10.2 Business transfers

By contrast, when a business (or part of one) is sold as a going concern, or when there is a change in service provision, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE) will apply.

Unless they refuse to transfer, those employed by the seller (“transferor”) immediately before the transfer will automatically pass into the employment of the buyer (“transferee”). Their rights and obligations are protected, and their continuity of service is unbroken. It is automatically unfair to dismiss any employees because of the transfer, unless the employer can show that the reason was an economic, technical or organisational (ETO) reason entailing changes in the workforce. If they opt out of the transfer, the employees’ contract of employment ends at the moment of transfer and they have no claim for compensation against either transferor or transferee.

In good time before the transfer takes place, the transferor must inform and (depending on whether any measures are to be taken that will affect the employees) sometimes consult with the workforce via representatives, who may be union representatives if there is a union in place, or other representatives who are either standing representatives or elected for this particular purpose.