What is TUPE?
TUPE stands for Transfer of Undertakings (Protection of Employment). It’s a regulation put in place to protect an employee’s rights when their employment is transferred to a new employer. When an employee is transferred, their terms and conditions are protected and they retain their length of service from the old employer.
When does it apply?
TUPE applies for two reasons; a business transfer or a service provision change. It will apply to situations such as a company taking over a contract for services but could also apply to a situation where employees work on a client account and that contract is won by a new organisation. Generally, in these situations, TUPE only applies to situations where a business or part of it retains its identity after the transfer.
In the case of a business transfer, TUPE applies when either the whole or part of a business moves from one employer to another. This may happen because a business has merged or been acquired. The triggers for TUPE, in this case, are where most of the assets have moved from one employer to another and where the activities of the business will remain largely the same after the transfer. Those assets will include buildings, equipment, copyright, branding, customers, and employees. TUPE will apply if any of these conditions are met but may apply even if only one condition is met.
A service provision change can apply in a number of situations – when a contract is being retendered, a service that was outsourced is transferred in-house, and when an in-house service is outsourced. Examples of common TUPE situations in this area include changes in areas such as security, catering, and office cleaning services.
The TUPE regulations apply regardless of the size of the businesses involved and the number of employees affected but will not usually apply in a situation where shares are being transferred. TUPE may be applicable in a situation that involves international transfers.
What should I be aware of?
You can read more about the requirements of TUPE from the CIPD here: https://www.cipd.co.uk/knowledge/fundamentals/emp-law/tupe/factsheet. However, TUPE regulations are complex and advice should be sought when contemplating a TUPE process or understanding whether TUPE applies.
The consultation process must be managed carefully as there is a potential to pay out up to 13 weeks gross salary if a tribunal decides that either employer failed to consult appropriately. To mitigate the likelihood of this, a thorough transfer plan should be agreed upon between both the new and old employers. This transfer plan will likely include agreement details such as how the consultation will be managed when the new employer will meet the employees and when the old employer will provide employee liability information. The regulations are very specific on informing and consulting, situations where employee representatives will be needed, what information should be given to employees, how a situation should be managed where an employee does not want to be transferred and the process that needs to be followed should a new employer wish to change any of the terms and conditions of the employees.
The new employer takes on liabilities for discrimination and equal pay claims, even if these relate to the period when the employee was employed by the old employer, so both employers will want to reach an agreement on indemnity against costs.
TUPE is a complex piece of legislation, and so if you think it may apply to a transfer your business is considering, please contact View HR for an initial discussion on how we can support you in terms of advising on the process and the on the ground too.