TUPE or not TUPE? That is very often the question.
TUPE is short for a piece of legislation called the Transfer of Undertakings (Protection of Employment) Regulations which protects employees against changes to their contracts of employment and dismissal when businesses are sold or when services are outsourced. Where TUPE applies there will also be obligations on employers to inform and consult with their staff about the transfer and any changes that might happen.
Employers are often unsure about whether TUPE will apply and, even if it does, what that means for them.
In general, TUPE will apply in two situations:
- Where there is an asset sale of a business or part of a business as a going concern (known as a “business transfer”); and
- Where a business outsources a service so that a contractor does it on their behalf, reassigns that contract to another contractor or brings that service back in-house (known as a “service provision change”)
TUPE will not apply where:
- There is a share sale;
- There is a transfer of assets only, not a going concern;
- The service being carried out after the transfer is different to before;
- The business is based outside the UK; or
- The service in question is only for a one-off event or of short duration.
Where TUPE does apply, certain obligations are triggered for the outgoing and incoming employers. They will both be required to provide certain information to each other as well as inform and consult with their own employees about the transfer and any changes that may affect them. Failure to comply with these requirements can result in employers being ordered to pay significant financial compensation.
Following the transfer, employers will not be permitted to make changes to the contracts of transferred employees or terminate their employment where the reason for this was the transfer unless they are able to establish an Economic, Technical or Organisational (ETO) reason for the decision.
If you are considering buying or selling a business or are involved outsourcing a service and you need to know whether TUPE applies and what to do if it does, we can help. We have specialist employment lawyers and HR advisers to answer your questions and guide you through a successful transfer.
The above blog is written by Laura Evans, Associate Solicitor at Your HR Lawyer. Our commercial Employment law services are provided by Your HR Lawyer, if you are an employer who needs advice about TUPE or any other aspects of Employment law, contact us on 0800 088 6280 or email firstname.lastname@example.org