Effect of the Transfer of Undertakings Regulations

Details

Created: Monday, September 01 2014 12:42

Before taking over an existing business, it is very important to consider whether the existing business has any employees.

Under Irish law, the European Communities (Protection of Employees’ Rights on Transfer of Undertakings) Regulations, 2003 apply to all situations where a business is being transferred, regardless of size. These Regulations are commonly known as the “Transfer of Undertakings Regulations” or the “TUPE Regulations”.

Essentially, the Regulations provide that where an existing business is being transferred to a new owner, the employees of the business will automatically transfer to the new owner along with the business. Furthermore, the employees will transfer with the benefit of their accrued years of service and their existing terms and conditions of employment.

The former employer is obliged to inform the employees or their representatives of the impending transfer, its date and the implications of the transfer for the employees. This notification must be made 30 days before the transfer of business is carried out, where reasonably practicable.

Dismissals as a result of the transfer of business are prohibited, unless the dismissals are made for economic, technical or organisational reasons entailing changes in the work force. Any dismissals or redundancies should only take place after the employees have been transferred to the new business owner, and you must ensure that the necessary procedures are followed at that stage.

Where a dismissal results from a transfer of a business, the employee can take action under the Unfair Dismissals Acts or to a Rights Commissioner under the Regulations, depending on the employee’s length of service. The Rights Commissioner can make the same awards as under the Unfair Dismissals Acts but, significantly, the employee does not require one year’s service to make the complaint to the Rights Commissioner under the Regulations.

If a transfer of business involves a substantial detrimental change in the working conditions of an employee, you as the new employer will be deemed to have constructively dismissed that employee, and any such dismissal is prohibited.
Therefore, if you are taking over an existing business with any employees, you should be very careful to ensure that you are aware of your obligations under the Regulations.