The Transfer of Undertakings Regs are largely seen as being relevant to
employment lawyers only. However, conveyancers should appreciate that
they can, in certain circumstances, impact on investment property
transactions. This is particularly likely if outsourcing is involved. For instance,
consider these two situations (both of which could involve an unintended
transfer of staff and a breach of TUPE for failure to notify):
- a lease is forfeited, surrendered or expires and a new T (or L) then carries
on the same business as the old business. The crucial issue is whether
the business retains its identity after the transfer. If it does, then TUPE
can apply. This can be a particular problem with specialist properties
which only have one use (eg cinemas, restaurants);
- if the building owner can contract out services such as cleaning or
security, and then takes them back in-house (or changes the contractor),
then TUPE may apply. For instance, if there is a dedicated team providing
the services (eg where it is always the same six security guards), then
TUPE will be relevant, as will be the case in certain other changes (eg a
change to another security company, in which case the guards will
transfer to the new contractor).
It is not difficult to think of other instances in which TUPE could inadvertently
apply. The moral is that, when acting on the acquisition of an investment
property, you should always consider the position concerning services such
as cleaning, security and managing agents (to find out whether it is more
than the building that your client is acquiring!). Source: Allen & Overy.
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July 2006 |
