Transferring a business, employees, TUPE and a legal minefield

When you buy or sell a business with any employees you may be sailing blissfully unaware towards a minefield, whilst your eye is on the tropical island of your destination on the horizon.

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246)1 (TUPE 2006) is the main piece of legislation governing the transfer to another of a whole or part of undertaking. The regulations are designed to protect the employee rights in a transfer situation. Employees are enabled to enjoy the same terms and conditions as they enjoyed before the transfer, with continuity of employment.

Now the legal bit… read our other articles if you prefer…

TUPE 2006 replaces the Transfer of Undertakings (Protection of Employment) Regulations 1981 (SI 1981/1794). Regulations were introduced to comply with EC Directives concerning the transfer of undertakings, namely: the Acquired Rights Directive (77/187/EC) the Acquired Rights Directive (98/50/EC) and the Acquired Rights Amendment Directive (2001/23/EC).

There have been amendments to the original UK regulations and in addition a great deal of explanatory case law.

There has recently been an extremely prolonged consultation, and on the back of this some pension provisions came into effect on 6 April 2005 whilst the core changes of TUPE 2006 came into force on 6 April 2006.

In addition further statutes and regulations having an effect on TUPE are: The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 (SI 1995/2587) The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999 (SI 1999/1925) Pensions Act 2004, especially sections 257 and 258 and The Transfer of Employment (Pensions Protection) Regulations 2005 (SI 2005/649).

Any attempt to opt or contract out of the TUPE regulations is void (TUPE 2006 (SI 2006/246) reg 18 incorporating ERA 1996 s.203). So an agreement between an employer and employee that TUPE shall not apply cannot be enforced.

However, special provisions since 1993 allow an employee to opt out from having his contract automatically transferred to the new owner (TUPE 2006 (SI 2006/246) 4(7), replacing TUPE 1981 5(4A)). But this will mean the employee has not been dismissed, as such. Which leads to other considerations.

The above is an unfortunate legal minefield. Let Lawdit de-mine your route.

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