If you buy a restaurant, pub or hotel as a going concern, the Transfer of Undertakings (Protection of Employment) Regulations 2006, known as TUPE, will usually apply. The existing staff transfer to you automatically on their current terms, with their length of service intact. You inherit liabilities too, such as unpaid holiday, tribunal claims and any underpayment of wages. Dismissing someone because of the transfer is generally automatically unfair, unless there's an economic, technical or organisational reason involving changes in the workforce. Both seller and buyer have duties to inform and, where measures are proposed, consult staff representatives.
The seller must also give you employee liability information before the transfer. Get proper due diligence: contracts, rotas, tronc arrangements, holiday balances and any grievances. Negotiate indemnities in the sale agreement. Treat the inherited team well, because they know the regulars and the building far better than you do.
What we ask on the show
- What surprises new owners most about TUPE?
- Can you ever change staff contracts after a takeover?
- How do you win over an inherited team?
- Does TUPE apply when you just buy the lease?