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16 Jun 2015
The intention of TUPE, the Transfer of Undertakings (Protection of Employment) Regulations, is to protect employees if the business (or the part of the business) in which they work changes hands. The main impact of TUPE is that employees transfer into the employment of the acquiring employer, as do most employment rights and liabilities associated with them. The legislation as to how and when it applies can be complex for a business to comply with, so here are our thoughts on what you can do to make it as easy as possible.
Employers involved in a business transfer must inform appropriate representatives of the affected employees about the transfer and consult on any proposed measures. Certain specified information must be provided to the representatives long enough before the transfer to enable the outgoing employer to consult with them about it.
If there are any changes or proposals for changes following the transfer, these “measures” will have to be discussed with the representatives of the affected employees. The incoming employer is required to provide the outgoing employer with information on proposed measures to allow the outgoing employer to comply with its duty to inform and consult. There is no set timetable for consultation, but the larger the transaction and the more staff affected, the longer the timetable will need to be.
If there is a failure to inform and consult, a complaint can be made to the Employment Tribunal. If successful, the Tribunal can award an amount of compensation that it considers just and equitable, subject to a maximum award of 13 weeks’ pay per affected employee. Information and consultation failures can result in liability for both the outgoing and incoming employers, although the contract between the seller and buyer governing the transfer can apportion who is responsible for the liability. If there are a large number of employees involved, the cumulative sums can be very substantial.
The outgoing employer has 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. Information must be given not less than 14 days before the transfer, although in practice the incoming employer will aim to attain this information much earlier.
If there is a failure to comply with this duty by the outgoing employer, the incoming employer can apply to the Tribunal for compensation, which will be assessed with regard to the losses suffered, with a minimum award of £500 per employee.
To be honest, that’s not the question. TUPE applies by operation of law and ultimately, whether or not it applies can only be determined by an employment tribunal. They will scrutinise any transaction if it is argued that the parties are trying to avoid TUPE. If the wrong decision is made on the application of TUPE, any employees who are dismissed will have a claim to an employment tribunal that their dismissal is automatically unfair.
Steps can be taken to divide liabilities and responsibilities between outgoing and incoming employers, which will always require specialist legal advice. Our experienced team can help you with support and advice, so get in touch today.
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