When involved in the sale or purchase of a business, taking over a service contract or outsourcing part of your business, the Transfer of Undertaking Regulations (TUPE) normally apply.
The Regulations are complicated and the employees affected will always be a crucial part of the deal. Under the automatic transfer principle, employees transfer to the buyer who inherits all rights, liabilities and obligations in relation to them. In most cases, the employees are entitled to transfer over on their existing terms and conditions and they are protected against a dismissal which is in connection with the transfer, unless one of the permitted reasons can be justified.
Buyers therefore need to gain a clear understanding of the employment situation for each employee in order to be fully aware of their responsibilities and the associated costs.
Sellers need to make sure that they are able to provide the buyer with the necessary information they require, while still achieving a deal on the best possible terms.
The Regulations also provide an obligation on both the seller and buyer to inform and consult with the affected employees. Failure to do so can have expensive consequences of up to 13 weeks wages per affected employee.
We can assist you with these complicated legal issues, to ensure you know what you are entering into and are properly protected. We can also advise on the pitfalls of making changing to employees’ contracts and in what limited circumstances this is permitted.
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called Compromise Agreements)
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