TUPE and business transfers. Protecting employment rights. When buying, selling, restructuring or outsourcing part of your business, understanding employment law implications is crucial. The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) significantly impacts employee rights during business transfers, mergers and service provision changes (e.g. insourcing or outsourcing). Our employment law specialists guide businesses through: Company acquisitions and disposals Outsourcing arrangements Service provision changes Business restructuring TUPE compliance requirements Our employment solicitors help you navigate complex employment obligations while protecting your commercial interests. Understanding TUPE Automatic transfer principle This is the at the very heart of TUPE and makes clear that the contracts of employment of those employees employed by the ‘transferor’ and ‘assigned to the organised grouping of resources or employees that is subject to the relevant transfer’ automatically transfer to the ‘transferee’ on their existing terms. The principle applies to ALL employees who were employed in the business or service to be transferred immediately before the transfer takes place, or who would have been so employed if they had not been dismissed by reason of the transfer, unless that reason was ‘an economic, technical or organisational reason’ (ETO reason) entailing changes in the workforce. The transferee effectively steps into the transferor’s shoes with regard to the transferring employees. All of the transferor’s rights, powers, duties and liabilities under or in connection with the transferring employees’ contracts pass to the transferee and any acts or omissions of the transferor before the transfer are treated as having been done by the transferee (regulation 4(2), TUPE). If employees are involved in your business sale or purchase this is another key reason to ensure that you undertake due diligence before committing. Protection against dismissal TUPE also provides enhanced protection against dismissal for employees with (at least) the qualifying period of service. Dismissals will be automatically unfair if the sole or principal reason for the dismissal is the transfer itself. If, however, the reason for the dismissal is an ETO reason entailing changes in the workforce, then the dismissal will be potentially unfair and the general unfair dismissal rules will apply. This is a very technical and often complex area on which Employers should take advice before taking action to dismiss. Obligations to inform and consult There are strict and onerous requirements around informing and consulting with employees affected by transfers covered by TUPE with many pitfalls for the unwary. A failure to comply with these obligations can also be expensive with employers being liable to pay compensation of up to 13 weeks’ gross pay to each and every employee affected. Our employment solicitors have extensive experience of advising and assisting employers in dealing with the range of issues which can arise on the sale or purchase of a business or a service provision change. Where required we collaborate with our company and commercial Team to ensure you receive comprehensive and holistic advice and assistance. We can also provide answers to queries such as: What are your consultation obligations? What employee information are you obliged to provide to the other party in the transaction? What happens if you need to make redundancies or other changes in connection with the business transfer or service provision change arrangements? Get in touch Contact Mel McCrum Partner, Head of Department Employment 01737 854500 Message Connect On this page Contact our Employment lawyers Get in touch
