When a business moves to a new owner in one of these 'relevant transfers', the Transfer of Undertakings Protection of Employment Regulations TUPE currently protect the entitlement of UK employees to the same terms and conditions, with continuity of employment, as they had before the transfer.
This factsheet provides introductory guidance on the law governing the transfer of an undertaking. It also gives brief guidance on managing a TUPE situation, particularly when it comes to dismissals, consultation and notification, pensions, and required written information.
A transfer of an undertaking falls into one of two broad categories, either a business transfer or a service provision change. TUPE applies if there is a transfer of an 'economic entity that retains its identity'. This can be determined by asking:. If the answer to several of the above questions is 'yes', then TUPE is likely to apply.
In some cases just one of these factors has been enough for TUPE to apply. In addition, the activities undertaken must be essentially the same after the transfer as they were before it. The Transfer of Undertakings Protection of Employment Regulations , as updated by various statutes and regulations, cover the transfer of an undertaking, or part of one, from one business to another. TUPE protects employees by entitling them to the same terms and conditions, with continuity of employment, as they had before the transfer.
TUPE applies to all relevant transfers, including situations where services are assigned to a new contractor, for example in labour-intensive services such as office cleaning, catering, security and refuse collection. The Government and Acas have both published guidance on complying with the law for employers, employees and their representatives. Changes of contractors for labour intensive activities, such as security, catering, refuse collection and cleaning, have caused confusion in the past, but TUPE usually applies in these situations.
TUPE may also apply where an organisation, such as an advertising agency or a law firm, takes over a client from another firm following a tender process. The new firm may be under an obligation to take on the staff working on the client account for the previous firm. This should include identifying key risks and holding a genuine dialogue with employees throughout the process.
All employees employed in the organisation or part of the organisation that is transferring will be entitled to carry on working for the new organisation with their existing terms and conditions of employment. Their continuity of service is also preserved. The transferee also takes over the liability for all statutory rights, claims and liabilities arising from the contract of employment, for example liabilities in tort, unfair dismissal, equal pay and discrimination claims.
The exception to this rule is criminal liabilities. It may be possible to negotiate warranties and indemnities which will provide a partial, or total, cushion against the financial impact of any claims resulting from the application of TUPE. Our practical guidance for people managers on the requirements for transfers of staff provides a minimum set of standards for all parties and includes sections on service provision transfers, steps to follow when transferring staff teams, pension issues, and the challenges if employers want to try and dismiss or harmonise terms and conditions.
If an employee is dismissed because of the transfer, their dismissal is automatically unfair. However, the dismissal will not be automatically unfair if the employer can show an 'economic, technical or organisational' ETO reason entailing a change in the workforce. ETO reasons are explained further below. Dismissal more generally is covered in our dismissal factsheet. The transferor must conduct a full and meaningful consultation with employees at the earliest feasible time.
Employers who failure to consult properly can be required to pay staff up to 13 weeks' pay in compensation. The transferor and transferee are both liable to pay this compensation. If there are no trade union or employee representatives, then the law stipulates that representatives must be elected by the affected employees for the purposes of consulting over the transfer. The employer must facilitate the election process.
If the reason for the variation or amendment is an ETO or if the reason for the variation is the transfer, but the contract of employment allows the employer to make the variation, then it will be valid. TUPE gives employees greater protection against dismissal above and beyond general unfair dismissal rules, subject to satisfying the qualifying period of service requirement.
A dismissal will be automatically unfair if the sole or principal reason for the dismissal is the transfer, unless there is an ETO reason, which could render the dismissal fair. The new and the old employer are under a duty to inform and if appropriate, consult with recognised union representatives or elected employee representatives in relation to any employees who may be affected by the transfer.
If any measures are envisaged by the transfer then the duty to consult is triggered. Among other things the amendment regulations enable the transferee to consult with representatives of affected employees, including transferring employees, before the transfer, as long as the transferor has been notified in advance and agrees.
The transferor is obliged to provide the transferee with specific information about the transferring employees not less than 28 days before the transfer, and if he fails to do so, there are remedies available to the transferee. For more information about TUPE, the Regulations and how they apply in practice, please call Amanda Badley on or email on amanda. Published by BHW Solicitors. Categorised in: Employment , News. To help us keep you updated with our handy guides and other useful news, please consider signing up to our mailing list.
Many of the decisions affecting transfer of undertakings situations have evolved from European countries and European courts. These decisions are constantly evolving and great care is therefore needed in the administration of employees in a situation covered by the regulations.
In essence, however, all of the liabilities owed to the employees by the existing employer the transferor will pass to the new employer the transferee at the point of transfer. Employers, therefore, who are transferring a business to another employer should ensure that the arrangements between them and the buyer are clear and unequivocal. Employees are also entitled to be given notice of the fact that a business is transferring. For the employer taking over a new business, again it is essential that accurate and comprehensive records relating to the employees and their contracts are transferred.
There is a legal obligation on the outgoing employer to provide certain information to the incoming employer prior to the transfer.
In either case, full, open and comprehensive communication with the employees is an essential ingredient. Employees who wish to claim a remedy for unfair treatment involved in the transfer of an undertaking may apply to an Employment Tribunal. Partners and Accreditations.
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