TUPE changes – point to note

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Changes to the TUPE Regulations came into effect on 31 January 2014. What are the main implications for corporate finance?

Generally speaking, the amendments to the TUPE Regulations are business-friendly. The Government appears to have listened to business concerns and the new regime should be, albeit only marginally, simpler than its predecessor. Purchasers of businesses – in respect of which TUPE will apply – should note the following:

  • employee liability information – i.e. the information about transferring employees – will have to be provided earlier in the process. Currently, this must be provided 14 days before a transfer. For transfers from 1 May 2014, it must be provided at least 28 days in advance. This will need to be built into transactional timetables
  • purchasers will be able to engage in pre-transfer collective redundancy consultation with the employees engaged in the target undertaking, provided the seller agrees. This is an important reform where post-transfer redundancies are anticipated and should offer greater certainty for all those affected by the transfer
  • redundancies caused by relocation of the workforce following a transfer will no longer be automatically unfair
  • purchasers will no longer be bound by future changes to contractual terms derived from collective agreements.

Walker Morris comment
The reforms though modest are welcome, particularly the ability for prospective purchasers to consult pre-transfer regarding collective redundancy and the change in the law which means that redundancy due to relocation following a transfer of an undertaking will no longer automatically be unfair.