Assessing any costs and liabilities (associated with
employees) is vital information to determine the commercial merits of a
proposed sale or business transfer.
Under the Transfer of
Undertaking (Protection of Employment) Regulations 2006 any employees
assigned to a transferring business (or part of it) will automatically
transfer and be employed directly by the purchaser. Normally this will subject to certain exceptions and be on the same terms and conditions of employment. Attempts to change the terms and conditions of employment could result in costly Tribunal claims.
We advise businesses involved in acquisitions, and mergers, in
relation to the applicability of the TUPE Regulations. We also assist
and advise on the strict requirements to inform and consult staff under
If a buyer or a seller gets the process set out by the TUPE Regulations wrong, this can result in each affected employee being awarded 13 weeks' pay, in addition to being able to bring other claims in the Employment Tribunal.
The Regulations are also now likely to apply to transfers where
functions or work is contracting-out functions, bringing work in-house
(previously contracted-out)or tendering for a new contract.
Key issues in any potential business transfer include:
Determination of application of TUPE 2006.
Determination of which (if any) employees shall transfer.
Organisational planning and structuring grouping of employees –
by doing this a business may seek to ensure its falls in (or outside)
the application of the Regulations.
Assessment of risks and liabilities relevant to transferring employees.
Provision of appropriate employee liability information to the
new employer. Failure to comply may result in the other party seeking
compensation of a minimum award of £500 per employee although the award
Provision of information and compliance with employee
consultation obligations. Failure to comply may result in an award of 13
weeks pay per employee.
Determination of any redundancy costs and procedures (if any).
Failure to get this right could result in significant liabilities
including unfair dismissal claims.
Negotiation of commercial terms, indemnities and warranties to cover and apportion liabilities.
Restructuring / Harmonisation - post-transfer.