TUPE reforms welcomed by R3

Trade secretary Patricia Hewitt announced the changes last week at the TUC conference. They include new rules governing when to apply TUPE regulations and grant greater flexibility to the circumstances in which they apply.

The reforms are aimed making troubled businesses more attractive to potential buyers. Employees’ unpaid wages and redundancy entitlements up to £240 per week will be paid for by the National Insurance Fund and potential purchasers can negotiate the terms and conditions of employment.

R3 said that, in the context of the current economic climate, as company insolvencies climb to their highest level in six years, ‘successful rescue of businesses is going to become even more important’.

It added reforms would make ‘the sale of businesses as a going concern easier by lowering the cost and risk of rescue to new management,’ and safeguard existing jobs. Selling businesses as a going concern is more likely to achieve higher returns than when it is broken up.

Roger Oldfield, president of R3 said: ‘Reform will be great news for business and even better for employees. The insolvency profession has been calling for the re-examination of TUPE regulations for some time.’

At the moment, the purchaser is responsible for employees’ rights, so when a company buys a business, it has to pay for any redundancies made in connection with the purchase.

‘This has often made it impossible for insolvency practitioners to find a buyer willing to accept the risks of buying on the business as a going concern, as recently illustrated at Cammell Laird, where thousands of jobs were lost,’ said R3.


R3 Website

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