Employers in the UK who win and lose contracts or buy business or part of businesses will be familiar with TUPE – the Transfer of Undertakings (Protection of Employment) Regulations 2006. These regulations apply where the business is situated in the UK immediately before the transfer. What happens if a business in the UK, buys a business in Southern Ireland and plans to incorporate the Irish business in to the UK limit company?
TUPE as we know it in the UK does not apply because the business wasn’t situated in the UK immediately before the transfer. However, as TUPE is derived from a European Directive (the Acquired Rights Directive) and Southern Ireland is a member of the EU, it has its own version (which competes closely with the UK version for the title of most snappy name for legislation) known as the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (“PETU”).
PETU is very similar to the UK’s old TUPE 1981 in that it uses the identifiable economic entity that retains its identity test but does not use the additional TUPE 2006 Service Provision Changeover test.
This leaves the employees of the Irish company with the protection of PETU and therefore the theoretical right to transfer their employment to the UK buyer. In practice, employees may not wish to transfer (particularly if the UK company decides to centralise all operations in the UK), but the Irish employer must still inform and consult in accordance with PETU to avoid claims of failing to inform and consult.
Looks like one can’t get out of TUPE by going business shopping in Ireland!