TUPE transfer – what it means when you sell your business

The law in the UK protects employees’ rights when the business they work in is sold or is transferred to another business.

Such transfers are often referred to under the term “TUPE” transfer, which comes from the legislation governing it: The Transfer of undertakings (Protection of Employment) Regulations 2006.

In broad terms, TUPE protects an employee’s terms and conditions of employment when a business or service, or part of one, transfers to a new employer.

During the transfer of ownership of your business employees must stay on the same terms of employment (including pay) they previously had without a break in their period of employment. This includes employees who are dismissed before the transfer, but by reason of the transfer where there is not an “economic, technical or organisational reason entailing changes in the workforce” (often called an ETO reason). Any dismissal will be automatically unfair dismissal where the sole or principal reason for the dismissal is the transfer itself and is not an ETO reason.

After the sale of your business completes all employees should be treated as having always been employed by the new employer, with the same continuity of employment (e.g. the same start date) and same terms and conditions (e.g. pay and holiday). The new business owners should not change salaries, holiday entitlement or other terms and conditions without agreeing with each employee first.

This is a very complex area of law and you should take legal advice if you believe it applies.

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