What does TUPE mean?
TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006. This provides protection for employees whose employer is seeking to sell or transfer the business to another company or there is a service provision change.
When does Transfer of Undertakings Protection of Employment rights apply?
2 ways Transfer of Undertakings Protection of Employment Regulations applies in the following situations:
- Business transfer.
This is where the employer changes from one business to another including mergers. Business activities are either the same or similar.
- Service provision change.
3 Ways a Service Provision Can Change Under TUPE
- Insourcing – where a contract was previously dealt with externally but is brought in house.
- Outsourcing – where a service was previously provided in house but is now dealt with by a contractor.
- Re-tendering – where one contract ends and is taken over by a new contractor.
For Transfer of Undertakings Protection of Employment Regulations to apply to service provision changes there must be an organised grouping of employees.
An organised grouping of employees is a group of employees carrying out work for the organisation receiving the services (the 'client') and can have just one employee. That group must be organised to deal with the client's needs. The client must remain the same for TUPE to apply. TUPE is less likely to apply in circumstances where the service activity is dealt with by multiple providers and the service is broken up.
When do TUPE regulations not apply?
TUPE does not apply where the contract is for supply of goods or for single events or short term tasks (exhibitions or conferences). TUPE also does not apply where the employer does not change for example share shares.
The Regulations impose obligations on both sellers and buyers of a business and failure to inform and consult could result in employees receiving up to 13 weeks' gross uncapped pay.
3 top tips for TUPE compliance
- Seek legal advice at an early stage if you are considering selling or buying a business and you have employees as TUPE may apply.
- If TUPE applies
- Consult with the employees at each stage to keep them updated.
- Enter into discussions with the seller or buyer at an early stage.
- Consider carefully before changing the transferred employees' contracts of employment. Although the contracts of employment can be changed where the change is not related to the transfer, where it is the contracts of employment can only be changed where the terms are improved, for example increasing the holiday allowance, or for an Economic (essential costs savings requirements), Technical (using new processes or equipment) or Organisational (making changes to the structure of the workforce for example making redundancies, change in the work location or restructuring an organisation) (ETO) reason, for example a restructure.
- Consider carefully before making redundancies and try and avoid this where possible.
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.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.