The Transfer of Undertakings (Protection of Employment) Regulations
It is essential that employers of all sizes understand what employment liabilities can arise following a transfer of business. The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) is in place to protect employees if the business in which they are employed changes hands. TUPE regulations effectively moves employees and any liabilities associated with them from the old employer to the new employer.
TUPE can apply when employers:
- sell or buy part or all of a business as a going concern;
- outsource or take the service back in-house or make a “service provision change”;
- grant or take over a lease or licence of premises and operate the same business from those premises.
The supply of goods and “one-off buying-in of services” are excluded and TUPE does not apply to a transfer of shares, although it would apply to an asset transfer carried out as a precursor to a share sale or a transfer of the business or part of the business to the holding company following a share transfer.
Virtually all service provision changes are covered so it is safe to assume that TUPE applies to most outsourcing but understanding exactly when TUPE does and does not apply is very complex. Failure to comply with the TUPE provisions can be very expensive for businesses. When a business or business unit is being transferred, with its employees, it is essential to take advice at the beginning of the process in order to avoid the potential pitfalls.
It is also essential that employers know all about the employees they might inherit if they are planning to take over a contract or buy a business and they should make sure that the contract protects them from any employment liabilities which arose before they became the employer. This is helped by the fact that the old employer is required to provide the new employer with written details of all employee rights and liabilities that will transfer.
Our employment lawyers are on hand to talk you through the process if you think a transaction you are involved in might be covered by TUPE.
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