The Government's proposals for the amendment of the law on transfer of undertakings do not go far enough, according to John McMullen, head of employment law at Pinsent Curtis and a leading commentator on Tupe.
Tupe (Transfer of Undertakings Protection of Employment Regulations 1981) protects the rights of employees on the transfer or sale of the business in which they work. But employees currently do not have those rights when the shares of the company are transferred only when the underlying business alone is transferred.
The Government, in a consultation paper issued by the Department of Trade Industry last week, does not propose extending Tupe to share sales, even though, says McMullen, a House of Lords select committee has suggested just that. McMullen argues that employees in such situations are in need of protection.
The Government also says it is opposed to the idea that both the new owners of a business and the employers transferring the business should be jointly liable for employment rights on a transfer.
Currently, employees must look to the new operators of their business to enforce their rights which is a problem, says McMullen, if the new business goes insolvent after the transfer.
However, McMullen praised the Government for debating amendments in the current law saying that the previous administration had failed to address the problems in this area.