If a business is going through a transfer to a new employer, there’s a process available to protect employee rights—TUPE.
It’s an employment law topic that can appear complex for small businesses, but it’s an essential one to get right.
You can call 0800 028 2420 for guidance about this process if you need immediate support.
Or you can read this guide, which provides essential insights into the laws and procedures that make up this protective regulation.
What is TUPE?
It’s a set of regulations that protect employee rights during a business transfer. You can consider it a piece of pro-employee legislation from the European Union (EU).
Here’s the full TUPE meaning—it’s the Transfer of Undertakings (Protection of Employment) Regulations 2006. It’s a major part of employment law that usually applies during business mergers and acquisitions. Or whenever a business changes hands.
In effect, it transfers existing employees and employment liabilities from one company to another and prevents employees from dismissal because of the transfer.
“Impacts [the] employer who is making the transfer (also known as the outgoing employer or the transferor) and the employer who is taking on the transfer (also known as the incoming employer, the 'new employer' or the transferee).”
What’s the purpose of TUPE?
The regulations aim to protect employees in the event of a service provision change, or when a business is bought or transfers to another employer.
What happens when staff employment contracts are transferred is the new employer takes over:
- All of the terms and conditions in the contract.
- If there were failures under the previous employer to meet employee rights, the new one will have to shoulder any leftover issues. This means any discrimination claims will carry over to them.
- All the previous holiday entitlement the workforce can claim.
- The same employee start date—this doesn’t change to the period of the transfer.
- Collective agreements (a written contract negotiated through collective bargaining for trade unions).
You’ll likely receive a lot of questions regarding this issue from staff, whether you’re the new or old employer.
So if a member of staff asks, “Can my new employer change my contract after TUPE?” No, is the answer.
But after the transfer is complete, they should receive an up-to-date written statement of employment. Details to include in that are:
- The name of the new employer.
- An explanation that the terms of their contract haven’t changed.
Some employees may also receive a P45. This is in the event their tax records receive an update.
Of course, businesses have different types of staff. Not every individual has a full employment contract. Here’s a look at how the process affects workers:
- Does TUPE apply for self-employed contractors? No. They receive no protection during any business transfers. The legislation only protects those with contracts, which the self-employed don’t have.
- It’s the same with TUPE and agency workers. They have no protection as they don’t have a contract with either business.
- Do zero hour contracts transfer under TUPE? These workers also have no protection—this is because they’re irregular staff.
When does TUPE apply?
It usually occurs through business transfers, but it may also apply when a contracted service transfers back in-house (or vice versa), when a service that’s normally in-house is contracted to an external provider.
It also covers the transfer from one external provider to a different one. And that’s if there’s a service provision transfer. This is when a new contractor:
- Takes over from a client—“outsourcing”.
- Takes over from another contractor—“re-tendering”.
- A client replaces the contractor—“sourcing”.
So, to clarify, the two reasons why TUPE apply are for:
- Business transfers.
- Service provision transfers.
But how long is TUPE valid for? Two years. The new employer has to stick to the existing terms for this period, after which it can bring in new policies.
If you’re planning any amends after the two years pass, remember you must provide your staff with 90 days’ notice for change of contract.
TUPE law assistance with Peninsula business services
You can learn about the various laws in place for Transfer of Undertakings (Protection of Employment) Regulations 2006 further below.
It’s complex employment laws such as this that we help thousands of small and medium-sized businesses with on a daily basis. We’re experts in assisting with:
- HR issues—we provide 24 hour advice.
- Health & safety issues, such as risk assessments.
- Corporate services, such as crisis management and learning opportunities.
- Employment tribunal representation.
- Useful free resources, such as our insightful guides into HR and employment law
Since 1983, we’ve helped tens of thousands of businesses deal with day to day operations.
We provide expert support to take the stress away from dealing with complex and time-consuming tasks, ranging from contracts and documentation through to adding health & safety insurance.
And we can help with your employment law requirements in the event of a business transfer. You can request a business call back for immediate support with TUPE.
What does TUPE protect?
Primarily, the employees. It helps them to get a fair deal during the process, so that a new employer can’t treat them less favourably.
The new employer inherits the workforce and must adhere to the employee’s existing terms and conditions of employment—it’s, in fact, unlawful to change these terms solely because of the transfer.
This means the new employer may be unable to avoid very high salary bills, which may also create a two-tier workforce where the new staff is on better contractual terms than the existing workforce.
It’s often impossible for the employer to revert to a single set of terms and conditions just because it’s easier for them to do so.
However, there are also rights for a business during the process. As part of TUPE, the employer has the right to request employee records containing information on:
- Terms and conditions.
- Any disciplinary undertakings.
You’re also bound to keep staff informed about what’s happening in advance. And allow them to have their say.
What is a TUPE consultation?
During the process, it’s your duty to consult with any employee or union representatives.
It’s important to meet with them to reach an amicable agreement about any measures that are upcoming.
The result is you should look to keep everyone informed on the progress of a transfer—this includes hearing suggestions from the representatives.
You must be receptive to suggestions. Consider them properly before reaching a conclusion, which will be to either accept or reject them.
Remember, it’s likely to be an unsettling time for employees when they know their business is being taken over.
Knowing the contract they’re working on will be moved to a different provider can create stress and tensions, such as concerns over keeping their job.
While the regulations intend to protect employees from unfair dismissal, there’s often some ground for employers to make valid redundancies. And that adds to the feeling of uncertainty among staff.
It’s the duty of all employers involved to keep staff informed as far as they are able to.
Failing to do so may result in an employment tribunal and action against the employer in question.
Employees will also want to know of certain developments. Such as:
- Positive changes: Whether the new employer will look to improve upon their existing terms and conditions, such as promoting greater equality through equal holiday day opportunities.
- Pension rights: What’ll happen to their pension—what they’ve earned up to that point receives protection. However, a new employer can continue with a different pension scheme if they want.
A TUPE and redundancy explanation
It’s important to appreciate employees can refuse to work for the new employer ahead of a business transfer.
Some of them may even approach you about other options. For example, on hearing a business transfer is happening they may ask, “Can I ask for redundancy instead of TUPE?”
From your perspective—if you have to dismiss an employee, especially after the transfer process begins, then it’s an automatic unfair dismissal.
In fact, under the Transfer of Undertakings (Protection of Employment) Regulations 2006 it’s classified as a dismissal.
However, a business must be careful during any business transfer. Making an employee redundant can only take place before the TUPE process begins.
Otherwise the member of staff could take the decision to be an unfair dismissal. Again, this can result in an employment tribunal—a damaging result for any organisation.
The law behind TUPE regulations
TUPE regulations are set in law by the act of Transfer of Undertakings (Protection of Employment) Regulations 2006.
They’re amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014.
The amendment in 2014 reformed TUPE by aiming to reduce the complexity of red tape you did have to stick to in the event of a business transfer. Following on from the update, the main differences are now:
- Dismissal and changes to terms post-transfer are easier.
- Employee protections aren’t as extensive as they were.
- The time limit before a TUPE transfer for passing information to the new employer is longer. This provides more time to digest this information prior to the transfer.
Is TUPE European law?
Yes. The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) is UK legislation.
However, it implements the Acquired Rights Directive (Directive 2001/23/EC)—that’s EU legislation.
But as a result of Brexit, what’ll be the outcome in the event of TUPE? Most likely we’ll continue with the process—at least for the time being.
After Brexit there’s a transition period, with the possibility the UK government implementing the EU’s legislation.
TUPE will, essentially, be available for change—or removal. It’ll depend on the government of the time on how it wants to approach this issue.
The basics of TUPE employment laws
As this is such a complex issue, it’s useful to have a brief overview of the main points in the process. These are:
- TUPE regulations apply whenever a business is about to be bought or sold, aiming to protect employees from unfair dismissal solely as a result of a transfer
- The new employer buys the workforce as part of the transfer—it must follow the existing terms and conditions of their employment contracts.
- Keep in mind the legislation reform in 2014, which reduced the complexity of red tape for employers, but that also reduced the level of protection for employees.
Need more help?
As this is a complex and difficult process to get right, industry-leading support can help. Call us for immediate assistance: 0800 028 2420.