Covid-19 and its impact on business transfers and TUPE

Posted on 6th April 2020 by Streets


Image to represent Covid-19 and its impact on business transfers and TUPE

For those that may have embarked on the acquisition of a business prior to the Covid-19 outbreak, its impact on the transaction most likely was not considered in detail, especially when it comes to employees.


On completion of the deal and the transfer of business to the ‘new’ entity, employees of the   acquired business (provided they are transferring with the business and have not opted out of the transfer) will be covered/protected by the Transfer of Undertaking Protection of Employment (TUPE). A situation which in broadest terms protects employees’ rights and safeguards their contractual terms and conditions.

Covid-19 has, for many if not the majority of businesses, led to a significant downturn and loss of revenue, with the lockdown measures preventing employees from working and customers from spending. Therefore, completion of a business transfer could give rise to a situation where ‘new’ employees are unable to or are prevented from working. They may in fact have already been furloughed.

Under the current furlough rules, employees being furloughed must be on the employer’s payroll on or prior to 28th February 2020 in order to qualify for the government backed Coronavirus Job Retention Scheme (CJRS) furlough payments. If employees change employer as a consequence of a business transfer completed after 28th February 2020 then they will be placed on a new PAYE system so would not be eligible for CJRS payments  with their new employer.

Whilst the incoming business may be able to provide evidence of the TUPE to HMRC and may subsequently obtain approval for the scheme, this is most likely going to be very time consuming and protracted.

As there have not been any specific announcements or guidance relating to CJRS and TUPE protections it would be advisable to consider a delay to TUPE until after furlough or have the TUPE transfer date and the transfer of the underlying business agreed after furlough has ceased. It is important however, for all those who might be affected to ensure they are kept up to date with announcements relating to CJRS as the situation may change or evolve.

 


No Advice

The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.

Information

The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.


Expert insight and news straight
to your inbox

Related Articles


Streets Banbury Office

In the first of a series of videos to promote our growing number of offices and their teams, Nathan Bignell who heads up our Banbury office shares his insight into the local business community, the clients they look after and the services they provide.


Boost Your Restaurant's Cash Flow with These Top Tips!

Maintaining a healthy cash flow is crucial for the success of any restaurant. Here are five key strategies to get you started: Optimise Menu Prices Ensure your dishes are priced for both competitiveness and profitabilityStreamline InventoryReduce waste and free up cash by using smart inventory management techniquesNegotiate with SuppliersBetter terms ...


Property Finance - unlocking opportunities with confidence and support

Exploring, navigating and understanding the complex landscape of property finance options can not only be time consuming, but hard to understand with the diverse range of financing options that are available in the market. It is essential from the outset for business owners to carefully evaluate their financing and ...


You might also be interested in...