TUPE or the Transfer of Undertakings

TUPE or the Transfer of Undertakings

Sometimes, when a business fails, the business, or part of the business, is transferred to someone else. This can be another business that is already operating or a new company specially set up for the purpose of buying the “old business”.

If this happens, the law says that the employees transfer to the new business. If only part of the business is transferred then only the employees involved in that part of the business are transferred. The new business is then liable for any arrears of wages, holiday pay, and any other outstanding payments to the transferred employees in excess of their statutory entititlement.  In practice the new business often pays the entire liability to avoid disruption.

This often happens in something known as a “pre-pack”. In a pre-pack, the business is sold as soon as the Insolvency Practitioner is appointed and the business carries on pretty much as before.

However, sometimes employees are made redundant just before the business is sold. The RPS may decide that any liability for redundancy is the responsibility of the new owner and you have to claim from them.  

TUPE and the employee’s rights under it are extremely complicated. They also depend on the individual facts of any transfer or dismissal.  For more information see this document  produced by the Government, particularly section 6 .