A Guide to TUPE in Insolvency
Information for directors when a business or undertaking may transfer during an insolvency process.
Where all or part of a company’s business is sold or transferred, the Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly known as TUPE, may be relevant.
This practical guide provides a clear overview of TUPE, how it may affect employees and claims, and why directors should identify the issue early and obtain specialist employment law advice.
What’s inside this guide
TUPE is a complex area of employment law. This guide explains the main concepts and where directors may need to seek specialist advice.
What TUPE is
Understand how TUPE is designed to protect employees when a business, undertaking or part of one transfers to another employer.
When TUPE may be relevant
Learn why TUPE may need consideration before an insolvency appointment, during administration or liquidation, or under new ownership.
Employee rights and continuity
Discover how employees may transfer automatically, how continuity can be preserved and which rights and obligations may pass.
Employee claims
See how TUPE may affect redundancy, notice pay, holiday pay, wage arrears and other statutory claims.
The RPS and our role
Understand the Redundancy Payments Service’s role, what Parker Walsh may explain and what requires an employment law specialist.
FAQs and key points
Get clear answers about business sales, insolvency procedures, employee selection and who determines whether TUPE applies.
Why download this guide?
A sale or transfer during insolvency can affect employees, purchasers and the claims that may arise. TUPE should be considered before decisions are made.
Where TUPE applies, employees assigned to the transferring undertaking will generally transfer to the new employer, continuity of employment is usually preserved, and many employment rights, obligations and liabilities may pass.
Employees do not necessarily become entitled to statutory redundancy payments simply because their employer enters insolvency. Where employment transfers, redundancy and certain other statutory payments may not arise at that stage.
Different insolvency procedures may affect how TUPE operates, and not every business sale or transfer is subject to the regulations. The position depends on the facts of the transaction and each employee’s circumstances.
This guide helps directors recognise the issues, preserve relevant records and understand when independent advice from a qualified employment law specialist is required.
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Guidance from Molly Monks F.I.P.A.
Molly Monks is a Licensed Insolvency Practitioner and Director of Parker Walsh, with more than twenty years of experience advising company directors and business owners across England and Wales.
Parker Walsh can administer the insolvency process, help directors identify circumstances in which TUPE may require consideration and explain how it may interact with insolvency in general terms.
Whether TUPE applies is a matter of employment law. Parker Walsh does not determine its application, so independent advice from an appropriately qualified employment law specialist should be obtained.
View Molly’s profile →Frequently Asked Questions
Does TUPE apply to every business sale?
No. Whether TUPE applies depends on the particular facts and circumstances of the transaction.
Does TUPE always apply in insolvency?
No. Insolvency does not automatically determine whether TUPE applies, and different insolvency procedures may affect how it operates.
Will employees automatically receive redundancy payments?
Not necessarily. Where TUPE applies, employment may transfer to a new employer and entitlement to statutory redundancy payments may not arise at that stage.
Can a purchaser choose which employees transfer?
Not usually. Employees assigned to a transferring undertaking will generally transfer automatically where TUPE applies, although assignment can be complex.
Who decides whether TUPE applies?
TUPE is ultimately a matter of law. Where there is disagreement or uncertainty, the issue may be determined by an Employment Tribunal or another court with jurisdiction.
Does entering liquidation mean TUPE cannot apply?
No. The nature of the insolvency proceedings and the circumstances of the proposed transaction must both be considered.
Related support and information
Considering a business sale or transfer during insolvency?
Raise TUPE as early as possible so the insolvency and employment law implications can be considered before decisions are made.
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