TUPE

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If you are buying part of a business or taking over works which have been contracted out, you have certain responsibilities to employees affected by the transfer. The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) applies to all business transfers taking place after 6 April 2006.

TUPE applies when there is a transfer of an economic entity from a transferor (either a Seller or the original contractor) to a transferee (either a Buyer or the subsequent contractor), where that entity retains its identity after the transfer.

When the sale occurs or the contract is taken over the employment contracts of all the employees employed in the business/undertaking transfer automatically to the transferee. This means that all the employees become employed by the transferee on the same terms as they had when employed by the transferor and the employees' continuity of employment is maintained.

The employers involved in a transfer owe various obligations not only to the employees transferring but also to their other employees who may be affected by the transfer. Those obligations include, amongst other things, a duty to inform and consult, and a duty to arrange for employee representatives to be elected to act on behalf of the employees. Timing is of the essence in TUPE transfers and not just in relation to the completion of the deal.

In these circumstances there are numerous pitfalls awaiting the unprepared employer (be it the transferor or transferee) and the cost of failing to follow the procedures can be significant. Therefore, it is imperative that legal advice is sought at an early stage once a TUPE transfer is contemplated.