Navigating TUPE and Employee Shares Following a Merger or Acquisition

Navigating TUPE and Employee Shares Following a Merger or Acquisition

Transfer of Undertakings (Protection of Employment) Regulations, often referred to as TUPE, are designed to protect the rights of employees when a business or undertaking is transferred from one employer to another.

TUPE applies to a wide range of business transactions, namely when employers sell or buy part or all of a business as a going concern. It is crucial that all employers know when TUPE is likely to apply to their business, the legal implications of TUPE, and what they have to do to comply with TUPE.

Share Schemes Remaining Intact

When it comes to share schemes, there are several issues that can arise in the context of TUPE.

One of the key concerns following the acquisition or merger of a business is whether share schemes, such as stock options or employee share ownership plans (ESOPs), will continue to be honoured by the new employer after the transfer.

Under TUPE, contractual terms and conditions of employment transfer to the new employer, including participation in share schemes. However, the specific terms of the share schemes may need to be reviewed to ensure they align with the new employer's policies and practices.

If the share schemes involve shares in the original employer's company, there may be questions about how the shares are valued and whether they need to be converted into shares of the new employer's company. This can be a complex issue that requires careful consideration and reliable advice.

GS Verde Law can provide expert legal advice on all areas of employment law - including TUPE - as well as support your newly acquired business on everything from transferring and onboarding employees to redundancies and appeals.

Communication Is Key

Under TUPE, both the old and new employers have obligations to inform and consult with affected employees or their representatives about the transfer. If share schemes are involved, employees may have questions about the impact on their participation in these schemes, and employers should be able to provide clear and accurate information.

Effective communication is essential to addressing any concerns or confusion among employees regarding the transfer of share schemes. Employers should provide employees with information about how the transfer will affect their share scheme participation and any steps they need to take.

Employers need to ensure that any share scheme changes resulting from the transfer comply with relevant legal and regulatory requirements. This may include obtaining necessary approvals or filings with regulatory authorities.

In some cases, employees may need to provide their consent to transfer their share scheme participation to the new employer. Employers should be aware of any consent requirements and seek employee agreement when necessary.

Tax Implications

The transfer of share schemes can also have tax implications for employees. Employers should provide employees with information about any potential tax consequences and may need to seek tax advice to ensure compliance.

GS Verde's tax experts can advice on the tax planning opportunities of selling a business, so possibly tax liabilities can be identified, mitigated, and reduced.

Turn to Experts

Employers should review the terms and conditions of existing share scheme documents to determine if any amendments or updates are necessary following the transfer.

If the new employer has its own share schemes, there may be a need to integrate or harmonise them with the schemes of the transferred employees. This can involve aligning eligibility criteria, vesting schedules, and other key features.

It's important for both the old and new employers to seek legal and financial advice when dealing with share schemes in the context of a TUPE transfer to ensure compliance with all applicable laws and to address any issues that may arise during the process. Additionally, open and transparent communication with affected employees is crucial to minimize confusion and concerns.

GS Verde's multidiscipline service encompassing legal, financial, tax and communications support can help streamline the merger/acquisition process. We also provide expert end-to-end advice so whether you're buying or selling a business you can be confident that you are doing right by your employees during every step of the transfer.

To find out how GS Verde can help you facilitate a smooth business transaction contact us here.


"GS Verde Accountants have been invaluable during an important and rapid growth phase of our business."

Nick & Jon Bird, Partners, SquareBird

"There are lots of accountancy firms that we could have chosen from to work with however there was a distinct difference in the approach and service level that was offered by GS Verde Accountants."

Kevin Dunn, Director, UKMD Ltd

"They are our finance team; and they are on top of our accounts and our financial strategy. We rely on their expertise to help us drive our business forward and they meet every aspect of our needs"

Mike Stephens, Director, English County Contracts Ltd

"We know that we cannot get a better or more reliable service – we don’t even have to think about it. GS Verde Accountants go beyond the call of duty"

Jonathan Gould, Managing Director, GWorks Ltd

"Worth absolutely every single penny – this is the single best decision we have made in the last year. For every single person we have spoken to at GS Verde Accountants – nothing is too much."

Hannah Kennard, Director, AK Plant Services Limited

"I feel valued as a client. I get rapid responses to any emails or calls; and I must say the GS Verde Accountants team are brilliant. I already feel freer to concentrate on setting the strategic direction for the business"

Mark Burland, Director, First Class Comms Ltd t/a FCC