New TUPE Regulations come into force
New TUPE Regulations – 6 April 2006
Anyone involved in the purchase or sale of businesses over the last 25 years will have been affected in some way by the Transfer of Undertakings (Protection of Employment) Regulations. It has not always been a positive experience.
New Regulations are coming into force on 6th April 2006 and will apply to all transfers taking place on or after that date. They try to address some of the key areas of dispute which have kept the Courts busy since 1981.
Importantly they do the following:-
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Clarify the meaning of a “relevant transfer” in light of UK and European case law over the last 25 years.
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Expand the regulations so that they specifically apply to “service provision changes” i.e. contracting out, out-sourcing and in-sourcing.
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Make it easier for insolvent businesses to be transferred to new employers. They provide that certain liabilities to employees (including payments in lieu of notice and redundancy payments) do not transfer in insolvency situations.
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Clarify the circumstances in which alterations to contracts can be agreed with employees.
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Clarify the circumstances in which dismissals will be potentially fair or automatically unfair.
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Impose specific obligations on the vendor or transferor of a business to provide the purchaser with “Employee Liability Information” about transferring employees at least 14 days in advance of a transfer. In the absence of special circumstances there is a minimum penalty of £500 per employee if the vendor fails to provide this information. This could be a significant liability - for example, if 150 employees transfer the minimum penalty will be £75,000.
The DTI has produced some guidance on the new Regulations, however they remain a very complex area of law.
For further information please contact: Alison Gow
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