The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) are a set of complicated rules that protect employment rights during takeovers and similar business structure changes. Here, we cut through the jargon.
- When does TUPE apply?
TUPE only applies when there’s a ‘relevant transfer’, which is either a ‘business transfer’ or a ‘service provision change’.
- What’s a ‘business transfer’?
A business transfer is when all—or part of—a business changes hands and keeps its identity, with the intention of it continuing as a going concern.
- What’s a ‘service provision change’?
A service provision change is when a business contracts a service out to an external contractor, changes from one external contractor to another, or brings the service in-house.
- What do TUPE Regulations do?
TUPE protects staff when there is a transfer of their employment. The rules also give several duties to both the old employer (the transferor) and the new employer (the transferee). A failure to perform these duties could lead to an expensive tribunal claim.
- What happens to staff?
Under TUPE rules, staff transfer to the new employer. However, they still work under the same terms and conditions as they did with their previous employer.
- Can the new employer change the terms and conditions?
Only if there’s either an economic, a technical, or an organisational reason which requires a change in the workforce.
- What does the old employer have to do for the transfer?
The old employer must consult with representatives of any affected employees and explain everything about the transfer, including when and why it’s happening.
- Does the old employer have a time limit for this?
At least 28 days before the transfer happens, the old employer should inform the new employer about all transferring employee rights and liabilities. They must provide information about terms of employment, disciplinary and grievance records, and any tribunal claims or collective agreements.
- Can affected employees make employment tribunal claims?
There are three reasons for a potential claim:
- Dismissal where the sole or principal reason is the transfer will be automatically unfair.
- Failure to inform and consult with staff. Each employee can make a tribunal claim for up to 13 weeks’ pay.
- Failure by the old employer to give the required information to the new employer may result in a compensation claim of at least £500 per employee.