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Three Parties

Transferring Them to Your Own Entity

A transfer is a termination and a new hire unless local law says otherwise, and what carries over varies.

YouThe providerNeither contract

Ending the service agreement

Ending the person's employment

Moving them to your own entity

The person simply resigning

YoursThe provider'sCrosses the twoNeither contract

Four matters, and no share: what any one agreement covers differs by agreement. One crosses both, and the handoff is where these arrangements fail. Three endings, and only one of them is yours to start and finish.

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Unwinding it · Procedure

The steps one buyer took to move three people onto its own local entity, and what each required

Establish whether the transfer is a transfer or a termination and rehire

What you actually ask for

A question to local counsel, not to the provider, because the answer decides everything else

What you cannot require

That the provider's view be the one you rely on, since they are a party to the arrangement you are leaving

Nobody has to agreeTakes: Two to four weeks

Agree the release with the provider

What you actually ask for

A termination of the service, on notice, with a written confirmation that they will not object to the move

What you cannot require

That they waive a non-solicitation clause you agreed to without reading

The provider has to agreeTakes: A month, and some agreements contain a fee for this

Make the person an offer from the new entity

What you actually ask for

A local employment contract, with the terms you intend to carry over stated explicitly

What you cannot require

That they accept, since it is a new employment relationship they are free to refuse

The person has to agreeTakes: A fortnight, and they may decline

Decide what continuity of service carries over

What you actually ask for

A written position on leave, seniority, notice and anything length-of-service dependent

What you cannot require

That it carry automatically, because in many cases it does not

Nobody has to agreeTakes: A week, once you have the legal answer

Set the start date against the old end date

What you actually ask for

A coordinated pair of dates so there is no gap in employment or in pay

What you cannot require

That a gap be harmless; in several countries a break interrupts entitlements the person cannot recover

Both have to agreeTakes: Two to three weeks of coordination

Five steps, and the first one decides the cost of the other four. One buyer's own move; whether service transfers, and what a non-solicitation clause is worth, differ sharply by jurisdiction.

Moving somebody from an employer of record to your own local entity is, in most places, a termination and a new hire rather than a transfer. What carries over depends entirely on local law, and the answer decides the cost.

The practical lesson in “Transferring Them to Your Own Entity” is that a third-party arrangement still leaves day-to-day management with the operating team. Used for productivity software for business, explore this workforce tool can make time and project context easier to review, provided the purpose is disclosed, access is limited and every consequential inference receives human review.

Establishing that answer first, before telling anybody anything, is the whole of the preparation.

For a separate perspective on “Transferring Them to Your Own Entity”, consult the EY workforce resources. Compare it with the actual contract, country and operating process rather than using a general resource as a local conclusion.

The question that comes first

Does the move amount to a transfer of an undertaking under local law, or is it an ending followed by a new employment.

The two produce very different outcomes for service, notice, entitlements and any payment due at the end. Ask local counsel rather than the provider.

Why not the provider

They are a party to the arrangement you are leaving and have a commercial interest in how it ends. They may also be perfectly helpful, and their answer is still not the one to rely on.

Use them for the mechanics, not for the legal position.

Most providers are entirely straightforward about this and will say so themselves. The ones that press a view on the legal question are the ones to be most careful with.

The release

Your agreement may restrict you from employing their employees, for a period, with or without a fee. These clauses are common and vary in enforceability.

Read it before you plan anything. A conversion fee discovered mid-move is a poor negotiating position.

Negotiating the release

Frequently achievable, particularly where you are leaving on good terms or taking other business elsewhere in the group.

Ask at signature whether conversion is permitted and on what terms. It costs nothing then and is the point at which you have leverage.

Making the offer

A new employment contract from your entity. State explicitly what you are carrying over: start date for service purposes, leave balance, notice period, anything length-dependent.

State explicitly what you are carrying over:

  • Start date for service purposes.
  • Leave balance.
  • Notice period.
  • Anything else that depends on length of service.

Silence is read against the person. Spelling it out is both fairer and clearer than relying on an assumption nobody wrote down.

What they may decline

All of it. This is a new employment relationship with a different employer, and nothing obliges them to accept.

Most people do, where the terms are at least as good. Where they are not, you are asking somebody to give up entitlements for your administrative convenience.

Continuity of service

The item that matters most and is most often overlooked. Length of service drives notice, severance, leave and in some countries protection against dismissal.

Where it does not transfer automatically, you can grant it contractually. Deciding to do so is a cost, and deciding not to is also a decision somebody should make rather than let happen.

Pensions and benefits

Scheme membership generally does not transfer. Accrued rights may sit with the old scheme and the person may have to be enrolled afresh.

Check for waiting periods in the new arrangements. A gap in medical cover during the move is the practical detail that gets forgotten.

Where a waiting period is unavoidable, say so in advance and consider bridging it. Somebody discovering mid-treatment that their cover lapsed will remember it permanently.

The dates

End date with the old employer, start date with the new, with no gap in employment or in pay.

A break of even a few days can interrupt entitlements in several countries, and the person cannot recover them afterwards. Coordinate the pair deliberately.

Telling the person

Early, and with the full picture: why you are moving them, what changes, what carries over, and what you need from them.

Somebody being moved between employers for reasons entirely internal to you deserves more explanation than a form, and the explanation costs one conversation.

Timing against the entity

The entity has to exist, be registered as an employer, and be able to run payroll before anybody moves. That takes months in most countries.

Start the entity work well before the conversion conversation. The usual failure is announcing a move and then discovering the registrations are not finished.

Payroll in particular needs a running start: a first run in a new entity is rarely smooth, and it should not be the run that also carries somebody's transfer.

What cannot be guaranteed

That the move is neutral for the person. Even done carefully, somebody may lose service, a benefit, or a term that existed in the old contract and not the new one.

The honest handling is to identify what those are, decide which you will replace, and tell the person before they are asked to sign rather than after. A conversion presented as purely administrative, which later turns out to have cost somebody two years of accrued service, is the version of this that poisons a relationship you were trying to make permanent.