TUPE Compromise Agreements

Published: 22nd December 2009
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In this article we look at how compromise agreements could come into play in relation to TUPE transfers.

Under TUPE, an employer will have a number of obligations to its employees. When considering a TUPE business transfer, an employer will need to give consideration to the obligations it has to employees. There are 3 main issues which a buyer will need to contend with:

The automatic transfer principle: employees transfer to the buyer who inherits all rights, liabilities and obligations in relation to them.

Secondly, employees gain additional rights in the sense that they become more protected when it comes to unfair dismissal.

Lastly, all business entities connected with the business transfer will have a legal duty to make employees aware of the transfer. This obligation will also mean that consultation is required.

Where a company fails in its obligations, a compromise agreement could avoid costly employment tribunals.

Compromise Agreements

The movement of employees from one business entity to another

Employees are effectively protected against being dismissed. These additional safeguards which employees gain are mostly in relation to unfair dismissal. An employer needs to adhere to the rules and regulations governing this.Employers that wish to dismiss employees during a TUPE transfer will need to look at the situation carefully, as they run the risk of it being automatically unfair, if the reason for dismissal is:

1) Due to the business transfer. An employee is protected.

2) Is in relation to the business transfer. More consideration needs to be given to this point as ETO reasons are potentially acceptable.


Employers should consider whether the TUPE transfer will mean that employee employment contracts will be breached due to new working conditions. Care needs to be taken in this respect as it could result in unfair dismissal.

Those affected will need to consider whether there is a potential claim for unfair dismissal. If there is a substantial change in working conditions then an employee may consider whether they are due compensation. In such a scenario, there may be a need to consider how a compromise agreement might help. This is a tool to allow the employee to compromise the claim in exchange for a settlement sum.

Employers must enter into consultation with employees

Informing and consulting employees in relation to the transfer is of great importance. It should be noted that consultation is limited to those affected.

The consequences for failing to follow the procedure may be severe. The organisations concerned may have to pay in a jointly and severally manner, as they would all be liable.

If such a situation arises, it is advisable that companies seek the advice of an employment law solicitor, as compromise agreements can be used to limit liability.

TUPE Compromise Agreements
Redundancy and Compromise Agreements



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