John Hemming's Web Log John's Reference Website
Saturday, April 16, 2005
  TUPE is the key
TUPE (The Transfer of Undertakings (Protection of Employment) Regulations) is always a key issue in terms of any corporate rescue.

When a business is sold from one person to another then TUPE generally applies. This has the effect of transferring some liabilities from one organisation to another.

I have not been able as yet to clarify the position as to exactly which liabilities transfer through administration.

My understanding is that the liabilities for redundancy payments rest with the administrator if redundancies are made during administration. That is a reason why normally a lot of redundancies occur during administration.

There are press reports indicating that other liabilities transfer. This may mean that the only way forward that anyone will finance is to have completely new businesses set up and employ new staff (which are, of course, likely [but not guaranteed] to be people who were made redundant). It does appear that TUPE scuppered the SAIC possibility.

If the business is not bought as a "going concern" then TUPE does not apply.

This press release from PWC explains the situation.
It has been represented inaccurately in various places.

The key phrase is:
"We have received a copy letter from SAIC early this morning which communicates to the DTi that they are not willing to acquire either the whole or part of the business on a going concern basis. "

In the press conference they also said they would not even work with a third party.

Although Intellectual Property Rights have been sold to SAIC they also need the people who know how to use the IPR. That also leaves an opportunity open.
 
Comments:
The Transfer of Undertakings (Protection of Employment) Regulations 1981 (plus copious amendments) actually implement The European Union Directive 77/187/EEC relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses., known as the “Acquired Rights Directive”. Council Directive 98/50/EC of 29 June 1998

As EU law, it is beyond the scope of our Parliament – yet another example of "hidden Europe".

and the Liberal and Labour Parties want to sign up to the EU constitution (Shame, shame)
 
I suppose the EU Directive went beyond the speed of light and back in time from 1998 to 1981.

In any event there is flexibility often completely ignored by the UK drafters of SIs.
 
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