What is TUPE and when does it occur?

October 5, 2018

What is TUPE and when does it occur?

TUPE (pronounced “To-pee” not “Toupée” or “Toop”) is actually an abbreviation for ‘Transfer of Undertakings (Protection of Employment) Regulations 2006. These regulations apply to organisations of any size and protect employees’ rights when businesses/services are transferred to a new employer.

TUPE Regulations apply when a business is sold, activities are outsourced or brought back in-house, or awarded to another contractor.

It is important to note that, for TUPE Regulations to apply, the activities being done before and after the transfer should be ‘fundamentally the same’. Business acquisitions or service provision changes which become severely fragmented may not fall under TUPE Regulations.

What does TUPE mean for employees’ rights?

TUPE regulation states that ‘all the transferor’s rights, powers, duties and liabilities under or in connection with the transferring employees’ contracts of employment are transferred to the transferee’. This covers rights under the contract of employment, statutory rights and continuity of employment. It also includes employees’ rights to bring a claim against their employer for unfair dismissal, redundancy or discrimination, unpaid wages, bonuses or holidays and personal injury claims etc.

Employees therefore have the legal right to transfer to the new employer on their existing terms and conditions of employment rights and liabilities intact. The new employer has to honour all of the effected employees’ current terms and conditions of employment, even if the new employer does not offer those terms to its existing staff.

How do I find out about transferring employees’ terms and conditions?

It is essential that employers know about the employees they may inherit, and that they are aware of any potential cost or liability.  The outgoing employer is obliged to provide the incoming employer with written details of all employee rights and liabilities that will transfer before the date of the transfer.

What terms will transfer?

As a general rule these contractual rights will transfer:

  • Rate of pay
  • Contracted hours
  • Sick pay entitlement
  • Entitlement to Company vehicle
  • Holiday entitlement
  • Trade union agreements
  • Continuous service
  • Contractual redundancy entitlement
  • Contractual maternity entitlement

(This list is not exhaustive)

Can I change the employee terms once they have transferred?

Under TUPE Regulations, any changes to the transferred employees’ terms and conditions that take place as a sole or principle result of the transfer will be void. For example, an employer may be found to have automatically unfairly dismissed their employees if they terminate transferred employee’s merely to reduce labour costs. It could also be seen as a breach of contract if the new employer attempts to harmonise the terms and conditions of new and old employees.

Variations agreed which relate to the following reasons may be valid:

  • If the sole or principle reason is an ‘Economic, Technical or Organisational (ETO) reason entailing changes in the workforce’ and provided the employer and employee agrees.
  • If the terms of the contract would have allowed the employer to make the change anyway, or a new development arises. For example the employer wins an order from a new client and has to bring in change to meet the needs of the new client.

The employer should consult with employees and reach an agreement about any changes to the terms and conditions.

How to comply with TUPE Regulations

TUPE requires that both the outgoing employer and the incoming employer inform and consult employee representatives of employees who are affected by the transfer. Businesses with fewer than 10 employees are not required to invite the election of representatives for consultation purposes if no existing arrangements are in place, although they must still inform and consult directly with each employee about the transfer.

If there are any changes or proposals for changes following the transfer, these “measures” will have to be discussed with the representatives of the affected employees.

The outgoing employer has had a duty to provide the incoming employer with written details of the transferring employees (including identity, age, particulars of employment, disciplinary and grievance records, employee claims and collective agreements) together with all associated rights and liabilities that will transfer. This information must be provided not less than 28 days before the transfer although in practice the incoming employer will usually aim to gather this information much earlier.

A complaint can be bought to an employment tribunal by transferring employees for failure to inform and consult. The remedy, depending on the severity of the case, can be up to 13 week’s pay as compensation.

Some scenarios you may recognise:

“We wanted to get rid of our cleaner who is useless. We ended the contract with the firm that employed her and got another firm in but she is still here – how did that happen?”

Ok we have lost the contract with ABC Ltd – make sure we allocate all the poor performers and long-term sick employs to that account so we can get rid of them and they can be someone else’s problem!”

’The staff that transferred to us have much better terms than our employees, it is causing resentment amongst the workforce. How can we deal with this?’’

’We are tendering for a big contract but it looks like there are more employees on the TUPE list than we need for the job. What can we do?’’

TUPE can be complicated but we are here to HELP – please call Honest Employment Law Practice on 01543 431050 if you wish to discuss any TUPE concerns.


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