The implications of TUPE for commercial property lawyers

The implications of TUPE for commercial property lawyers
Guest post by Fudia Smartt, Senior Associate, Russell-Cooke
The people of the United Kingdom have spoken and voted to leave the European Union so you may now be wondering whether you need to read this post. Well, it is still worth your while given that, until all the necessary formalities have been complied with regarding our secession from the European Union, UK employment law remains “business as usual.”
The aim of this post - and the associated webinar (more details below) - is to provide commercial property lawyers with a broad understanding of the application of the Transfer of Undertaking (Protection of Employment) Regulations 2006 (“the TUPE Regulations”) so that you can identify possible issues before they arise, and therefore minimise the risk of delays and unexpected and potentially significant costs.  

With this in mind, the key points to remember are as follows:

1. The application of the TUPE Regulations:

The TUPE Regulations apply where:

  • there is a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another business which retains its economic identity after transfer (reg. 3(1)(a) TUPE).  This is known as a business transfer
  • a client engages a contractor to do work on its behalf, reassigns such a contract or brings the work "in-house" (regulation 3(1)(b), TUPE). This is known as a Service Provision Change (SPC)

It is possible for a transfer to be both a business transfer and a SPC.

Having regard to the above and from a property perspective, the TUPE Regulations may apply in the following situations:

  • the sale of a property;
  • the grant or termination of a lease;
  • a buyer transferring its managing agent contract to a new agent or where management services are taken in-house
2. Key implications:

The aim of the TUPE Regulations, which derive from the EU Acquired Rights Directive, is to preserve the continuity of employment and the terms and conditions of those employees (with the exception of age, invalidity and survivors' benefits such as occupational pension schemes) who transfer to the new employer.  This means that the employees employed by the previous employer (the transferor) when the transfer takes effect automatically become the employees of the new employer (the transferee).  This is known as the automatic transfer principle.

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