TUPE When You Sell a Plumbing and Heating Business

The TriggerA share sale does not trigger TUPE, and an asset sale does

This is the distinction that decides everything else and it is the one most often got wrong. If a buyer acquires the shares in your company, the employer does not change: the same company continues to employ the same people on the same terms, and TUPE is simply not engaged. If a buyer acquires the trade and assets, the employer does change, and the regulations apply to move your engineers across.

TUPE also applies to a service provision change, which matters in this trade more than owners expect. If you lose a maintenance contract to another firm and the engineers substantially dedicated to that contract go with it, that is a transfer even though no business has been sold. Owners who have been through that on a single contract sometimes assume a whole-business sale works the same way, and where the deal is structured as a share sale, it does not.

The practical consequence is that the structure of the deal, which is usually chosen for tax reasons, decides how much employment law process a sale involves. It is worth knowing which structure is proposed at heads of terms rather than discovering it when a solicitor asks for employee liability information.

The TransferWhat actually transfers with your engineers

Employees assigned to the transferring business move automatically, on their existing terms, with their continuity of service intact. Liabilities move with them, which includes outstanding holiday, unpaid overtime, and any claim that has not yet been made. The buyer inherits the employment history, not a clean sheet, and the price will reflect anything a buyer's adviser finds in it.

Custom and practice transfers too, and in heating and air conditioning businesses it is usually where the surprises live. The standby rota payment that has never been written down, the tool allowance, the van used for personal journeys at weekends, the informal commission on parts. If it has been consistent for long enough it may well be contractual, and it is better identified by you in advance than by the buyer in diligence.

Pensions are the main exception and they are more complicated than a paragraph allows. Rights under an occupational pension scheme relating to old age, invalidity and survivors do not transfer in the ordinary way, although the buyer picks up minimum obligations and auto-enrolment duties continue to apply. Anyone with an occupational scheme should take advice on this specifically rather than assume either outcome.

Dismissals connected to a transfer are automatically unfair unless there is an economic, technical or organisational reason entailing changes in the workforce, and changes to terms connected to a transfer are void on the same test. A seller asked to slim the team before completion should treat that request with considerable care and their own solicitor's involvement.

The TimetableThe obligations that run on somebody else's clock

Both sides must inform appropriate representatives of the affected employees about the fact of the transfer, when it will happen, why, the legal, economic and social implications, and any measures envisaged. Where either side envisages measures, they must consult with a view to reaching agreement. Where there are no existing representatives, they have to be elected, and an election takes time nobody has built into the timetable.

Smaller businesses have a simpler route: where there are fewer than ten employees and no existing representatives, the employer may inform and consult the employees directly. A good many firms in this trade sit under that threshold, and it removes an election from a crowded final month.

Separately, the transferor must provide employee liability information to the transferee at least twenty-eight days before the transfer. It covers identities, ages, particulars of employment, disciplinary and grievance records from the last two years, claims in the last two years and any collective agreements. Assembling it takes longer than expected because the information sits in several places, and the twenty-eight day point arrives while everything else is also happening.

The result is that TUPE is the reason a sale timetable stops being entirely yours. Plan the conversation with your team around it rather than around the moment you feel ready, and take employment advice early enough that it shapes the timetable instead of reacting to it.

Where there are no existing representatives, they have to be elected, and an election takes time nobody has built into the timetable.