TUPE rules apply where an “undertaking” moves from one business (A) to another (B). This can happen when an employer loses or wins a new contract to provide services, or buys or sells all or part of its business to another business. The TUPE regulations apply to the treatment of the staff employed by employer A before the contract or business is transferred into employer B.
TUPE regulations place obligations on both employer A & B to consult fairly with affected employees prior to the transfer taking place. The regulations make it unlawful to dismiss employees because of the transfer except for certain categories of reasons known as ‘economic, technical or organisational’ (ETO).
TUPE is a hugely complex set of regulations, but for the purposes of our summary here, from the employee’s perspective nothing should change as far as service, pay and conditions are concerned whether working for employer A or B. So having been the subject of a transfer from A to B, the employee’s contract of employment is treated as if it had always been between the employee and employer B.
Where changes are required, and providing these are ETO changes, these must be the subject of meaningful consultations between A & B and the employees concerned on the run up to the transfer date. ‘Meaningful’ consultations means ‘with a view to seeking agreement’. Employers should facilitate the election of employee representatives as part of this process. Where employees fail to elect a representative then employer A should consult directly with those due to transfer. Micro busineses (those with under 10 employees) are not obliged to consult with a representative – they can consult directly with employees if there is no trade union.
During this process employer A would also be required by law to provide employee liability information to employer B 28 days prior to the anticipated date of transfer.
Under some circumstances TUPE will be deemed not to apply. This can include businesses in receivership and businesses which are being acquired through a wholesale share acquisition, but (other than a change of owner) will continue to operate from the employee’s perspective as though nothing had happened.
Typical employment law pitfalls
TUPE is a very complex piece of legislation. The first employment law consideration is to establish whether it applies at all, and mistakes here can be costly. If problems are to arise under TUPE they will normally first show during consultation, or stem from the lack of it. Other issues include failing to count service as continuous, making changes without the agreement of employees, not realising that even changes with agreement may not be binding, if considering redundancies (even for ETO reasons) failing to include all potential employees in the ‘at risk’ pool (from both employers) and errors in paperwork e.g. confirmation letters, new contracts etc.
Help and support
We can help customers develop a fair process TUPE and be on hand to assist during that process. Customers contemplating TUPE inbound or outbound programmes should please contact us straight away. Larger scale exercises may be undertaken by separate arrangement (beyond the scope of the myhrdept.co.uk annual subscription) and we will notify customers where this appears to be the case and will provide an estimate before engaging in work.
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