TUPE update

Buyers of a business (insolvent or not) need to be aware of how staff liabilities and contracts will transfer. 

Obviously TUPE rules generally state that all contracts and liabilities simply transfer to the purchasing entity, this may have a huge bearing on the price a buyer may be willing to pay and will certainly have an impact if the buyer wishes to make any changes to the workforce.  A few new clarifications have come into force in January that may impact on a purchasing business.

Specifically  any dismissals in connection with the transfer are automatically unfair unless there is an economic, technical or organisation reason for the change (ETO reason).  ETO has been extended to include changes in location, so place of work redundancies are not automatically unfair.  This may be relevant if a buyer is purchasing an insolvent business and moving the location to merge with their own for example.

The rules on TUPE are both complex and potentially financially significant, so it is important to obtain good legal advice when buying (or selling a business) – whether from a solvent or insolvent company.