If you are buying or selling a business you need to consider how the Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE), may affect your sale or purchase. When a business changes owner, its employees may be protected by TUPE. When TUPE applies:
- The employees’ jobs usually transfer over to the new company
- Their employment terms and conditions transfer
- Continuity of employment is maintained
TUPE may also apply if you contract out a service or if you take over a contract for services from another supplier.
If TUPE applies and you fail to warn and consult affected employees about the transfer, you may be liable to pay each of the affected employees a penalty award of up to 13 weeks gross pay. You may also end up being liable for other claims, such as unfair dismissal, or breach of contract.
If you propose to buy or sell a business, or you take over from an outgoing contractor, it is important to seek advice at an early stage and before you agree terms.
