New legislation puts Yorkshire businesses at risk of forking out at least £500 per employee

Transfer of Undertakings legal advice

16.03.2006

Yorkshire companies transferring business ownership will face an avalanche of paperwork under new legislation, and potential financial penalties of at least £500 per employee if they do not comply, a leading Yorkshire lawyer has warned.

TUPE lawyer

Matthew Brain, an employment law partner with national law firm Irwin Mitchell, based at its offices in Queen Street, Leeds, made the comments in relation to the new Transfer of Undertakings (Protection of Employment) Regulations, due to come into force on April 6.

More commonly know as TUPE, the original act passed in 1981 was devised to preserve employment for staff when a business changes ownership.

The new regulations replace the current legislation in its entirety, consolidating a number of changes made over the years as well as adding several new provisions.

TUPE legal advice

Mr Brain said: The new regulations take account of the piecemeal amendments made over the years and add new stipulations, with the stated aim of adding clarity to this difficult area of the law.

Whilst this intention is entirely laudable, in practical terms the rules leave much uncertainty as to whether they will improve the process for all parties involved or simply add further points of contention to be debated by lawyers.

The new regulations apply not only to traditional business sales, but also to changes to contractors involved in service provision to clients when contracts are re-let on tender.

Mr Brain warned outgoing businesses in Yorkshire they must comply with obligations to provide employee liability information about the transferring staff to the incoming employer at least two weeks in advance of a transfer.

Details to be passed over about staff must include:

  • identity and age 
  • terms and conditions of employment 
  • disciplinary or grievance proceedings issued in the preceding two years 
  • court or tribunal cases concluded in the preceding two years or which might be brought in the future 
  • collective agreements

Mr Brain said: This could be a particularly onerous task where significant numbers of employees are involved. Many businesses in Yorkshire may still be unaware of the new regulations and will be putting themselves at risk of claims for substantial compensation of at least £500 per transferring employee, and in many cases much more, if they fail to comply.

Although some of the new provisions are onerous, there are some new aspects of the legislation which offer benefits for local companies.

It should now be easier for new employers to reach agreement with transferring employees regarding changes to their terms and conditions in specific limited circumstances, which has traditionally been an area previously fraught with contention.

Were also pleased to see the Government has recognised the problems of applying TUPE during insolvency proceedings, with the new regulations encouraging business transfers in these situations, allowing new employers to take employees on with a clean slate, instead of bearing the burden of inheriting redundancy payments and other specified accrued liabilities.

Irwin Mitchells employment team acts on behalf of employees and employers, from small businesses to major plcs and public sector bodies. The team can be contacted on 0370 1500 100.

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