Transfer of business as going concern by insolvency practitioner

Where an insolvency practitioner transfers a business as a going concern, TUPE transfers the employment contracts to the new employer, but special rules, set out in regulation 9 of TUPE, give the insolvency practitioner limited freedom to change terms and conditions (for example, cutting pay or hours), as long as any changes are intended to safeguard employment opportunities by ensuring the survival of the business. This freedom is tightly regulated by regulation 9. In particular:

• where a union is recognised, variations must be agreed with the union rep, who is entitled to paid time off to negotiate;

• where there is no recognised union, variations must be agreed with the non-union rep and:

• the agreement must be in writing and signed by each non-union rep; and

• before it is signed, a copy must be given to each affected employee, together with an explanation in writing.

Once the variation has been agreed by the representative, it becomes a part of the employees’ contract terms.

As well as allowing the new buyer to make limited changes to employment terms, the legislation removes from the buyer some of the financial liabilities that would have passed to it under TUPE. Regulation 8(3) makes the National Insurance Fund rather than the new employer liable for the cost of any redundancies, holiday pay, the basic award and statutory notice (capped as above). See above for details of how to contact the Insolvency Service.