TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) is a key aspect of employment law that usually applies during business mergers and acquisitions, or whenever a business changes hands. TUPE may also apply when a contracted service is transferred back in-house; or, vice versa, when a service that is normally provided in-house is contracted to an external provider. In addition to this, TUPE covers the transfer from one external provider to a different external provider. These specific regulations are intended to protect employees in the event of a service provision change, or when a business is bought or transfers with another company. In effect, TUPE transfers existing employees and employment liabilities from one company to another and prevents employees from being dismissed solely because of the transfer.
How TUPE affects employersThe new employer effectively inherits the workforce. The new employer must also adhere to the employee’s existing terms and conditions of employment – it is unlawful to change these terms solely because of the transfer. This means that the new employer may be unable to avoid very high salary bills, which may also create a two-tier workforce where the new staff are on better contractual terms than the existing workforce. It is often impossible for the employer to revert to a single set of terms and conditions just because it is easier for them to do so. As part of TUPE, the employer has an absolute right to request employee records containing key information on terms and conditions, and any disciplinary undertakings. The employer is also bound to keep staff informed about what is happening in advance, and allow them to have their say.
Keeping employees informedIt is likely to be an unsettling time for employees when they are notified that their business is being taken over, or that the contract they are working on will be moved to a different provider. While the regulations are intended to protect employees from unfair dismissal, there is often some ground for employers to make valid redundancies, which adds to the feeling of uncertainty among staff. Read more about redundancy here. As stated above, it is the duty of all employers involved to keep staff informed as far as they are able to. Failing to keep staff updated may result in a tribunal claim and action being taken against the employer in question.
The law behind TUPE regulationsTUPE regulations are set in law by the act of Transfer of Undertakings (Protection of Employment) Regulations 2006, and have been amended by Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014. The amendment in 2014 reformed TUPE regulations by aiming to reduce the complexity of red tape that employers had to adhere to in the event of a business transfer. Dismissal and changes to terms post-transfer were made easier, but also reducing the level of protection for employees. The time limit before transfer for passing information to the new employer was made longer, which gave the new employer more time to digest this information prior to the transfer. See The Transfer of Undertakings (Protection of Employment) Regulations 2006 for more detail.
- TUPE regulations apply whenever a business is being bought or sold, aiming to protect employees from unfair dismissal solely as a result of a transfer
- The new employer acquires the workforce as part of the transfer, and must adhere to the existing terms and conditions of their employment contract.
- Be aware of the legislation reform in 2014, which reduced the complexity of red tape for employers, but that also reduced the level of protection for employees.