TUPE
Friend or Foe?
The Transfer of Undertakings (Protection of Employment) Regulations (“TUPE”) was enacted in order to protect
employment rights in situations where employees transfer from one entity to another.
Key Considerations
What this means in practice is that if a business transfers from one entity to another, employees are entitled to the
same remuneration, benefits and rights from their new employer. There is little doubt this important legislation has
protected some vulnerable employees from scrupulous employers who may otherwise have sought to reduce their
terms of employment through a transfer.
Whilst the principle of this is commendable it does in practice have some downsides, particularly in the arena of
insolvency. When a Business is Insolvent the only way employees can transfer to a new owner is if the Buyer takes on
all the employee liabilities, which in some situations can be material. But does TUPE protect an employees wider
interest in terms of maintaining employment?
Take the recent closure of British Homes Stores (“BHS”) as an example. 11,000 staff have lost their job as a result of
the closure of over 160 stores. Any Buyer coming in to acquire the trade and business of BHS would do so taking on
all the employee rights and obligations under TUPE. In this case it would have meant having to plug a large hole in the
BHS Pension Scheme, a liability that nobody was prepared to inherit.
Whilst the employees are in no way to blame for the closure of the Stores, if TUPE did not exist would the Business
have survived and a large number of jobs saved?
When a Business is Insolvent there is a reason why. Sometimes this could be that the costs are out of kilter with
income and the only way the Business can be made viable and profitable is to restructure the cost base of the
Company. If all other suppliers and creditors are in the same boat, should employees be treated differently?
TUPE is a very important piece of legislation that is here to stay. But whilst the protection of employees is paramount
are there certain situations where an exception can be made? Should staff be given the opportunity to decide for
themselves whether to accept a change in the terms of their employment in Insolvency where the status quo is not
viable? Is employment on reduced terms better than having no job at all?
How can Keenan CF help you?
Keenan CF are Northern Ireland’s leading independent transaction and restructuring Advisors.
Our Corporate Restructuring team delivers market leading Restructuring and Insolvency solutions, in complex
situations. Our team which boasts a wealth of experience is sharply focused on adding value from the outset by
assigning senior people with the right mix of skills and experience.
Contact Us
If you would like to know more about our Restructuring solutions or if we can help you in any way please contact us:
Tom Keenan
Scott Murray
[email protected]
[email protected]
+44 (0) 28 9089 0960
+44 (0) 28 9089 0962
Keenan CF,
Victoria House
Gloucester Street
Belfast, BT1 4LS