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TUPE regulations

Are you concerned that the transaction you are considering will have TUPE implications?

Are you considering the purchase of a business?

Talk to an experienced employment law solicitor today. Call us now on 0161 618 1032 or click here

• Are you considering the purchase of a business either whole or in part?
• Have you been successful in tendering for a contract or winning work?
• Did you know that in either case, you could be responsible for expensive liabilities in relation to employees?

These regulations crop up in all sorts of different areas and are generally seen as a bit of a nightmare for both employers and employees alike (and their advisors!).

The most common scenarios in which TUPE regulations are encountered are as follows:

1. Buying or selling a business
2. Contracting out a service
3. Contracting to provide a service
4. Taking a service back in house

When do the TUPE regulations apply?

TUPE regulations will apply in two situations:

• (a) when there is a “transfer of an economic entity that retains its identity”
• (b) when there is a “service provision change”

The first situation is designed to cover the typical buying of a business scenario in which the assets of a “business” are bought and the business continues to be run in such as way as to retain its identity. However, when does a functioning business simply become a collection of assets, and what if the buyer simply wishes to purchase some of the assets but not all, for example a customer database, or just the profitable part of an operation?

The second situation is designed to cover a “service provision change” ie when a party “outsources” part of its operation to a contractor, a party takes over the running of a contract, or a customer changes a supplier or a service. Employees who are “essentially dedicated” to the contract will transfer to the new provider.

What should I do if I'm concerned about TUPE?

In a nutshell, it is always worth taking legal advice. Talk to an experienced employment law solicitor.

There are expensive liabilities in relation to any job losses (or in some cases even employee resignations) which arise as a result of a TUPE transfer. In addition, buyers generally become legally liable for the actions of the seller in relation to employment liabilities.

Buying a business - things to consider:

1. Is TUPE likely to apply and am I happy to take over the staff?
2. If not, how will the staff be dealt with? Can I consider redundancies?
3. What exactly am I taking on? Ask the seller to provide full details of ongoing payroll costs, notice payments, redundancy payments and full “employee liability information”
4. Conduct a thorough “due diligence process” – as a buyer you will generally be bound to honour all existing contractual terms and meet any claims
5. Be aware that there are legal difficulties with changing terms and conditions of employment of transferring staff after the transfer has taken place
6. The regulations require employers to “inform and consult” with employee representatives before a transfer takes place – be aware of what this entails and the financial penalties if this is not done. Factor any potential liabilities into the deal.

Disclaimer – The contents of this page are provided for general guidance only and do not replace the need to obtain legal advice about any given situation.