When do TUPE regulations apply?
One of the first things to think about when considering buying a business is whether or not the Transfer of Undertakings Protection of Employment (TUPE) regulations apply.
TUPE regulations cover all sectors and sizes of business and were put in place to provide protection to employee’s rights when a business or service transfers to new ownership.
The two situations that TUPE regulations might apply are business transfers and service provision changes.
If a business, or part of a business, moves or merges, TUPE regulations apply where the core assets of the business have been transferred and are being used in the same kind of activity as before.
Assets could include premises, equipment, work, goodwill, intellectual property, and employees.
The new owner(s) of the business would be expected to take on responsibility for all employees of the business.
It’s always best to assume a transfer is covered by TUPE regulations
Service Provision Changes
These occur when a contractor takes over a service from a client, a client takes over a service from a contractor, or a new contractor takes over from an old one.
TUPE regulations then apply where:
- an organised group of employees exists (such as those that work for a specific client)
- the client remains the same
- the work activities remain the same
TUPE wouldn’t apply where:
- only goods have transferred ownership
- there’s no organised group
- the work activities become too fragmented
It’s always best to assume a transfer is covered by TUPE regulations and seek professional advice. Getting it wrong could result in costly, time consuming tribunal claims and reputational damage for your company.
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