TUPE / Business Transfers
Assessing any costs and liabilities (associated with employees) is vital information to determine the commercial merits of a proposed sale or business transfer.
Under the Transfer of Undertaking (Protection of Employment) Regulations 2006 any employees assigned to a transferring business (or part of it) will automatically transfer and be employed directly by the purchaser. Normally this will be on the same terms and conditions of employment. Attempts to change the terms and conditions of employment could result in costly Tribunal claims.
We advise businesses involved in acquisitions, and mergers, in relation to the applicability of the TUPE Regulations. We also assist and advise on the strict requirements to inform and consult staff under those Regulations.
If a buyer or a seller gets the process set out by the TUPE Regulations wrong, this can result in each affected employee being awarded 13 weeks’ gross pay, in addition to being able to bring other claims in the Employment Tribunal.
The Regulations are also now likely to apply to transfers where functions or work is contracted-out and brought in house after previously being contracted out, or put out to tender for a new contract.
Key issues in any potential business transfer include:
- Determination of application of TUPE 2006.
- Determination of which (if any) employees shall transfer.
- Organisational planning and structuring grouping of employees – by doing this a business may seek to ensure its falls in (or outside) the application of the Regulations.
- Assessment of risks and liabilities relevant to transferring employees.
- Provision of appropriate Employee Liability Information to the new employer. Failure to comply may result in the other party seeking compensation of a minimum award of £500 per employee although the award is unlimited.
- Provision of information and compliance with employee consultation obligations. Failure to comply may result in an award of 13 weeks’ gross pay per employee.
- Determination of any redundancy costs and procedures (if any). Failure to get this right could result in significant liabilities including unfair dismissal claims.
- Negotiation of commercial terms, indemnities and warranties to cover and apportion liabilities.
- Restructuring / harmonisation post-transfer.