Transfer of Undertakings - TUPE

Where a business is transferred from one employer to another the employees will be entitled to the protection of the Transfer of Undertakings (or “TUPE”) regulations.

This will apply if a service provided by one contractor is subsequently awarded to a new contractor e.g. where there is a change of cleaning contractor.

TUPE protection means that the employees’ contracts of employment will transfer to the new employer on your existing terms and conditions and with their continuity of employment maintained

Whether you are the new or old employer you will be obliged to consult with employee representatives to make them aware that the transfer is to take place, the reasons for it, its timing and how you expect it will it will impact the employees of the business.

Any employee who is dismissed as a result of a business transfer who has at least one year’s service will be entitled to bring a claim for compensation to the Employment Tribunal based on unfair dismissal. The only defence open to you is to show that the dismissal was for economic, technical or organisational reasons entailing a change in the workforce.

If the transfer of the business leads to a substantial detrimental change in terms and conditions of employment for the employees, even if this is permitted by their contract, they may be entitled to resign and pursue a claim for compensation to the Employment Tribunal based on constructive dismissal.

Both the old and the new employer can be liable for failure to inform and consult and if you are the person taking over the business or the contract you can be held responsible for the actions, including any dismissals carried out, of the old employer.

The starting point for liability for failure to consult and inform would be 13 weeks’ pay for every affected employee, unless you can show there is a good reason why it should be less. This is before you even start looking at compensation for Unfair Dismissal, which can be anything up to about £80,000 for any one employee.

Rees Page can advise you in connection with the employment implications of any business sale or purchase, or in relation to the impact of taking over (or losing) a contract to provide services. We can help you avoid ending up in the Tribunal in the first place and can represent you if you find yourself facing a Claim.