Business Transfers - TUPE

The Transfer of Undertakings Protection of Employment Regulations 2006 (‘TUPE’) operates to safeguard an employee’s rights when a business in which they work changes hands.  

Parties can not contract out of these regulations when they apply. When the regulations do apply there are serious ramifications for failure to comply with them or for taking action which would then result in the liability for the same transferring.

In a business transfer TUPE serves to transfer all the seller’s rights, powers, duties and liabilities under or in connection with employment contracts, transferring employees together with the liabilities for and anyone found to be automatically unfairly dismissed if their employment is terminated in connection with the transfer for a reason not an economical, technical or organisational reason entailing a change to the workforce.   In addition under the TUPE Regulations the Buyer shares a joint duty with the Seller to inform and consult with employees about the transfer and its effect on their employment. The Buyer will be jointly and severally liable with the Seller for any failure to discharge this duty, subject to any other arrangements set out in the transfer agreement.

Duty to inform

Under Regulation 13(2) of TUPE 2006 the seller is obliged to disclose information to affected employees prior to the transfer and to facilitate consultation about the proposed transfer where measures are envisaged.

As part of the process the seller must inform their transferring employees of the following:

• the actual or proposed date when the transfer is to take place
• the legal, economic and social implications of the transfer for affected employees
• any measures envisaged in relation to affected employees in connection with the transfer. This may include any measures the buyer intends to take in relation to transferring employees, and the buyer must inform the seller either that they do not envisage any changes, or supply details of the changes that are envisaged.

Duty to Consult

If any measures are to be taken in relation to the terms and conditions of employment of any affected employee, including any ‘step, action or arrangement’, then the seller must commence the consultation process - this may include electing and appointing an employee representative.

If the employer fails to inform and consult affected employees, they may present a complaint to the Employment Tribunal. If the Tribunal finds that the employer failed to comply with the requirements of TUPE 2006 to inform and consult, protective awards of up to 13 weeks’ salary for each employee who has failed to be informed and consulted can be made. 

Seller’s Duty to Notify

The seller must provide the buyer with certain specified employee liability information about transferring employees. The information must be provided to you in writing or in other forms, which are ‘readily accessible’. This information must be accurate no more than 14 days before the date on which the seller sends it. Failure to provide the above information can result in awards of up to £500 per employee.  

Dutton Gregory’s Employment Team can guide businesses through transfers and service provision changes to ensure compliance and can carry out due diligence and advise businesses as to any potential risks they may face regarding the transferring of employees when taking on a business or service provision change.