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TUPE - what do you need to know?
The Basics of TUPE
The Transfer of Undertakings (Protection of Employment) regulations, or TUPE, protect employees if the business they are employed in changes hands. Its purpose is to move the employees and the liabilities associated with them directly from the old to the new employer. Even for the experienced, TUPE is a tricky piece of legislation.
Who does it apply to?
TUPE can apply when employers:
·       buy or sell part or all of a business as a going concern;
·       outsource or make any "service provision change" involving an external contractor;
·       grant or take over a lease and operate the same business from the premises.
What does TUPE mean for you?
To protect your business from claims during a merger, acquisition or outsourcing, you will need to understand how TUPE is likely to apply and what it means to you legally.
At its heart, it means that transferring employees have the right to transfer to the new employer on their existing terms and conditions of employment and with all their existing rights and liabilities intact. Effectively, the new employer steps into the shoes of the old employer.
Therefore, it’s essential that you know all about the employees you might inherit if you are planning to take over a contract or buy a business. You also need to make sure that the contract you draw up protects you from any employment liabilities which arose before you became the employer. The old employer is required to provide you with written details of all employee rights and liabilities that will transfer.
An example of what might happen?
Company A has been carrying out a contract to supply Company B with services. Your Company is very pleased to win the contract. As soon as you take over the contract, however, you will inherit the employees of Company A who were involved in supplying the service, along with all their terms, conditions and liabilities. On this occasion, the outgoing company had failed to pay its employees their wages for the past few weeks. Under TUPE, you will inherit the liability to the employees for the unpaid wages.
In summary, TUPE is complex and can be fraught with danger to the unwary. Caveat emptor!
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