The Transfer of Undertakings (Protection of Employees) Regulations (TUPE), are designed to protect employees in businesses that are sold. If you are considering purchasing another business with employees you must consider the impact of TUPE on that business. Failure to do so could cost you significantly through either paying too much for the business or attempting to remove staff when you take over the business.

When Does TUPE Apply?

TUPE is a complex area of law, but it may apply if:

  • a business is sold as a going concern (all or part of the business)
  • a section of the business is outsourced
  • the business premises are licensed to another person who carries out the same business from those premises

Effects of TUPE

If TUPE does apply, the employees will have the same legal rights of employment with the new employer that they had with their old one: it is as if the employees were always employed by the new employer.

Breach of TUPE

If you take over a business, a part of one, or even the premises, and dismiss any of the employees, and TUPE applies, your employees' dismissal will automatically be unfair and they will be entitled to compensation unless the dismissal is for an economical, technical or organisational reason.

Therefore, it is vital that you take early legal advice when taking over or disposing of a business.

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