Insolvency, Employment Protection and Corporate Restructuring: The effects of TUPE

The statutory protection currently provided by UK law to employees during transfers of undertakings and other restructurings has been criticised on the grounds that it undermines insolvency procedures and interferes with the 'rescue' process. We present an analysis which suggests that granting employees contingent control rights may be an efficient means of recognising their firm-specific human capital. Case-study evidence shows that while in some situations employment interests to be factored into the bargaining process so as to enhance the survival chances of enterprises undergoing restructing. the law functions best when effective mechanisms of employee representation are in place and when the conditions under which employees' acquired rights can be waived in the interests of preserving employment are clearly specified. When these institutional conditions are met, employment law performs an economically-valuable role in expressing the interests of employee-stakeholders in the firm.