Making ‘TUPE’ More Commercially Effective

by dburke on March 19, 2014

  • SumoMe

Transfer of Undertaking (Protection of Employment) – or ‘TUPE,’ as it’s more widely known – often gets a bad reputation. Simply, TUPE protects employees of a company from redundancy when an employer is selling-up. If a company or charity is enters purchase negotiations, not only will the new owner control the services this institution provides, but it will also have a fully-functioning task force. It certainly saves building an employment base from the ground up, and it gives employees continuity – they retain their original contracts and pay terms.

TUPE is an effective answer to a modern problem: companies change hands all the time, due to staggering market competition. It just isn’t sustainable to keep laying off whole workforces, whenever ownership changes. Surely, TUPE sounds like the perfect solution to this problem, but it doesn’t always work out this way. In fact, it’s not so much that TUPE is flawed as a process, but the way it’s executed is often poor, leading to broken businesses and charities.

Common Issues With TUPE

Some of the main problems incurred by TUPE are: the costs, inaccuracies in information, lack of transparency, and poor leadership. Small charities, in particular, struggle to find the money for the necessary legal fees. When it comes to the liabilities of TUPE, charities steer clear, if possible. For a TUPE transfer, you can expect to pay between £1,500 and £10,000 per employee in legal fees.

Universally, charities complain about the lack of transparency and punctuality during a TUPE deal. Information about transferring staff is rarely forthcoming and potential buyers need to know all the details about staff numbers and contracts. However, these details often come in drips and drabs, leaving potential buyers in the lurch – often they have to pull out at the last minute because they didn’t have all the information they needed to go forward.

How Can TUPE Be Managed Better?

The key is to utilise heavy leadership. Effective sanctions will improve the speed and the quality of the information delivered from employees. Commissioners are the best people to manage this process, as they are an impartial party and should have leverage. When it comes to non-disclosure, a commissioner should be able to hand out individual fines to the offending party. This will incentivise compliance.

Side Effects Of TUPE

But TUPE doesn’t stop at the transfer. New and old employees will find the merger challenging and the change in ownership can be extremely stressful for everyone involved. Smoothing out this process is one of the main things employers should focus on. Click this commercial law page for solicitor advice.

Unfortunately for employers, they tend to lose out through TUPE, whereas many employees benefit from job security. The legislation isn’t necessarily to blame. The real burden comes from the way that TUPE is handled. With a carefully thought-out plan, employers can avoid some of the nastier aspects of TUPE, for a better economy and happier employees.

Marketing Executive working on behalf of Vincent's Solicitors, focussing on a variety of legal disciplines, but in particular, commercial law.

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