The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) protects employees' terms and conditions of employment when a business is transferred from one owner to another. Employees of the previous owner when the business changes hands automatically become employees of the new employer on the same terms and conditions. It's as if their employment contracts had originally been made with the new employer.
Their continuity of service and any other rights are all preserved. Both old and new employers are required to inform and consult employees affected directly or indirectly by the transfer.
The transfer is a disadvantage in business rescue. It becomes expensive to reorganize a business and make redundancies.
If an employer becomes insolvent, and is unable to pay the employee’s entitlements then the claim is met by the Redundancy Payments Office and HMRC.
The Insolvency Service's Redundancy Payments Offices are responsible for paying the following claims:
- redundancy pay
- wages (including protective awards)
- holiday pay
- notice pay
- basic award for unfair dismissal
- unpaid pension contributions
HMRC is responsible for continuing to pay the following payments you might be entitled to on or after the insolvency:
- Statutory Sick Pay
- Statutory Maternity Pay
- Statutory Paternity Pay
- Statutory Adoption Pay
Payments from the Redundancy Payments Office are limited to £400 per week. Any claims in excess of the statutory limit can be claimed from in the insolvency.
All payments are subject to tax, with the exception of redundancy payments where the first £30,000 is exempt.