Newsletter Winter 2006
Selling your company? What you need to know about TUPE
TUPE is an acronym for the Transfer of Undertakings (Protection of Employment) Regulations. The Regulations were first passed in 1981 but overhauled in 2006.
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.
TUPE broadly applies to business sales of all sizes.
TUPE gives employees the legal right to transfer to the new employer on their existing terms and conditions of employment and with all their existing employment rights and liabilities intact. Effectively, the new employer steps into the shoes of the old employer and it is as though the employee's contract of employment was always made with the new employer.
The new employer is prohibited from making any changes to the terms and conditions of employment of the transferred employees if the sole or principal reason for the variation is connected to the transfer. This often makes it difficult, for incoming employers to harmonise terms and conditions of employment of staff immediately after a TUPE transfer.
Since April 2006, the outgoing employer has had a duty to provide the incoming employer with written details of the transferring employees (including identity, age, particulars of employment, disciplinary and grievance records, employee claims and collective agreements) together with all associated rights and liabilities that will transfer. This, although in practice the incoming employer will aim to obtain this information much earlier. The transferred workforce has also to be informed when the deal is public.
This is a specialised area of law and for some sales may require legal advice. For most sales, however, it is simply a case of ensuring that the buyer is aware of all the relevant staff details to ensure that the workforce is treated fairly by the new owner.
Thinking of Selling your Company? Contact ACF for a confidential free valuation and consultation.