Martin Malone highlights what to watch out for when considering business transfers involving employees.
Business transfers are regulated by the Transfer of Undertakings (Protection of Employment) Regulations, (TUPE). They apply to any situation where there is a transfer of business ownership and this can include not just the sale and purchase of business, but also contracting out, licensing, franchising and granting of concessions.
The purpose of TUPE is to protect employees if the business where they are employed changes hands. Its effect is to move employees and any liabilities associated with them from the old employer to the new employer by operation of law. Effectively the new employer will step into the old employer’s shoes and it will be as if the employee’s contract had always been with the new employer.
It is essential that you understand your liabilities under TUPE to ensure that your business is protected from claims. Failure to comply with TUPE can mean that affected employees could claim against you which will be expensive and damaging for your business, for example, failure to inform and consult can result in an award at thirteen weeks’ pay for each employee. You could therefore be exposed to claims large enough to undermine your entire transaction.
We can provide you with advice on when TUPE is likely to apply; what TUPE means legally; what steps you must take to comply and what other steps you can take to protect your business. There are many considerations to be made under the regulations so if they may apply to your business call us on 08000 832 832 to ensure that you are not caught out.
Read more about businesss transfers and TUPE here.