How Selling Your Business Affects Your Employees with TUPE

How Selling Your Business Affects Your Employees with TUPE

What should know about your employees when selling your business?

One of the biggest considerations when selling your business is what will happen to your existing employees when ownership changes. You may want your existing staff to have job security when ownership transfers to someone else. In many cases, the sale of the business could be hampered if a business buyer is not willing to guarantee that the existing staff remain in employement. It is fair to say that the staff are one of your business' greatest assets. They have no doubt put in the hard work to help you get the business to where it is today.

The good news is a sale to the right buyer will not only protect the staff, but could also mean a better future for them too. If a buyer is looking at the company as a form of investment, keeping key staff will be essential to increasing the return. It is also likely that to incentivize staff and prevent them from leaving, they may reward higher salaries and give bonuses for performance.

Are there any laws protecting employees?

The short answer is yes. When a business changes owner, its employees may be protected under the Transfer of Undertakings (Protection of Employment) regulations (TUPE).

TUPE applies to employees of all businesses in the UK.

A ‘TUPE transfer’ happens when:

  • an organisation, or part of it, is transferred from one employer to another
  • a service is transferred to a new provider, for example when another company takes over the contract for office cleaning

If you sell a company, your employees may be affected by a TUPE transfer if:

you’re transferring from your current employer to a new employer other employees are transferring to a new employer but you stay employed with your current employer and do not transfer other employees have been transferred to the organisation you work for

So what is TUPE exactly?

TUPE is a law bought in by the UK government as part of the Companies Act in 2006. It was put in place to protect employees and ensure they are treated fairly by employers when it comes to transfer of ownership.

In this video, an employment solicitor by the name of Rachel O’Connell explains some of the key issues related to TUPE.

What happens during a TUPE transfer?

Every TUPE transfer may be different, but the usual process involves the following:

  • the old and new employers identify who is affected by the transfer
  • the old and new employers inform, and in some cases consult, employees who are affected by the transfer
  • the old employer provides the new employer with information about the employees who are transferring, for example their age and identity
  • the employees who are transferring transfer to the new employer along with their employment contracts and length of service