Q&As

Where an outsourcing agreement provides that the transferor is responsible for employment-related liabilities arising ‘on or before the transfer date’, does this mean that, if the transferee terminates the employment of a relevant employee on the transfer date itself the transferor might be liable for the termination costs?

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Published on LexisPSL on 17/06/2017

The following Employment Q&A provides comprehensive and up to date legal information covering:

  • Where an outsourcing agreement provides that the transferor is responsible for employment-related liabilities arising ‘on or before the transfer date’, does this mean that, if the transferee terminates the employment of a relevant employee on the transfer date itself the transferor might be liable for the termination costs?
  • Position under TUPE 2006
  • Contractual position

Position under TUPE 2006

Under regulation 3(1)(a) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006), SI 2006/246, a business transfer occurs where there is:

  1. a transfer of an undertaking or business (or part of an undertaking or business)

  2. situated immediately before the transfer in the UK

  3. to another person

  4. where there is a transfer

  5. of an economic entity

  6. and the economic entity retains its identity after the transfer

For further information, see Practice Note: TUPE—business transfers.

Under TUPE 2006, SI 2006/246, reg 3(1)(b), a service provision change takes place where:

  1. 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')

  2. 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

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