If you are an employer contemplating taking over a business – or part of a business – we strongly advise that you contact our Employment Department for advice on whether the Transfer of Undertakings (Protection of Employees) Regulations 2006 (TUPE Regs) apply.
What are the TUPE Regs?
The TUPE Regulations (Transfer of Undertakings) 2006 apply to situations where there is a relevant transfer, either a sale of whole or part of a business, or a service provision change, where the transferred business or service retains its identity after the transfer.
In the case of a relevant transfer, the existing contract rights of employees are protected by the TUPE Regs. The new employer effectively takes over all of the rights and liabilities which existed between the employee and the previous (transferor) employer.
When a transfer falls under the TUPE Regs there are employment law consequences for both the original employer (the transferor) and the new employer (the transferee).
The transferor and transferee have a joint duty to inform and consult and may be held jointly liable if there is a failure to reasonable inform and consult with employees about the relevant TUPE transfer. The transferor employer has an ongoing duty to inform the transferee on a number of issues including providing information about all the employees and their contracts of employment, and any pending or recent employment litigation for example.
Employers should also be aware that there is potential for unfair dismissal claims to arise if the TUPE Regs are not adhered to. In particular, any dismissal by a transferor or transferee for the sole or principal reason of the transfer may be deemed automatically unfair. Any detrimental change to the terms and conditions of employment for reason of the transfer may also be void.
Please contact our Employment Law team for further advice on the application of the TUPE Regs.