TUPE

TUPE is short for the Transfer of Undertakings (Protection of Employment) Regulations 2006, which apply in the United Kingdom. When a business or part of one moves to a new employer, for example in an asset purchase, the employees assigned to it transfer to the buyer automatically, keeping their terms and their length of service. The buyer also takes on most liabilities connected with them. TUPE is unlikely to apply to a share sale: the company employing the staff stays the same, so their contracts simply continue.

Buttercross Print Studio is a fictional business in England. A buyer purchases its trade and assets for £800,000.

• Eight employees transfer to the buyer with their existing pay, holiday entitlement and length of service.
• One employee has an unresolved claim for £10,000 of unpaid overtime, and that liability transfers too.

The buyer negotiates a specific indemnity from the seller to cover that claim.

In a UK asset deal, you cannot simply choose which staff to take on. Changing transferred employees' terms because of the transfer, or dismissing them for that reason, is generally not allowed unless a limited exception applies. Both employers must inform affected staff, usually through their representatives, and consult them where changes are planned. Failing to do so can lead to compensation claims.

In England, Wales and Scotland, the seller must give you set information about the transferring employees, including their terms and any claims or disputes, at least 28 days before the transfer, unless special circumstances make that impractical. In Northern Ireland the period is 14 days. Check it against payroll and contracts during diligence.

Take advice from a UK employment lawyer early. Other countries have their own rules on staff moving with a business. For the wider UK picture, see buying a business in the United Kingdom.