This article answers the question of ‘What is TUPE?’ including when it applies and the consequences of not getting it right.
TUPE is the ‘Transfer of Undertakings (Protection of Employment) Regulations 2006’ and its amendment in 2014. It is a legal term that concerns employees’ rights being protected in cases where businesses change ownership or there is a service provision change. The protection referred to is that employees retain their terms and conditions of employment, their continuity of employment and other contractual matters when they transfer from one business to another.
TUPE applies when a there is business transfer, or a service provision change to any size business within the United Kingdom whether it has one employee or several thousand.
When a business or just simply part of a business transfers from one employer to a different employer. Mergers are also included which could involve the combination of 2 companies to create a new one.
In order for TUPE to apply in a business transfer the identity of the employer is required to change.
A service provision change can include insourcing (moving a previously outsourced service in-house), outsourcing (contracting a service originally in-house to an external contractor) and a contract that ends with one contractor and moves to another.
Once you have identified that TUPE indeed applies it is important to educate yourself and prepare for what your obligations are, either as the transferee or the transferor.
The new employer the employees will transfer to.
The original employer prior to the transfer.
As a result of a TUPE transfer the transferee will take over all of the current liabilities, rights and obligations of the employees from the transferor, so it is essential that all Employee Liability Information is obtained in good time (no less than 28 days before the transfer) for the new employer to have a clear view of what it is inheriting. This includes employment contracts, pay, continuous service and holiday entitlements. In some instances, pensions may also be protected under TUPE regulations.
Consultation with all affected employees, or nominated representatives, is required by both parties, and included within the consultation should be any measures the transferee intends to take.
TUPE can really be a minefield for business owners, and the consequences can be costly if not followed properly. Some of these include:
Penalties can include up to 13 weeks’ pay for failure to consult with employees should the employee complain to an employment tribunal.
Failure of the transferor to provide the ELI could result in a claim being sought by the transferee for a minimum of £500 per employee whose details were not shared in line with TUPE regulations.
In addition to the above, if employees are dismissed as a direct result of a TUPE transfer, then the dismissal will likely be deemed unfair, attracting compensation for unfair dismissal at a tribunal.
Please note this article provides a basic overview of what TUPE is. The ins and outs of TUPE are extremely complicated. Each case of TUPE is judged on its own merits and as such it is one of the most complex areas of employment law. Therefore, it is important you seek appropriate professional advice to support you through the process.
To find out more information or if you require any advice about TUPE, get in contact with our team of experts.
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