Buying or selling a business can bring great rewards but an important legal aspect of the process is often overlooked – with costly consequences.
The Transfer of Undertakings (Protection of Employment) Regulations 2006, amended in 2014, seek to protect the jobs and terms and conditions of employees when a company is sold or transferred to another business.
The TUPE rules also apply when there is a change in service provision, for example when a contract is awarded to a new provider or is taken in-house, or a service provided in-house is awarded to an external supplier.
A key element is that employers are obliged to inform and consult affected staff about the transfer, and failure to do so appropriately can lead to a claim by each employee for up to 13 weeks’ pay.
As a minimum, staff should be told that the transfer is to take place, the date of proposed completion and the reasons for it.
An outgoing employer with 10 or fewer staff can consult collectively, whereas larger businesses should do so with employee representatives.
Rachael says: “We act for many companies involved in a sale process where TUPE rules apply, and have dealt with a number of cases where the owners have omitted to inform or consult staff.
“Directors are often unaware of their obligations, and simply think they are doing their staff a favour by ensuring that jobs will be safeguarded as a result of the deal.
“In a climate where more businesses and contracts are changing hands, it is becoming an increasingly important issue.”
She says that failing to deal with other, seemingly minor matters can also result in employers having to pay out under the TUPE rules.
“These can involve, for example, a change of pay day by a new employer, a failure to issue P60 documents to staff or mistakes over auto enrolment pension transfers,” she says.
“As time passes and more employees have been through the TUPE process before, they are increasingly aware of their rights.
“It only takes one member of staff who knows about their employer’s obligations to tell the rest of the workforce and, before you know it, they can find themselves before an employment tribunal and facing a hefty financial penalty.
“We encourage business owners to come to us at the outset, rather than when it is too late. We are able to hold the employer’s hands through the process and prevent potentially costly slip-ups when it comes to TUPE obligations.”
How we can help
Our employment experts are on hand to assist you with any employment law matters and can be contacted by telephoning 0161 330 6821 or by emailing:
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.