Succession and transfer of businesses in the UK
| Autor | Dr. Mark Butler |
| Páginas | 43-52 |
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The UK initially regulated the position of succession and transfer of businesses through the Transfer of Undertakings (Protection of Employment) Regulations 1981, which transposed into UK law the 1977 Acquired Rights Directive. This piece of legislation was later repealed and replaced by the Transfer of Undertakings (Protection of Employment) Regulation 2006 (hereinafter, TUPE 2006), which updated the UK’s protection in light of the updated Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses.
This effectively ensures that the rights and obligations of employment transfer when a relevant transfer takes place, with special provision made for companies that are insolvent, with the unfair dismissal system offering protection against dismissals that are as a direct result of a transfer (unless in certain accepted situations).
The obligations contained within Directive 2001/23/EC are currently implemented in the UK through the Transfer of Undertakings (Protection of Employment) Regulations 2006 (hereinafter TUPE 2006). TUPE 2006 were updated and amended in 2014 by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014.
Protection under the UK’s TUPE 2006 is dependent on the existence of a ‘relevant transfer’, which is considered across two different situations:
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Transfer of an undertaking, business or part of an undertaking or business (Regulation 3(1)(a) TUPE 2006)
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Service Provision Change (Regulation 3(1)(b) TUPE 2006).
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Standard relevant transfer
The position where the entire business is being transferred does not generally cause any problem in practice. The key question is whether the business is retaining its identity after the transfer. Accordingly, a test that has developed in this respect is whether the essential business activity is carried on by the new owner (see Kenny v South Manchester College [1993] IRLR 265). Factors to be considered include:
- Nature of the undertaking concerned, in particular whether it is labour intensive or asset-reliant.
- Whether tangible assets were transferred.
The value of intangible assets at the time of transfer, and whether these are being transferred.
The extent of employee transfers.
Whether customers or customer goodwill was transferring.
The degree of similarity of the business post-transfer with that pre-transfer.
Transfers of part of a business are also covered, so long as it is a recognized and identifiable part of the business as a whole. In such circumstances, in line with the ECJ decision in case 186/83 Botzen [1985] ECR 519, employees assigned to this part of the business will be transferred. Such a question is a question of fact.
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Service provision change
A service provision change is defined as covering three categories:
- Activities cease to be carried out by a person (-a client-) on his own behalf and are carried out instead by another person on the client’s behalf (-a contractor-);
Activities cease to be carried out by a contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by another person (-a subsequent contractor-) on the client’s behalf; or
- Activities cease to be carried out by a contractor or a subsequent contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by the client on his own behalf
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This covers situations described as first generation contracting out, second generation contracting out, as well taking services back in-house...
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