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23-01-2014

While there is nothing specific on Insolvency in the new TUPE regulations coming into force on January 31st, a lot of the provisions will impact indirectly on insolvencies. For example, broadly speaking, the normal TUPE rules apply on non-terminal insolvency proceedings (although certain debts do not transfer and it is theoretically easier to amend contracts of employment). That means indirectly IPs need to be alert to the following:

 

  • The transferee (that is the new employer) may wish to make redundancies following a transfer. Where this is likely to affect 20 or more employees, the duty to consult ‘employee representatives’ is likely to apply under TULCRA (the redundancy legislation). This means that currently there are two separate duties to inform and consult: under TUPE and TULRCA. Practical difficulties arise about how consultation should be handled, which party should be involved and who is liable. The Government will allow consultation by the transferee before the transfer, to count towards the obligations under TUPE and TULRCA.
  • Currently, Employment Liability Information has to be provided at least 14 days before the relevant transfer. This will change this to 28 days, meaning IPs need to get their information together quickly.
  • Businesses with fewer than 10 staff will be allowed to inform and consult directly with employees where there are no pre-existing employee representatives who are recognised.
  • The Regulations provide that a change in the employee’s place of work after the transfer should be regarded as included within the term “changes in the workforce” for the purposes of an economic, technical or organisational (ETO) defence, which affects whether or not any dismissals are automatically unfair or not.

IPs may take a bit of a robust approach to TUPE, but getting it wrong makes the sale of an insolvent business less attractive.

See also Key Points in the New TUPE Regulations.

Sarah Rushton (srushton@moonbeever.com)

Tel: 0207 539 4147

This is intended for general information only and should not be considered as giving advice in relation to any individual case nor be taken as applying to any particular case. No liability is accepted for any such use of the information.

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Standout firm known for its personal insolvency work for clients including private companies, individuals and governmental institutions. Frequently acts for insolvency practitioners, assisting with the realisation of assets, both in the UK and abroad.

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