New judgment makes application of TUPE clear for firms in administration
A disappointing Christmas and New Year season has seen a rise in the number of high street retailers going into administration. A key judgment by the Court of Appeal has clarified the application of TUPE regulations to staff acquired when firms are bought out of administration.
By law, if a business, part of a business or service provider is changing from one owner to another, then employees' existing employment contracts are usually protected under the Transfer of Undertakings (Protection of Employment) Regulations, known as 'TUPE'. Both old and new employers are also required to inform and consult employees affected directly or indirectly by the transfer. However, if insolvency proceedings have been initiated "with a view to liquidation" and the business has been broken up, then TUPE has typically not been applied to firms who subsequently buy parts of the business.
A recent ruling by the Court of Appeal has now cleared up the legal 'grey area' around the application of TUPE regulations in such cases, ruling that employees acquired from any administration are indeed subject to TUPE.
The application of TUPE regulations can be complex. Acas offers training for employers to give an overview of TUPE and explore the commercial and practical implications of a transfer at each stage of the process from initial procurement process, to due diligence, communicating with staff and other stakeholders as well as actions post transfer.
Visit the Acas training and business solutions area for more information.