The Transfer of Undertakings (Protection of Employment) Regulations 2006 ('TUPE') aim to safeguard employees' rights on the transfer of a business or on the change of a service.
Duty to Inform and Consult under TUPE
Under TUPE, both the transferor (who is usually the seller of the business or the current provider of the services) and the transferee (who is usually the buyer of the business or the incoming supplier of the services) have separate obligations to inform and, usually, consult with appropriate representatives of their employees who are affected by a TUPE transfer, or measures taken in connection with it.
Appropriate representatives are either members of a trade union recognised by the employer or, where there is no such trade union, employee representatives who are either:
- existing representatives with suitable authority; or
- new employee representatives who are specifically elected for this purpose.
Exemption for micro-businesses
Employers with less than ten employees (micro-businesses) can choose to inform and consult with individuals directly, provided there are no existing representatives (whether this be members of a recognised trade union or employee representatives) and the employer has not invited the affected employees to elect representatives already.
This makes sense given the process of electing representatives would be excessive for a transfer involving only a handful of employees who could be spoken with directly with ease.
Rule change for transfers from 1 July 2024
This exemption for micro-businesses will be extended for transfers occurring from 1 July 2024 to apply to:
- Employers with fewer than 50 employees.
- Employers of any size, involved in the transfer of fewer than 10 employees.
Again, this applies only if there are no existing representatives in place and the employer has not invited elections.
In reality, many employers already inform and consult directly with affected employees where the transfer itself only involves a handful of employees as it often makes more commercial sense to do so. The new law will therefore be welcomed by employers and goes a bit further in extending the exemption to employers with less than 50 employees provided the above criteria is met.
Employers should ensure they are familiar with their obligations to inform and consult under TUPE as a failure in this regard potentially exposes transferors and transferees to up to 13 weeks gross pay per affected employee.
Our team of experts are on hand to guide you through the TUPE process including these information and consultation obligations.
TUPE Podcast Series
TUPE can be a very complicated area of law to navigate and so we have designed a series of short podcasts to give you a really good overview of the basics.
- When Does TUPE Apply? – Relevant Transfers
- Service Provision Changes – Same Client and Fundamentally the Same Activities
- TUPE Podcast Series: Service Provision Changes – Organised grouping and principal purpose
- TUPE Podcast Series: Service Provision Changes – Single specific events or tasks of short duration
- TUPE Podcast Series: Who Transfers?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.