The Transfer of Undertakings (Protection of Employment) Regulations
The Transfer of Undertakings (Protection of Employment) Regulations 2006 more commonly known as TUPE, is legislation which was designed to protect an employees’ entitlement to the same terms and conditions with continuity of employment, when an organisation or service they work for transfers to a new employer.
The regulations apply to all organisations regardless of size and its effect is to move employees and any associated liabilities from the old employer to the new employer.
When does TUPE apply?
TUPE regulations apply when a business or part of business moves from one employer to another, either in the form of a business transfer or a service provision transfer.
Examples of a relevant transfer which would be protected by TUPE are:
- Where two companies combine to create a new business known as a merger
- Where all or part of a sole trader’s business or partnership is sold or otherwise transferred
- Where assets of a business are sold as a going concern
- A service which was provided in-house is awarded to a contractor
- A contract ends and is given to a new contractor
- A contract ends and the work is transferred in-house by the former customer
When does TUPE not apply?
TUPE regulations do not apply to the following:
- Transfers by share take-over because the same company continues to be the employer
- Transfers of assets only (e.g. sale of equipment only)
- Transfers of a contract to provide goods or services where this does not involve the transfer of a business or part of a business
- Transfers of undertakings situated outside the United Kingdom
TUPE transfers are a complex legal area and specialist legal advice should be sought at the earliest opportunity to avoid costly mistakes.
What are the effects of TUPE for the new organisation?
Where the TUPE regulations apply, employees will have the right to work for the new organisation with their existing terms and conditions of employment and continuity of service protected.
The new organisation takes over the liability for all statutory rights, claims and liabilities arising from the contract of employment but excludes criminal liabilities and certain pension schemes relating to old age and occupational pension schemes.
Any collective agreements which were made on behalf of the employees and in force before the transfer are also moved to the new organisation.
Organisations should be aware that dismissing an employee due to the transfer will be deemed as unfair dismissal unless they can show “economic, technical or organisational” (ETO) reason entailing changes in the workforce e.g. introduction of technology which means that fewer employees are required.
Many of the ETO reasons are redundancy situations and so organisations may need to pay redundancies.
Employees who believe that their terms and conditions have been substantially changed to their detriment before or after a transfer have the right to terminate their employment and claim constructive unfair dismissal at a tribunal.
These resignations are classified as dismissals by the TUPE regulations.
Organisations are required to conduct a full and meaningful consultation with employees at the earliest opportunity. This can be done via trade union representatives or if there isn’t a trade a union then formally elected employee representatives.
Micro businesses (fewer than 10 employees) can inform and consult with employees directly if there is no trade union.
What the employer must provide
The employer must provide the following information to the representatives:
- That a transfer is to take place
- The reason for the transfer and when it is expected to take place
- The implications for employees for example a change in location or the risk of redundancies
- The measures that the current employer expects to take in relation to the employees
- The measures that the new employer expects to take in relation to the employees
Organisations who fail to consult properly can be required to pay staff up to 13 weeks’ pay in compensation. Both the old and new organisation are liable to pay this compensation.
Disclosure of employee liability information
The organisation transferring the employees must provide the following employee liability information to the new organisation:
- The identity and age of the employees who will transfer
- Information contained in the written statement of those employees
- Details of any disciplinary action taken against an employee in the last two years
- Details of grievances raised by an employee in the last two years
- Instances of legal actions taken by employees against the organisation in the last two years
- Information regarding any collective agreements
The information must be accurate and provided no less than 28 days before the transfer. Failing to comply with this entitles the new organisation to apply to a tribunal for compensation which will be a minimum of £500 per employee.
How our HR consultants can help with TUPE transfers
TUPE transfers are a complex legal area and expert advice should be sought at the earliest opportunity.
PeoplePointHR can provide expert advice to both incoming and outgoing organisations providing end-to-end management of TUPE transfers.
Our practical support and guidance will ensure that the process is handled in an efficient and compliant manner minimising any risks to your organisation.
What our consultants can do for you
We will help you:
- Identify whether TUPE applies to your situation and which employees will be affected
- Arrange and manage consultations with employees
- Plan and manage any potential redundancies
- Provide employee liability information to the incoming organisation
- Draft any associated documentation
- Create a TUPE process and management plan detailing the required actions and suggested timelines
For more information call us today on 0330 555 2555.