• Employment Law
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Peninsula Group, HR and Health & Safety Experts

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In this guide, we'll discuss what the TUPE regulations are, the penalties, and the process of transferring employees.

Sometimes, businesses may be bought by other companies; either through a transfer or merger. If this happens, employees are afforded certain protections through TUPE.

Failure to follow TUPE regulations could create serious issues for a business. For example, if a business is transferring to your company, you might unfairly dismiss a staff member.

If this happens, they could claim unfair dismissal at an employment tribunal. Consequently, your business could face a financial penalty, and even reputational damage.

In this guide, we'll discuss what the TUPE regulations are, the penalties, and the process of transferring employees.

What does TUPE stand for?

TUPE stands for the Transfer of Undertakings (Protection of Employment). It’s a specific employment legislation that came into effect in 2006.

TUPE is aimed at full-time and part-time employees, and applies to big and micro-businesses alike. Not to mention, it can apply to businesses in the public or private sector.

What is TUPE?

TUPE is the effect of transferring employees and any responsibilities linked with them from the old employer (outgoing employer) to the new employer (incoming employer) by operation of law. For example, if:

  • The organisation (or part of it) transfers to a new owner.
  • A service their employer provides is transferred to a new provider.
  • The organisation (or part of it) is transferring to another business within the UK.
  • Their employment terms and conditions transfer.
  • Their continuity of employment is maintained.

In essence, TUPE protects employees during times of specific change within their place of employment. But, they must:

  • Legally be considered an employee (but this can include apprentices and workers too).
  • Have their employment terms and conditions transfer.
  • Have their continuity of employment maintained.

When does TUPE apply?

There are two instances where TUPE applies; business transfers and service provision changes. This includes relevant transfers within the public and private sector.

Let's take a look at both in more detail, so you're aware of your employees' rights:

Business transfers

TUPE applies when a business transfer occurs. For example, the sale or transfer of a business from one employer to another. Or, two businesses come together to form a new company.

For the transfer to be protected by TUPE, the identity of the employer must have changed.

Service provision changes

TUPE also applies in the instance of service provision changes. This occurs when:

  • An in-house service is offered to a contractor. For example, if a contractor were to take over your office cleaning, which you previously carried out yourself.
  • A business contract a company has with their current contractor ends and is given to a new contractor.
  • A business contract ends, and the work is moved in-house.

However, only the employees who are assigned to the services are protected by TUPE regulations.

When does TUPE not apply?

TUPE doesn't apply to every business transfer or service provision change. This includes:

  • Transfers in the public sector where the employer does not change. For example, transfers within the social care sector.
  • Transfers of a contract which is for the supply of goods only. For example, a restaurant changing food suppliers.
  • Transfers for a single event or short-term task. For example, an event or festival.
  • A company's shares are transferred to new shareholders.

It's worth noting that TUPE can still apply when working abroad in limited circumstances. For example, if the business or part of a business transfer is taking place in the UK, but your head office is abroad. This can be a tricky area, so make sure you seek independent legal advice.

What are the TUPE regulations?

There are several TUPE regulations that you must abide by if you're conducting a relevant transfer. For example, inform your staff of the transfer in the correct way.

TUPE regulations protect new and existing employees (regardless of whether they are working for the outgoing or incoming employer) so ensure you’re familiar with their rights.

We'll explore the steps to conducting a lawful TUPE process below:

Consider what you need to do before transferring

The first step in any TUPE transfer is to consider what actions you need to take before it occurs. This applies to both the old and new employers involved in the transfer.

This might include considering how you'll:

  • Discuss plans with staff early on.
  • Keep staff motivated throughout the transfer.
  • Assess the risks of the transfer.
  • Confirm whether or not the transfer is a possibility.
  • Identify likely employment costs and other liabilities.
  • Manage staff with different employment terms.

You should also consider the risk of redundancies after transferring employees. Remember, your main priority is protecting employees, so ensure you consider the above.

Make a plan and share information with the new employer

Now you've decided the transfer will happen, both parties need to agree on a plan. You might wish to discuss:

  • If TUPE applies to this transfer.
  • Which employees are transferring.
  • The date of transfer.
  • If the new employer will meet with transferring staff and employee representatives.
  • If affected employees can visit the new business premises to gain better understanding.

For new employers, you might also wish to request warranties and indemnities from the outgoing employer. Indemnities are promises the old employer provides to the new employer, to protect them from unexpected costs and liabilities.

For example, if an employee raises a claim to a tribunal, the old employer would have to cover the cost of monetary damages. But, this is only if such an agreement is reached.

Provide employee liability information

Next, the old employer needs to provide the incoming employer with employee liability information (ELI). This is information or data relevant to the staff transferring.

It includes an employee's:

  • Identity.
  • Age.
  • Written statement of employment particulars.
  • Disciplinary and grievance records from the last two years.
  • Any collective agreements shared with a trade union.
  • Any claims related to the employment of staff made against the old employer in the last two years.

ELI must be provided at least 28 days before the transfer date. But, it's best practice to share or request this information early on, as it gives you time to ensure the ELI is up-to-date and accurate.

Inform and consult staff

After the ELI is received, it's time to inform and consult the affected employees about the TUPE transfer. To inform, both the old and new employer must tell staff - or their existing appropriate representatives - the details about the transfer.

To consult, both parties must listen to staff and their representatives (these individuals will likely belong to a recognised union). This step is essential to ensuring employees have their concerns listened to and addressed.

Trade union representatives speak on behalf of staff. If a workplace has 10 or more employees, and there is no recognised union representation, they must arrange for staff to elect representatives. Businesses with less than ten employees might opt to speak to each employee individually instead.

Employment contracts transfer

The date the TUPE transfer happens is when the staff's employment contracts will transfer to the new employer. This includes:

  • Their length of service or continuous employment.
  • The employees' terms and conditions of employment.

Put simply, the employee's start date is the same as it was before the transfer. Not to mention, they don't get a new employment contract, it just continues. The new employer should also confirm the change in writing, noting that staff still have the same terms and conditions of employment.

If the new employer fails to transfer contracts lawfully, employees could make a breach of contract claim to a tribunal. This is why all parties involved in a TUPE transfer must follow the process properly.

Is a TUPE dismissal automatically unfair?

Yes, dismissal as a result - or of reasons related to the business transfer - is considered automatically unfair.

If the new employer fails to abide by TUPE and unfairly dismisses an employee, the staff member can raise an automatically unfair dismissal claim to a tribunal. As a result, the business might be required to pay hefty compensation – but the amount will vary depending on the claim.

How much notice do you need to provide for a TUPE transfer?

There is no set length of time TUPE regulations outline when it comes to the notice you need to provide.

You aren't ending the employee's contract. So you don't need to provide the same notice period you would in other circumstances, such as dismissal.

Are pension schemes covered by TUPE?

Pensions are only covered by TUPE in certain circumstances. Up until the date of transfer, the employee's pension will be protected. It will only transfer to the new employer if the individual has a personal pension - otherwise known as a pension arranged by the employee themselves.

In this situation, the new employer must pay the same amount into the personal pension as the outgoing employer did. But, if the employee has an occupational pension scheme it's likely the employee's pension rights will not transfer to the incoming employer.

This is because it's exempt from TUPE regulations. Consequently, the new employer does not need to continue the same pension. However, they must still provide a reasonable alternative scheme and match contributions up to a maximum of 6%.

How long do TUPE regulations last?

TUPE regulations last for an indefinite period. The transferee employer cannot change the terms of an employment contract as a result of the transfer. Unless, there is an economic, technical or organisational reason entailing a change in the workforce.

This is still the case if years have passed since the transfer, and such instances would still be considered unlawful.

For example, the incoming employer wants to reduce the amount of contractual annual leave their new employees have. And the reasons for this are related to the transfer. Even though time has moved on, this would be unlawful.

Get expert advice on TUPE from Peninsula

Businesses that are being transferred to - or merged with - another company, must ensure they follow TUPE regulations.

This means discussing changes with transferred employees and listening to their suggestions. Failure to do so could result in staff raising claims to an employment tribunal.

Peninsula offers expert advice on the TUPE process for outgoing employers and incoming employers. Our teams provide 24/7 HR advice which is available 365 days a year. We take care of everything when you work with our HR experts.

Want to find out more? Contact us on 0800 028 2420 and book a free consultation with an HR consultant today.


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