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If you buy or sell a business, there will be employment implications for you. If you buy or sell the shares in the business, the employees would retain their normal employment rights as the business entity would remain the same. However, if you buy or sell the assets of the business or if there is any change to a service provider or if you outsource or insource any services, it is likely that the Transfer of Employment (Protection of Employment) Regulations (“TUPE”) will apply. The employees have additional rights in a TUPE situation.
The employees would transfer to the purchaser or new service provider on their existing terms and conditions of employment and the new employer would also inherit various liabilities and obligations in relation to those employees.
Any dismissal of an employee with at least one year’s service will be automatically unfair where the sole or principal reason for the dismissal is either the transfer itself or a reason connected with it which is not an economic, technical, or organisational reason entailing changes in the workforce.
The outgoing employer also needs to provide the new employer with certain information about the transferring employees. Failure to provide that information at least 14 days before the transfer can lead to a claim from the new employer and a tribunal award of at least £500 in relation to each employee for whom the information was not provided or was defective (unless the tribunal considers that it would be unjust or inequitable to award this minimum payment).
In addition the new and old employers have an obligation to inform and consult with the employees regarding the transfer of their employment and any implications for them. Failure to comply can lead to each employee being awarded up to 13 weeks actual pay in addition to any compensation for unfair dismissal.
There can be costly implications for employers who fail to comply with TUPE. We have many years experience in advising on TUPE situations and can advise you on the TUPE minefield and ensure that you comply with all of your obligations.
Head of Employment & Intellectual Property