TUPE – Business Transfers and Acquisitions

TUPE (Transfer of Undertakings (Protection of Employment) Regulations is one of the most complex areas of employment law. Your business wins a new contract which appears to be profitable but then discover that the employees who have automatically transferred to you under TUPE suddenly extinguish those profits.

To make the decision whether to take on a contract or acquire a competitor needs commercial assessment of the TUPE implications. It is not possible to change the transferring employees’ pay conditions or to make them redundant without costs implications because of the TUPE regulations. Even if the ‘old’ business had closed down some time before you acquired it you may still find that under TUPE those employment contracts are resuscitated.

Employment Tribunal compensatory awards are now capped to a year’s salary but in a TUPE situation multiple employees may be awarded TUPE compensation and not only those employees who actually transferred. Cases of £500,000 total TUPE liability, or far more, for the company could be a reality. It could potentially be a significantly greater TUPE total of awards with a large workforce particularly if it is found by the Employment Tribunal that either the purchaser or the vendor have failed to fully inform and consult with the employees about the transfer.