Practical Tips for Business Transfers and Service Provision Changes
Author: Emily John
Key contact: Chris Aldridge
The Transfer of Undertakings (Protection of Employment) Regulations, commonly known as TUPE, serve a straightforward but critical purpose: to protect employees when a “relevant transfer” takes place. TUPE applies in cases of business transfers and service provision changes, ensuring continuity of employment rights. However, the practical implementation of TUPE can be complex. Without a careful and proactive approach, employers may face significant legal and financial risks. Our Employer’s Guide to TUPE Transfers provides some practical tips for employers navigating a TUPE transfer.
1. Conduct thorough due diligence
Before any transfer, it’s essential for employers to carry out detailed due diligence. This process involves gathering and analysing information about the other party involved in the transfer. It helps identify potential risks, liabilities, and costs that may arise post-transfer.
For incoming employers, this is also the stage to evaluate whether warranties or indemnities should be requested from the outgoing employer to protect against unforeseen liabilities.
2. Engage in early discussions
Early and open communication between the transferring and receiving employers is crucial. These discussions should clarify whether TUPE applies, determine the proposed transfer date, and establish which employees will be included in the transfer.
Proactive collaboration helps ensure the process runs smoothly and reduces the risk of disputes later on.
3. Obtain employee liability information
The outgoing employer is legally required to provide specific details about the transferring employees – known as employee liability information – to the incoming employer. This must be provided at least 28 days before the transfer date.
Providing incomplete or inaccurate information, or missing the deadline, can lead to a claim in the Employment Tribunal and may result in a financial penalty.
4. Fulfil the duty to inform and consult
Both the outgoing and incoming employers have a duty to inform – and, in certain cases, consult with – appropriate employee representatives or trade unions. This obligation applies not only to employees directly affected by the transfer but also to any employees impacted indirectly.
Failure to comply can lead to serious consequences, including an uncapped award of up to 13 weeks’ gross pay per affected employee.
5. Plan for post-transfer integration
The employer receiving the employees must actively manage the post-transfer period. This includes integrating the transferred employees effectively and addressing any workplace concerns that may arise.
If redundancies are necessary, they must be handled in accordance with fair and lawful redundancy procedures to avoid further legal risk.
If you’re an employer seeking tailored advice on any issues related to TUPE transfers, please contact a member of our Employment team.
