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TUPE Business Transfer and Outsourcing Regulations

TUPE Regulations Applying to Transfers and Outsourcing

If you are involved in the sale or purchase of a business as an ongoing concern or in the outsourcing of corporate functions on a contract basis, there are important rules particularly affecting the organisations acquiring the business or performing the outsourced function. Principally, they may be required to continue to employ those employees previously employed in the transferred business on their original terms and conditions of employment.

The most important element of this section is to identify when the transfer of undertaking regulations apply and their significance for the transferor and the transferee.

Transfers: If you are involved in the transfer of a business as a going concern, you must take into account continuing obligations principally owed by the transferee to the workforce under the Transfer of Undertaking (Protection of Employment) Regulations 2006.

In assessing whether there is a transfer of an undertaking under the Regulations, whilst each case is looked at on its own facts, the transfer of assets, goodwill, customer contracts, customer lists work in progress, intellectual property, the workforce and the like will be relevant.

Outsourcing: The Regulations can also apply to the outsourcing of a business unit within the previous employer's operation (e.g. catering, distribution, maintenance). Where services are outsourced to a contractor or where the outsourcer changes contractors, affected workers may well be covered by these regulations.

Due Diligence: Where a business is transferred as a going concern, the buyer or contractor and his lawyers will make extensive due diligence enquiries as to the number and characteristics of the employees for whom responsibility may be assumed.

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