If an employer is buying or selling a business or part of one, or is involved in a service provision change, the Transfer of Undertakings (Protection of Employment) Regulations may apply. This is more commonly known as TUPE, but why does it matter and what are some of the key things to be aware of?
As part of our festival of learning series in which we shine a spotlight on different areas of employment law, we take a quick look at TUPE below.
When can TUPE apply?
In general terms, TUPE can apply in two types of situations:
- Business transfers – where an economic entity transfers, and it retains its identity after the transfer. This commonly occurs where a business is bought or sold.
- Service provision changes – this is where activities are outsourced, taken back in-house or there is a change of contractor. TUPE may apply in these situations if certain conditions are met, including where there is an organised grouping of employees whose principal purpose is to carry out the service activities in question.
Why does TUPE matter?
It’s important to be aware of TUPE because of the rights and protections it usually gives to employees as well as the obligations it normally places upon the employers involved. Here’s some key things to be aware of when it comes to TUPE:
- Affected employees will automatically transfer from the old employer (the transferor) to the new employer (the transferee), unless the employee objects. The transferring employee’s continuity of service will be maintained.
- In respect of the employees, the transferee will take over the rights and liabilities of the transferor, apart from a few exceptions.
- Employees are protected from being dismissed because of the transfer – such dismissals are automatically unfair.
- Employees terms and conditions are protected – there are very limited circumstances in which these can safely be changed.
- The transferor must provide the transferee with Employee Liability Information. This must be done at least 28 days before the date of the transfer. The Employee Liability Information which must be provided includes information about the identity of the employees, their terms and conditions and any recent disciplinary action or grievances. If you are the transferee, it is important you ensure you get this information as it will help you to determine whether you want to take on the business/contract concerned.
- There are rules regarding informing and consulting employee representatives about the transfer. It’s important to be aware that if you breach your information and consultation obligations an employment tribunal can award up to 13 weeks gross pay for each affected employee.
TUPE can be one of the trickier areas of employment law but remember that Kingfisher Professional Services Ltd are here to help. It’s important to seek advice on your situation as soon as possible if you are buying or selling a business or part of one, or your organisation may be involved in a service provision change.