When a new contract is won it is important to assess whether TUPE
comes into play.
TUPE stands for Transfer of Undertaking (Protection of Employment). In 1981, regulations were introduced to ensure that employees’ rights were protected in the event of a business transfer. Prior to this under common law, when a business was sold, existing contracts of employment terminated and the new employer could choose whether or not to employ any of the original staff.
If a group of employees are grouped together with the aim of pursuing an ‘economic activity’, then they form an ‘economic entity’. If that entity transfers to a new owner, so do the employees. The employees retain all their contractual rights and obligations, even where these differ from other employees already employed by the transferee.
The new employer (the ‘transferee’) acquires all the rights and liabilities associated with those employees.