Business Sales Affecting the Employee

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 6th April 2006. TUPE is often regarded as a complex and tricky piece of legislation adopted by the UK 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 effect is 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.

Employers frequently make the mistake of dismissing a workforce. Any dismissal by virtue of the transfer is automatically unfair unless the employer can establish that the dismissal was in no way connected to the transfer but genuinely took place for an economical technical or organisational reason, however if the employer fails to consult as required under the Regulations the redundancy situation is likely to remain unfair.