What is Transfer Of Undertakings (Protection Of Employment)?
“TUPE” is the abbreviated reference to the Transfer of Undertakings (Protection of Employment) Regulations 2006. TUPE applies where a business or part of a business is transferred from one legal owner to another. TUPE also applies where a specific function is either outsourced to a third party supplier, transferred from one third party supplier to another or is brought back in-house.
Note that the regulations do not apply on a simple transfer of shares in a limited company as the business itself remains unchanged in these circumstances.
How does TUPE work?
From time to time, almost all business undertakings experience a transfer of ownership of one form or another. Inevitably, those employed within such an undertaking are affected by change – whether it is minor alterations to rules and working practices or a wholescale transformation of internal structures and reporting lines. Certain forms of transfer, known as “TUPE” transfers, give rise to special protection to employees who are employed in the undertaking at the time of the transfer.
Thus, a successful bid for a contract to supply services or indeed the loss of such a contract to a competitor would almost certainly engage the provisions of TUPE.
The obligations imposed upon the buyer and seller (or transferee and transferor) are onerous and the penalties for non-observance are some of the most draconian in the field of employment law. The obligations are not self-evident and in some instances are counter-intuitive.
You should therefore obtain TUPE advice from Ralli as soon as you become aware of the likelihood of a TUPE situation arising. Knowing whether TUPE will apply to your transaction early on enables you to factor in compliance and take steps to protect the value of the deal by minimising your exposure to liability.
Advice on TUPE from Ralli
At Ralli, our employment law specialists work in tandem with the business support team to ensure your deal goes through as smoothly as possible.
“When our company recently secured several major haulage contracts from a competitor, Mark and his team were on hand at every stage to guide us through a very complex transfer of staff. Their practical and pragmatic approach enabled the transaction to complete smoothly and successfully.”
Andrew Kinsella, Managing Director, Gwynedd Shipping
There are very hefty penalties imposed upon the parties for failing to comply with TUPE and so it is essential that you seek advice as soon as preliminary discussions with the other party reach the stage that a transfer is likely.
For help and assistance on queries relating to TUPE, contact our Employment team on 0161 832 6131 or get in touch by filling out one of our online enquiry forms.
Find out more on our Employment Law page.