If you are an employer looking to purchase or sell a business, we provide specialist TUPE transfer advice to ensure your employees are transferred correctly. Call us today for a free initial telephone consultation, without obligation to discuss whether TUPE applies to your business Sale/Purchase.
Our specialist Solicitors are skilled in advising businesses in this complex area of employment law and have assisted businesses in sectors as diverse as Social Care, Construction, Finance and Education.
Further information on TUPE Transfers
What is TUPE?
The Transfer of Undertakings (Protection of Employment) Regulations 2006 aim to safeguard employee rights on the transfer of a business.
Amendments to the the TUPE 2006 Regulations have been made by The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations which came into force on 31 January 2014.
It is essential that if you are considering purchasing or selling a business, you speak with an employment law solicitor who is experienced in TUPE transfers to see whether TUPE applies to your business purchase.
When does TUPE apply?
TUPE applies to both business transfers (whole or part) and service provision transfers.
TUPE may apply whenever a client buys something that has employees associated with it: this might be an asset, or an activity, or a business. For example, if a client is taking over the provision of a service, such as catering, the employees currently providing that service may become the client’s employees by virtue of TUPE. Or if a client is considering buying an hotel, restaurant or pub, the employment of all staff, including cleaners and security staff may be transferred to a client when it buys the business.
When a school transfers from local authority to academy status, its staff will automatically transfer their terms and conditions to the academy.
What is the effect of TUPE Transfers?
The main impact of TUPE is to:
- automatically transfer all the employees working in the business together with their contracts of employment to the buyer
- transfer liability in respect of employees dismissed by the buyer in advance of the transfer if the reason for dismissal was connected with the transfer
- renders any dismissal (where the reason for that dismissal is the transfer) automatically unfair unless there is an ‘economic, technical or organisational reason’ (known as an ETO reason) for the dismissal.
Information and consultation – what are the obligations?
TUPE imposes significant information and consultation obligations on both the buyer and the seller.
Both the buyer and the seller must inform employee representatives of their employees affected by the transfer, of:
- the fact and proposed date of the transfer
- the reasons for the TUPE transfers
- the legal, economic and social implications of the transfer for the affected employees
- the measures which the buyer envisages he will, in connection with the transfer, take in relation to any affected employees or, if he envisages no such measures, that fact
Consultation is required if the seller/buyer envisage there will be measures in relation to their respective employees.
‘Measures’ include any action, step or arrangement that has an effect on the employees affected by the transfer, for example redundancies or changes to the timing of salary payments.
The obligation to inform and consult applies to any employee affected by the transfer or measures connected with it. This will usually include not only the transferring workforce, but also the seller’s and buyer’s non-transferring workforces.
The penalty for non-compliance is up to 13 weeks’ (uncapped) pay per affected employee with both the seller and the buyer being jointly and severally liable to pay the amount ordered.
Information and consultation must be with trade union representatives or, if there are none, with elected employee representatives. If there are no elected representatives, elections must be held.
In relation to a TUPE transfers on or after 31 July 2014, a micro-business (an employer with fewer than 10 employees) with no existing appropriate representatives and who has not already invited the employees to elect representatives, may inform and consult the employees directly.
What is an “ETO reason”?
Economic, technical or organisational reasons entailing a change in the workforce are likely to include reasons relating to:
- the profitability or market performance of the buyer’s business (‘economic’ reasons)
- the nature of the equipment or production processes which the buyer operates (‘technical’ reasons), and
- the management or organisational structure of the new buyer’s business (‘organisational’ reasons)
An ETO reason will only be a valid basis for a transfer-connected change where that reason ‘entails changes in the workforce’. This has been held to apply only where there are changes in the actual numbers employed or the functions performed by employees or after 31 January 2014 a change to the workplace location of the employees.
What are the main changes that have been made by the 2014 TUPE Transfer Regulations?
- the ‘ETO defence’ has been extended, to include an employer’s change of location
- the circumstances in which contracts of employment may be varied following a TUPE transfer have been extended
- for transfers after 1 May 2014 bringing forward the deadline by which employee liability information must be provided to the buyer, from not less than 14 days before the transfer, to not less than 28 days before the transfer