TUPE or not TUPE – that is the question…

And the answer is that TUPE (which people usually rhyme with loopy, but sometimes with puppy) is one of those pieces of employment legislation that many people have heard of, but few understand.  So the more crucial question is probably – what is TUPE? 

TUPE stands for "Transfer of Undertakings (Protection of Employment) Regulations 2006", as amended by the "Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014", and they apply when part or indeed all an employer's business or undertaking is transferred to another employer.  The legislation protects employees if the business (or part of a business) that employs them moves to another employer and ensures that they receive the same terms and conditions of employment from the new employer.  There are two key situations when this applies: 

• When an entire business, or a division of it, is transferred from one employer to another (for example, when a business is sold, a service is outsourced, or there is a merger or acquisition that involves a transfer of assets and employees.  This is called a Business Transfer. 

• When a provider of services changes.  As an example, this could be when a company outsources its cleaning services to a new cleaning contractor – the people employed to do that work by the previous contractor might transfer under TUPE.  This would be a Service Provision Change. 

TUPE does not usually apply if a transfer is only of assets (such as equipment) or if there is a contract for services for a specific event, or if there is a change of provider but they only provide items or resources (rather than services).  We would always recommend taking professional advice to determine whether TUPE applies to a transfer. 

The TUPE Regulations 

Transfer of Employment Contracts – employee contracts automatically transfer to the new employer, meaning that they keep their contractual terms and conditions.  It also prohibits dismissal of employees because of the transfer, so provides job security. 

Continuity of Employment – length of service with the previous employer is taking into account when considering their statutory rights (for example, what their Statutory Redundancy Pay entitlement would be if there were to be a redundancy situation in the future). 

Transfer of Collective Agreements 

Negotiated terms agreed collectively are transferred at the date of transfer. 

Changes to Terms and Conditions post-transfer 

Any changes post-transfer must not be directly related to the transfer itself and need to be justified by valid reasons, specifically Economic, Technical or Organisational (ETO). 

Workplace Pensions 

These do not transfer with individuals – the new employer must enrol the employees in a new scheme (although some exceptions may apply for public section pension schemes). 

The TUPE Process 

It is a complex one.  The new and previous employer have different responsibilities and the process needs to take account of the specific situation. 

Due Diligence Checks 

The new employer will want to ensure that they are fully aware of all the risks and terms that apply to the incoming employees.  The previous employer must provide Employment Liability Information (ELI) to the new one. 

Inform and Consult 

Both employers need to inform and consult with representatives or Trade Union reps about the transfer – there are hefty financial consequences for failing to do so.  If neither already exist, the employers may need to hold elections to appoint reps.  Individual consultations are important, particularly if measures (terms and conditions that will change due to the transfer) are proposed, in which case both employers should consult together with the affected employees. 

The original employer needs to give sufficient notice of the date of the transfer. 

TUPE and Redundancy 

The responsibility lies with the new employer, if any redundancies are proposed, hence why employees cannot be made redundant until after the TUPE transfer has happened. 

Integration 

The new employer should plan for the integration of employees into the new structure and provide necessary support and training to help the transition. 

Need help with the TUPE process?

Are you heading towards a TUPE situation in your business?  Not sure how to manage it?  Contact Pure Human Resources for advice and support through the process. We can provide HR support and advice on a pay as you go basis, with no need long term commitment or contract.

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