TUPE – What does it mean?
TUPE – The Transfer of Undertakings (Protection of Employment) Regulations 2006, Its aim is to protect employees when a business changes owner. TUPE protects employees by entitling them to the same terms and conditions, with continuity of employment, as they had before the transfer.
There must be a relevant transfer for TUPE to apply. This can be quite complex but is generally described as ‘a transfer of an economic entity which retains its identity’.
When does TUPE apply?
- A business or part of a business moves to a new owner or merges with another business to make a brand new employer
- When a client takes over activities from a contractor
- When a contractor takes over activities from a client
- When a new contractor takes over activities from another contractor
When does TUPE not apply
- A business only transfers assets
- A change in business identity
- A transfer of undertaking outside of the UK
- A transfer by share takeover
- A client buys in services from a contractor on a one-off basis
Employee liability information
You must provide the new employer the following employee information; –
- the identity and ages of the employees who will transfer
- details of any collective agreements that apply
- their statements of employment particulars
- details of any formal disciplinary action taken, or employee grievances raised in the past two years to which either the 2004 or 2009 ACAS code of practice on discipline and grievance procedures applies
- instances of any legal actions against you in the past two years by the transferring employees and any potential legal actions
Consultation and notification
The current employer must give the following information to all employees that the transfer will affect.
- That a transfer is to take place.
- The reason for the transfer and when it is expected to take place.
- The implications for employees.
- The measures that the current employer expects to take in relation to the employees.
- The measures that the new employer expects to take in relation to the employees.
What happens if the transferor or transferee fails to consult and notify?
Failure to consult or notify could lead to an employee being awarded a protective award of up to 13 weeks’ pay. Any complaints must be set with a tribunal within 3 months from the date the transfer took place.
In the case that an employee objects to transfer over to a new business, they have effectively resigned resulting in them losing the right to claim certain employment rights. They will have no entitlement for any redundancy payment.
After a Transfer
The new employer can’t change an employee’s terms and conditions if the reason is the transfer itself.
The new employer can change an employee’s terms and conditions if the reason is an ‘economic, technical or organisational reason’ (ETO) involving changes in the workforce or workplace, such as a result of redundancies or a move from a managerial to a non-managerial position. The employee needs to agree to this change.
- ‘Economic’ reasons are to do with how the company is performing.
- ‘Technical’ reasons are to do with the equipment or processes the company uses.
- ‘Organisational’ reasons are to do with the structure of the company.
Employers should continue to engage with all affected employees on an ongoing basis after the transfer. However if there are potential redundancies to be made, the employer must continue to inform and consult with representatives and employees as appropriate.
For full details download the Acas Guide to handling TUPEAcas TUPE guide