TUPE & Business Sales

Business sales, transfers, change of ownership and changes to service providers may bring with it the employment law complexity of TUPE (the Transfer of Undertakings (Protection of Employment) Regulations).

Its aim is to protect employees; their employment rights (including continuity of employment) and terms and conditions of employment. This occurs when they are, because of TUPE, automatically transferred over.

When does TUPE apply?

It applies where there is one of two types of “relevant transfer”:

    • a business transfer, involving a sale or transfer of a business or part of a business
    • a change in service provider, for example outsourcing a service formerly undertaken by the business, reassigning an existing service contract or bringing the work in-house

There are various tests, but in its simplest form, it should be recognisable after the transfer. Trying to avoid TUPE by providing the services (for example) differently won’t be enough. One person alone as a ‘grouping’ can be enough.

Are their exceptions?

Yes, pure share sales for one.

Automatic transfers

As mentioned anyone employed by the transferor, in the above circumstances, immediately becomes the transferee’s employee. This will be on their existing terms of employment (including pay) and without a break in their employment. This can even include those dismissed beforehand.

Dismissals (and some resignations) will be automatically unfair where the sole or principal reason for the dismissal is the transfer itself or a reason connected with it, which is not an ETO reason (an economic, technical or organisational reason entailing changes in the workforce).

Any changes to the employees’ terms will be void if the sole or principal reason for the change is either the transfer itself or a reason connected with it, which is not an ETO reason.

Your obligations

Both businesses have obligations to formally inform employees of the proposed transfer. If you propose taking any ‘measures’ (small changes count) in respect of employees’ terms and conditions, you must consult your own affected employees (directly with employees if there are fewer than 10 or if more, with their elected representatives). If you do not, an Employment Tribunal can award up to 13 weeks’ gross pay for each affected employee. You must also provide certain information (if you are the transferee) to the transferor.

What next? How can we help you?

We are unable to prescribe headache medication! However, we can help guide you through the complexities of TUPE to limit the risk of litigation. Please speak to your employment solicitor at s & h employment law. We can meet with you there, or at your offices if you prefer in Guildford, Godalming & the surrounding area.

To provide some useful information, whilst online, we have employment law checklists available. You can also sign up for regular updates.

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If you are an employee and want more guidance please see here.