Legal Article - Employment Law

TUPE Transfers and Employee Rights

Where a company is contemplating

• A merger

• Transfer of assets to a new owner

• Transfer of employees to a contractor

• Change of contractors/franchise/lease

• contracting out services or tendering for work

• putting work out to tender where the contractor is likely to offer work to existing employers

The Employment Affairs, Legal or Helpline departments should be consulted at the earliest possible moment.

A timetable should be agreed by the parties to a transfer that provides for timely and adequate consultation with elected representatives. Such consultation is more effective if machinery for consultation is already in place (e.g. consultative committee or works council).
 
The purchase price and other terms of acquisition should reflect the requirements and effects of the TUPE Regulations. For example, the transferee may wish to insert a suitable worded indemnity as follows:

“The Vendor shall discharge and indemnify the Purchaser against all liabilities, claims, costs and demands arising from any dismissal by the Vendor of his/her employees whether such demands be for redundancy, unfair dismissal or otherwise.”

Other decisions, which may be embodied in indemnities, are

• Who is to pay notice pay or wrongful dismissal damages?

• How long will the Vendor’s agreement to indemnify the purchaser continue after the transfer?

• Who is responsible for salaries, other benefits, expenses, NT contributions up to the completion date? This is particularly important when the purchaser begins to assume control over the business before completion of the transfer

The transferee should obtain from the transferor prior to completion of the transfer information on

• The employees (ages, salaries, notice entitlement, benefits, numbers employed etc.)

• Details of unions involved, if any
• Health and safety policies

• Collective agreements

• Outstanding employment related litigation (e.g. sex discrimination claims, employment law claims, personal injury claims).

Published: 27 May 2011

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