What is TUPE?
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended by The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014) aim to safeguard employee rights on the transfer of a business.
If you are considering purchasing or selling a business, or you are taking over a contract, it is essential that you speak with an employment law solicitor who is experienced in TUPE transfers.
When does TUPE apply?
TUPE applies to both an employer who is making the transfer (also known as the transferor) and the employer who is taking on the transfer (also known as the ‘new employer’ or the transferee).
TUPE applies to both business transfers (whole or part) and service provision transfers.
If your business or part of your business transfers to a new owner or merges with another business to make a new company then TUPE will likely apply.
In service provision transfers
TUPE may apply in the following circumstances:
- You are a contractor who outsources work from a client.
- Your business is taking over activities from another contractor after a successful tender.
- You are a client who insources work from a contractor.
In other words, TUPE may apply whenever your business changes hands and there are employees affected by the change. The change might relate to an asset, or an activity, or a business. For example, if you take over the provision of a service, such as catering, the employees who provide the service may become your employees by virtue of TUPE. Or if you are considering buying an hotel, restaurant or pub, the employment of all staff, including cleaners and security staff may be transferred with the sale of the business.
If you are a school transferring from local authority to academy status, your staff will automatically transfer their terms and conditions to the academy.
How we can help your business
If you are an employer looking to purchase or sell a business or you are taking over a contract, we provide specialist TUPE transfer advice. We can advise you if TUPE applies. If TUPE does apply, we can ensure that your employees are transferred in accordance with the regulations. Call us today for a free initial telephone consultation, without obligation to discuss whether TUPE applies to your business transaction.
Our specialist Solicitors are skilled in advising businesses in this complex area of employment law and have assisted businesses in sectors as diverse as Social Care, Construction, Finance and Education.
Further information on TUPE Transfers
What is the effect of TUPE?
The main impact of TUPE is to:
- automatically transfer all the employees working in the affected business together with their contracts of employment to the new employer
- transfer liability in respect of employees dismissed in advance of the transfer if the reason for dismissal is connected with the transfer
- renders any dismissal (where the reason for that dismissal is the transfer) automatically unfair unless there is an ‘economic, technical or organisational reason’ (known as an ETO reason) for the dismissal.
Disclosure of employee liability information
If you are the transferor, you must provide information about your transferring employees to the new employer. This is known as the Employee Liability Information.
The following information must be provided by the transferor about the employees who will transfer:
- the employees’ name and age
- the employees’ terms and conditions of employment
- 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
- any court or employment tribunal claims taken by employees in the last two years
- information regarding any collective agreements
If you are the transferor then you must provide accurate and up to date information in a secure format to the new employer at least 28 days before the transfer.
Information and consultation – what are the obligations?
TUPE imposes information and consultation obligations on both the transferor and the transferee.
Both parties must inform employee representatives of their employees affected by the transfer, of:
- the fact and proposed date of the transfer
- the reasons for the TUPE transfer
- the legal, economic and social implications of the transfer for the affected employees
- the measures which the new employer envisages in connection with the transfer, in relation to any affected employees or, if no such measures are envisaged, that fact
You will need to consult with your employees if there will be measures that affect any of the employees.
‘Measures’ include any action, step or arrangement that has an effect on the employees affected by the transfer, for example redundancies or changes to the timing of salary payments.
You will need to inform and consult with any employee affected by the transfer or measures connected with it. This will usually include not only the transferring workforce, but also the non-transferring workforces.
The penalty for non-compliance is up to 13 weeks’ (uncapped) pay per affected employee with both parties being jointly and severally liable to pay the amount ordered.
Information and consultation must be with trade union representatives or, if there are none, with elected employee representatives. If there are no elected representatives, elections must be held. A micro-business (an employer with fewer than 10 employees) with no existing appropriate representatives and who has not already invited the employees to elect representatives, may inform and consult the employees directly.
What is an “ETO reason”?
Economic, technical or organisational reasons entailing a change in the workforce are likely to include reasons relating to:
- the profitability or market performance of the new employer’s business (‘economic’ reasons)
- the nature of the equipment or production processes which the new employer operates (‘technical’ reasons), and
- the management or organisational structure of the new employer’s business (‘organisational’ reasons)
An ETO reason will only be a valid basis for a transfer-connected change where that reason ‘entails changes in the workforce’. This has been held to apply only where there are changes in the actual numbers employed or the functions performed by employees.