When a business is bought or sold, it’s generally the case that the acquiring business (‘transferee’ to use the technical term) automatically takes on the relevant employees. The question of whether employees ‘go with’ a business and on what terms they are ‘transferred’ is one that is heavily governed by employment law, specifically, the Transfer of Undertakings (Protection of Employment) Regulations. These are often called the TUPE (pronounced Tew-pee) rules for short.
Both the outgoing employer (the transferor) and the incoming employer (transferee) have obligations under TUPE. In particular, they have obligations regarding informing and consulting affected employees, and the transferor must provide certain information about the employees to the transferee.
Following a TUPE transfer, restructuring of the acquired business is often necessary and sometimes redundancies result, in which case further consultation with affected employees will be necessary.
For outsourcing, insourcing or reassigning outsourced activities, don’t forget to also consider whether TUPE applies. The TUPE regulations apply if you engage a contractor to provide an outsourced service for you, when you bring an outsourced service back ‘in-house’, or you reassign that service mandate from one contractor to another.
It is not always obvious whether TUPE will apply. It only applies if the entity that is transferred remains the same in its new corporate environment, or when the service provided remains essentially the same service once the transfer has taken place. Our guidance can help you to gauge whether you need to be concerned.
Once you’ve ascertained that you’ve got a TUPE situation, it’s important to decide which employees transfer. As a general rule, they must be employed by the transferee on exactly the same terms as before, though there are circumstances where changes can be made.
Our guide to TUPE and the accompanying letters should help you to navigate with confidence through the TUPE process.
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