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Transfer of Undertakings
Acquiring or Selling a Business?
So many employers whether the incoming purchaser, or the outgoing seller think they can simply dismiss or make redundant it’s staff despite the fact that the business is being sold as an ongoing concern. TUPE is the shortened version for the Transfer of Undertakings (Protection of Employment) Regulations. These Regulations were first passed in 1981 but overhauled significantly in 2006. The 2006 Regulations came into force on the 6th April 2006. TUPE is often regarded as a complex and tricky piece of legislation adopted by the U.K. in order to implement the European Acquired Rights Directive.
The purpose of TUPE is to protect employees if the business in which they are employed changes hands. Its effects are to move employees and any liabilities associated with them from the old employer to the new employer by operation of law. Essentially when a business is sold as a going concern the incoming employer steps into the shoes of the outgoing employer and all the existing employees have the legal right to transfer to their new employer on their existing terms and conditions of employment with all their existing rights and liabilities in tact.
The message is clear – Take advice when TUPE applies
Employee’s rights under the “TUPE” Regulations are far reaching and liability can now be split as against the buyer and seller of the business when an employee is dismissed by virtue of a TUPE transfer. Your contract of sale needs close examination to protect you from claims. Some TUPE claims have been brought against employers over a year after the sale/acquisition took place.
This is a complex piece of Legislation that requires careful guidance.
We offer advice on the Sale & Purchase Agreement to ensure that the correct indemnities are in place.
We will raise requisitions as to staff composition.
We will negotiate to limit liabilities against potential future claims.
We will guide you through the consultation period and process keeping to Regulation guidelines.
We will assist you where re-organisation within the workplace is inevitable post sale.
Any dismissal will be automatically unfair where the sole or principal reason for the dismissal is the transfer or a reason connected to the transfer. Compensation penalties are high. The defences available to the employer are narrow and even if the employer can establish an economical and technical organisational reason for the workers dismissal, its failure to consult under the legislation may still make the dismissal unfair.