Generally, employment contracts will transfer over from the buyer to the seller on the same terms, by operation of law.
TUPE applies when there is a transfer of a business (an “undertaking”), and as a result of the transfer the business retains its identity.
Example: A beauty parlour is bought and continues as a beauty parlour. TUPE will apply.
TUPE also applies in contracting out situations. This is where a business:
TUPE does not apply if a business loses its identity as a result of the transfer.
Example: A beauty parlour is bought and converted into a warehouse. TUPE will not apply.
TUPE does not apply to a share sale. So if a new purchaser buys the shares of a business, TUPE does not apply because there has been no transfer of the business itself.
The seller has an obligation to the buyer to inform them about the:
Information to be provided includes:
Failure to do so can result in the buyer claiming up to 13 weeks’ pay for each employee they were not informed about.
The buyer must also inform employees in good time before the transfer that the transfer will be going ahead, and of:
There is also an obligation on the seller to consult with affected employees and their appropriate representatives up to the transfer.
Employees must have the opportunity to appoint appropriate representatives to receive this information. If there are no appropriate representatives, the employer is required to invite the affected employees to elect appropriate representatives.
Failing to inform and consult can result in a “protective award” from an Employment Tribunal. Remember:
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