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TUPE exemption for micro-businesses now in force

TUPE* protects employees when the business or undertaking they work for transfers to a new employer. Where TUPE applies employers must inform and (in certain circumstances) consult with employees via ‘appropriate’ representatives. This will be trade union representatives if there is a recognised trade union, and otherwise either suitable existing employee representatives or new ones specially elected for the purposes of the transfer. Failure to comply with these obligations can result in compensation of up to 13 weeks’ uncapped pay for each affected employee.

Following a consultation last year, the government decided to relax the information and consultation obligations for small businesses, with the change taking effect yesterday – 31 July 2014.

For TUPE transfers taking place on or after 31 July 2014, micro-businesses (those with fewer than 10 employees) can inform and consult directly with individual affected employees so long as there are no existing appropriate representatives (i.e. no recognised trade union or suitable existing employee representatives) and the employer has not invited the employees to elect representatives.

Despite requests during the consultation process, the exemption does not extend to larger workforces, even if fewer than 10 employees are affected by the transfer.

* Transfer of Undertakings (Protection of Employment) Regulations 2006

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