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If you are a multinational with a branch or office in the UK, you should be aware of the laws that can affect any attempt to transfer your UK entity. Basically, your employees have rights in the UK surrounding the terms of their employment in the event of a business transfer or branch closure, where you still intend to continue business activity in the UK.
The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) is a UK law that protects employee rights in the event that a business has a transfer of ownership to a new company. TUPE applies to transfers of all or part of any going concern, to ensure that employment terms are transferred at the same time for affected employees.
The purpose of TUPE is to make sure that an employee’s current status, compensation and applicable benefits will not change when there is transfer of the business. The employee is transferred whole to the new business entity, and the new employer effectively steps into the shoes of the old employer as though they originated the employment contract. One important exception to TUPE is when an existing company simply has a new owner, and there is no ‘TUPE transfer’.
TUPE is triggered in the common situation where a company outsources some part of its business to a third-party supplier, and the employees are given the choice to be a part of the transfer. They can opt out of course and choose to resign if they don’t want to be a part of the transfer.Subscribe to get more insights like this.
TUPE does not apply to every ownership change in a business and requires that there be at least a partial transfer or outsourcing to a new organization. This can take several forms, including:
Regardless of the type of transfer, TUPE provides the same protection equally for employees of either entity that are affected.
Companies with UK employees that want to outsource employment can use TUPE to transfer existing employees to a GEO employer of record (EOR). There may be several reasons a company wants to do this, for example multinationals with an existing branch in the UK that want to downsize or cut costs, or reorganization issues surrounding Brexit.
The EOR as a separate UK entity qualifies as an outsourcing supplier under TUPE, and every aspect of employment can be seamlessly transferred to the EOR along with all current terms of employment. This gives employees the assurance that their employment contract and compensation will be unchanged, and that administration of employment will be serviced by UK experts through the local EOR.
Similarly, this move simplifies the employment process for employers, and gives them the peace of mind that they are in full compliance with TUPE and other UK regulations. Shield GEO’s local partner will assist with setting up the new employment to mirror the former employment contract, along with any necessary adjustments. In this way, the employer can continue with business activity uninterrupted, using current staff, without the administration of formal employment through their own entity.
Please contact Shield GEO with any questions about outsourcing employment in the UK or in any other country where you assign staff. We make international employment simple for our clients in over 90 countries.Need help employing in UK? Get in touch
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