When an employer thinks of the Transfer of Undertaking (Protection of Employment) Regulations (TUPE Regs) and employees, there is a natural assumption that it will be about employee rights. This is largely true.
However, under TUPE a failure by a seller transferring a business to another party to provide the employee details, aka employee liability information (ELI) in the proper time and manner can result in an Employment Tribunal fining the seller £500 per employee who are part of the transfer.
Therefore, the person selling/transferring (transferor), must give the person buying (transferee) the ELI at least 28 days before the transfer – (Regulation 11).
Should they fail to do so and on the day the buyer (transferee) takes over they discover that there are several employees they knew nothing about and had not been told about and only get the information on that day, later or maybe not at all, then the buyer besides being surprised / miffed / angry / bl##dy annoyed (delete as appropriate) has a way of getting redress (even).
The buyer can lodge a claim with an Employment Tribunal within 3 months of the transfer taking place to ask for redress for the seller not being honest and informing the buyer as they should have done – (Regulation 12).
Should the tribunal agree with the buyer’s claim, then they can:
make a declaration that the seller has broken the rules; and
award compensation to the buyer for the seller’s failure
A judgement under point 1 can be published online and the starting point for compensation is set at £500 per employee (although this value can go up or down (as they say in the TV adverts) depending on the circumstances.
But what if the seller can show it was all beyond their control or due to some unforeseen circumstances. Surely, that must be a defence? Yes, it can be but think of convincing the grumpy teacher at school that the dog ate your homework, and you get the idea that your reasons will have to be good, really good.
Such a risk is best avoided would be our advice. However if you are on the receiving end of news that suddenly you employ people you didn’t think you did, give us a call on 01527 909436.