TUPE – Transfer of Undertakings Regulations – Employees
If the business you are employed by or the contract you are employed on is sold or otherwise transferred to someone else you will usually be transferred to the new owner or operator of the contract. The TUPE regulations protect the terms and conditions of your employment which cannot be altered just because of the transfer.
Employees are often confused by this process and as experienced Employment Solicitors we can assist you to understand what is happening and protect your position.
TUPE introduced three concepts into UK employment law:
- Employees transfer to the transferee (usually the purchaser of the business) who inherits all rights, liabilities and obligations in relation to them.
- Protection against dismissal in connection with a TUPE transfer.
- The obligation to inform and consult with representatives of the affected employees.
TUPE applies to all of the UK.
TUPE applies to a “relevant transfer”, which means either or both of the following:
- A transfer of a business, undertaking or part of a business or undertaking where there is a transfer of an economic entity that retains its identity (a business transfer). This involves three elements:
- an economic entity;
- a transfer of that economic entity; and
- the economic entity retaining its identity following the transfer
TUPE does not apply to a transfer of shares
The transferee takes on the transferring employees on their existing terms of employment, and can only make changes to their terms in limited circumstances.
Changes to terms of employment will be void if the sole or principal reason for the change is the transfer itself, unless either:
- The reason for the variation is an ETO reason.
- The reason for the variation is the transfer, but the terms of the contract permit the employer to make such a variation.
TUPE provides enhanced protection against dismissal over and above general unfair dismissal law for employees with (at least) the qualifying period of service which is usually 2 years.
A Dismissal will be automatically unfair if the sole or principal reason for the dismissal is the transfer itself. If, however, the reason is an Economic Technical or Organisational reason, then it will instead be potentially unfair.
Both the transferor and the transferee must inform and (if appropriate) consult with recognised trade unions or elected employee representatives (if there is no recognised union) in relation to any of their own employees who may be affected by the transfer or any measures taken in connection with it. Certain information must be provided to the representatives long enough before the transfer to enable the transferor to consult with them about it. Although there will be a duty to inform on every TUPE transfer, the duty to consult only arises where an employer envisages taking measures in respect of affected employees. Businesses with ten or fewer employees can inform and consult affected employees directly in certain circumstances.
A failure to comply with these obligations exposes the parties liable to pay compensation equivalent to up to 13 weeks’ uncapped pay. The transferor and transferee may, in certain circumstances, be held to be jointly and severally liable ( www.practicallaw.com/8-200-1391) for this.
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