Keen listeners of ‘the everyday tale of country folk’ were recently treated to Usha Gupta, the local solicitor, advising Susan Carter on her employment rights.  This arose in the context of the proposal to convert the village shop, which Susan manages, into a community shop run by volunteers.

Putting aside Usha’s conflict of interest - having recently been asked to sit on the proposed management committee - was the advice right?

Usha correctly identified that, in the event that the shop business was transferred and the community shop required an employed manager, Susan would be entitled to transfer on her existing terms and conditions under TUPE (the Transfer of Undertakings (Protection of Emloyment) Regulations 2006).

However Usha then went on to advise that if the community shop did not need to employ a manager Susan would have to be made redundant before the transfer of the business took place, and would then have a claim for both a redundancy payment and unfair dismissal against Peggy, the current owner.

Hopefully Peggy will be receiving better advice.  If the community shop is to be staffed by volunteers and does not require an employed manager then there is a redundancy situation, but only after the transfer/sale has been completed.

This is because a seller can not rely on a buyers redundancy reason in order to fairly dismiss an employee before a sale/transfer.  Instead the employee(s) should transfer to the buyer who would then make any necessary redundancies.  It is sometimes the case that, as part of a deal, the seller will agree to fund redundancy payments, but it is important that it is the buyer that actually effects the dismissals.  If the seller makes the dismissals then (and Usha got this bit right) it could face claims for unfair dismissal because it does not have a redundancy reason - as the employee(s) would have been entitled to transfer with the business (if only to then be made redundant by the Buyer after).

Perhaps it is not surprising that Usha failed to grasp the intricacies of TUPE given that she has previously advised villagers on a wide range of issues such as child custody, agricultural tenancies, criminal damage and business start ups.  The moral of the story?  Ensure that you have the support of specialist advisers to assist with this increasingly complicated area of law and regulation.

Posted: November 11th, 2009 under Employment/HR.
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