TUPE stands for Transfer of Undertakings (Protection of Employment).
As a business owner or decisionmaker within a business, you may have been through a business sale, acquisition, or outsourcing of a service. The chances are you will have heard your HR Consultant or legal adviser giving consideration to whether TUPE applies to the situation.
According to ACAS:
TUPE regulations protect employees’ rights when they transfer to a new employer.
When Does TUPE Apply?
- a business transfer
- a service provider change
A business transfer is when an organisation, or part of it, is transferred from one employer to another.
A service provider change is when a service is transferred to a new provider. For example, when another company takes over a contract for IT services or another service such as cleaning.
The part of the organisation that’s transferring must be in the UK for TUPE to apply.
The size of the organisation does not matter. For example, it could be a large organisation with many employees, or a small business with one employee.
Who does TUPE apply to?
TUPE regulations can apply to the public and private sectors, as well as charities.
Essentially the legislation ensures that the staff and liabilities automatically move across to the transferee (the incoming employer) from the transferor (the outgoing employer).
TUPE makes sure that:
- Employees are able to continue being employed, even if their employer changes.
- Their terms and conditions remain the same (including pay, holidays, notice, and continuity of service).
- Certain protections against dismissal are put in place around the time of the transfer.
Business Transfers
This is where an economic entity (an organised grouping of resources which has the objective of pursuing an economic activity) moves from one owner to another.
A transfer of an economic entity is most evident in a business sale and typically involves the transfer/purchase of tangible assets like equipment, premises, customers, staff, and goodwill.
To determine if TUPE applies, it is important to very clearly identify the undertaking in question and assess whether it has transferred with its identity retained. Generally, if activities and customers remain the same and staff are still needed, then the identity is likely retained.
It is best to take advice on whether TUPE applies, in some circumstances, and if you are purchasing part of a company, or one element of the services it provides, it is imperative to understand who may be subject to the TUPE transfer.
Service Provision Changes
Common in outsourcing and facilities management, these include:
- Outsourcing (e.g. where a company outsources its cleaning or catering to a third party)
- Change of contractors or service providers
- Bringing services back in-house when these services have previously been provided by an external service provider
To apply, the service must involve an organised grouping of employees whose main purpose is carrying out the relevant activities which are switching from one employer to another.
When Does TUPE not Apply?
TUPE is wide-ranging, but not limitless. It will generally not apply where:
- There is no organised grouping of employees doing the work that is transferring, making it hard to identify which members of the team transfers on a change of contract
- The activity is “one-off” or “single event” work and not an ongoing arrangement
- The transfer is within the same business, such as public sector and the employer does not change
- The business being transferred is non-UK based
What Steps Must Employers Take to Comply with TUPE?
The outgoing employer (the “transferor”) and the incoming one (the “transferee”), both have legal responsibilities. Here is what needs to happen:
- Identify who is transferring
Figure out which group of employees are “assigned” to the transferring business or service, as TUPE only applies to employees who are permanently assigned to the relevant undertaking or organised grouping of employees. You may need to consider the following to determine whether an employee is assigned or not:
- The percentage of time that the employee spends on other activities?
- is the employee temporarily allocated to the group?
- Provide Employee Liability Information (ELI)
The outgoing employer must give the new employer key information about the transferring employees, including:
- Identity and age
- Terms and conditions including any applicable collective agreements
- Disciplinary / grievance history
- Claims or potential claims
This must be provided at least 28 days before the transfer. If a transferor fails to comply with the ELI obligations, an Employment Tribunal may order the company to pay the transferee compensation.
- Inform and Consult
Both employers must:
- Inform affected employees (or their nominated representatives) about the transfer
- Consult on any measures and material changes expected to be taken in connection with the transfer in relation to the affected employees (these may be subjects such as pay dates, and pension providers and other benefit providers)
Failing to inform and consult can result in protective awards of up to 13 weeks’ gross pay per affected employee. Claims may be brought against either or both of the transferor and the transferee for failure to inform and consult.
- Respect Continuity of Employment
The new employer takes on employees as if nothing had changed. All their existing rights, obligations, and liabilities transfer with them. The transferee has a right to the same benefits that they transfer across with.
How we can help you with your TUPE transfer…
We are aware that there are many issues relating to TUPE, we have managed various processes, but will always recommend you seek leal advice if the situation is not clear cut. We can refer you to a number of lawyers who will be only too happy to help.
We can help with the consultation process, measures letters and identifying the groups of employees. Contact us to discuss your project and we will step in and manage the output, liaising with lawyers as and if necessary.
