 weeks’ pay.
• If there is a Dismissal situation, your dismissal may be automatically unfair if connected with the transfer, although it will depend on all the facts of your case.
• You have the right to object to the transfer if there is a change in your working conditions to your material detriment. You should take advice before objecting.
• Look at the pension arrangements. Under TUPE, pension rights under occupational pension schemes do not transfer but you should ensure that the pension benefits are broadly comparable to your existing benefits.
• Similarly, profit share and equity incentives may not be readily transferable and you should ensure you are being provided with comparable benefits.
If you have any concerns regarding your Redundancy or the transfer of your employment please contact us on 0800 916 9060 or email firstname.lastname@example.org.
By Employment Solicitor Deborah Casale.
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