New TUPE – new penalties
Release date: March 2006

The DTI has announced new draft Transfer of Undertakings (Protection of Employment) Regulations.

These Regulations apply where there is a transfer of economic entity, which retains its identity. The Regulations usually apply when there is a sale or purchase of a business (other than a share sale) or where a service contract passes from one contractor to another. Employees transfer from one employer to the other and their contracts of employment are protected.

The Regulations were originally expected to come into force in October 2005, however the DTI recently announced that the Regulations will now be laid before Parliament this autumn and come into force on 6th April 2006. The delay is a result of the high number of detailed responses to the consultation document.

For employers the most important change is likely to be the new requirement for the Notification of Employee Liability Information. According to the draft Regulations, the transferor (old employer) will have to provide information about the transferring employees to the transferee (new employer). This must be provided in writing in good time before the transfer and include the identity of every employee.

If there is a failure to notify the transferee of this information, the transferee can bring a claim against the transferor for a penalty of up to £75,000, based on what is just and equitable in all the circumstances, and matters such as to the extent and the reason for the failure.

For further information contact Chris Wiper
chris.wiper@close-thornton.co.uk

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