What is TUPE?
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) operates to protect employees where there is a relevant transfer.
For example, a relevant transfer could be:
- When a business or part of a business moves to a new owner;
- When a business merges with another to create a new entity;
- Outsourcing e.g. when a contractor takes over from a client;
- Re-tendering e.g. when a new contractor takes over from another contractor; or
- Sourcing e.g. when a client takes over from a contractor.
Transfers covered by the TUPE Regulations
The first of these two situations typically applies where a business is being sold. The employees employed by the seller (the transferor) will, in most cases, transfer to the purchaser (the transferee) if the employees are wholly or principally assigned to the undertaking which is transferring.
This means that the employment is not terminated and they do not get a redundancy payment, and they have security of employment.
The term “a service provision change” describes a situation whereby services are contracted out. It may be that an organisation provides services in-house, but then decides to contract those services out to a contactor. That is often described as being “first generation contracting out”. The successful contractor may, in time, lose the contract and another contractor may be awarded the contract. That situation is described as “second generation contracting out” and it is also a service provision change. In time the organisation which contracted out may decide to bring the service back in-house, and that situation would also be a service provision change.
For there to be a service provision change there has to be an activity which transfers and there has to be an organised grouping of employees. Case law tells us that there can be an organised grouping of employees even where there is only one employee.
Transfers not covered by the TUPE Regulations
There are two exceptions to the rule that employees transfer where there is a relevant transfer. Where the employee objects to the transfer in the way prescribed by the regulations, they will not transfer. Similarly, they will not transfer where there is an economic, technical or organisational reason entailing changes in the workplace.
Where the regulations apply, the transferor has two principal duties. These are to inform and consult with employees and to provide the transferee with something known as employee liability information. The obligation to inform and consult is owed to employees who are affected by the transfer, not just those who are transferring. The way in which an employer should inform and consult depends upon the size of the organisation.
The effect of TUPE is that if an employee who ought to transfer is dismissed because of the transfer then he will be automatically unfairly dismissed (provided they have the requisite two year service period). Employers who have failed to inform and consult in the appropriate way can be held liable for up to thirteen weeks’ pay in respect of each employee. There are also penalties for failing to provide employee liability information. The information which the transferor is required to give is set out in the regulations but covers the main terms and conditions of employment and certain information regarding the process and claims.
How can Turcan Connell help you?
The employment law team at Turcan Connell can help by assessing whether the TUPE Regulations apply to your situation and advising you, if they do apply, of the consequences.
If you are an employer, then you need to be aware of what the consequences are for you. You will probably have obligations under the Regulations to inform and consult and, if you are a transferor, you may have an obligation to provide the purchaser with information on your employees. If you are a buyer or contractor, you need to assess what liabilities you are taking on.
You need to know whether the TUPE Regulations apply and if not whether you will be “made redundant”. If the Regulations do apply, you need to know what your rights are.