Transfer of Undertaking is the term applied to the situation in which ownership or control of a business changes hands.
Where this happens, the employees of the business transfer to the buyer as if the buyer had employed them all along. The law protects transferring employees against dismissal and their terms and conditions are also transferred, so advice in this area is crucial. It is easy to get it wrong.
TUPE imposes an obligation on employers to inform and consult with employees who are affected with penalties of up to three months’ pay per employee for failure to consult.
Another complication with TUPE is the so-called “Type 2 transfer” or service provision change (SPC). This means that TUPE applies to transfer and protects employees and their rights in outsourcing, insourcing and third party contracting situations.
The cost of getting the law wrong can have a crippling effect on the buyer and seller, because there will often be multiple claims from a number of employees who may have the support of trade unions and other representative bodies, and often claims are brought against both seller (transferor) and buyer (transferee).
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Recent examples of our work include advising a haulage contractor which had taken on a contract involving unloading goods from trains and advising a global company on the transfer of responsibility of its specialist IT division and outsourcing to a third party contractor.Get in touch