The Transfer of Undertakings Protection of Employment (TUPE) is a complex and technical process, designed to protect employees. The regulation was implemented in 2006 and is applied when you’re transferring your business or service to another person. There are many reasons an employer may want to sell their business. This could be due to retiring...
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The Transfer of Undertakings Protection of Employment (TUPE) is a complex and technical process, designed to protect employees. The regulation was implemented in 2006 and is applied when you’re transferring your business or service to another person.
There are many reasons an employer may want to sell their business. This could be due to retiring early, part of a pre-existing exit plan or that they can’t afford to stay open.
We’re going to guide you around TUPE. This article explains what the laws are, and best practices for transferring employees from one business to another.
We have also included a TUPE transfer checklist for you to download.
If you need further advice, get in touch with one of our experts today on 0800 470 0613.
TUPE ‘Transfer of Undertakings (Protection of Employment)’ protects employees when the business they work for changes hands or is sold.
When the employer is transferring employees, all their legal rights still stand. This is during the move and after. The new employer’s legal duty is to follow the employee’s contractual terms outlined in the employee’s documentation.
These terms could include, but not limited to:
When you’re going through the TUPE process, you may come across a few names that refer to the old employer and the incoming employer. These names will refer to two entities or businesses involved.
TUPE laws are important, they protect your employee’s employment rights.
During internal changes and restructures these rights can be overlooked and sometimes forgotten. The main reason for TUPE is to ensure that employers go through the correct legal process while they’re making the transaction.
As the incoming employer has the legal duty to honour their new employee’s employment contracts, employees should be able to continue carrying out their duties as normal.
It’s often a misconception that TUPE only applies to the old employer, but that isn’t the case. Both employers have the responsibility of protecting their staff’s employment rights.
The old and new employers must inform and consult the relevant people during the transfers, this could be trade unions or employee representatives. Every employee has the legal right to know about the transfer, including the steps to completion, desired outcomes and timelines, and who the affected employees are.
TUPE can apply in a variety of business transfers. For example, it could be if an employer wants to give their business away to another person or sell it so they can retire early.
In these types of business moves, the incoming employer assumes the title and responsibility as the owner of the business. As the owner, they will have to pay for any arrears, and contract breaches, and honour any other employment rights.
To put it simply, the new employer is now responsible for the business and all the staff within it.
TUPE protects the salary of the employees, this ensures that the employees are paid the same as before.
There are some instances where TUPE doesn’t apply. These could be;
An employer may decide that they want to rebrand their business. This could include a name change. As the business and its practices are the same, TUPE laws won’t apply.
Service provision changes are when employers decide to use a new contractor. For example, if a restaurant changes its food suppliers to cover one or more large corporate events.
There are endless reasons for using a service provision change, but reassigning a contract might mean that TUPE doesn’t apply. For example, if a business agrees to a new long-term service provision, TUPE applies to the employees doing the selected work.
Affected employees will automatically transfer to the new owner.
It’s a common misconception that employees are only transferred through TUPE based on their working hours and their years of service. Employers can’t pick their favourite employees or high performers.
The affected employees can cover all your staff members. During the TUPE process, you need to include any employees:
Employers need to ensure that they have informed their affected employees, employee representatives or trade unions.
In some cases, TUPE applies to workers as well as employees, although this depends on the individual situations.
As per employment law, a worker isn’t the same as an employee, but the legal view may change depending on their job conditions. A worker’s job description, wage and years of service can be the same as someone who has an employee status. They need to be part of an organised group of employees to have TUPE transfer rights.
If a worker is entitled to transfer, but not chosen because of their job status, it can be classed as an unlawful dismissal.
Employers should ensure that they hold meetings with both the employees and workers. Workers have the right to also have their employment rights that need to be taken into consideration.
The legal terms of TUPE come under the Transfer of Undertakings (Protection of Employment) regulations 2006.
There is a big risk of unfair dismissal when it comes to business transfers. This is most likely to happen when employers aren’t clear on who is entitled to the TUPE transfer.
Employers need to be transparent throughout the TUPE process, this will help them to reduce the risk of unfair dismissal claims.
Employers have several legal duties that they need to cover whilst going through TUPE.
It’s important to remember that employers can’t just tell their employees about the TUPE transfer over email.
The old employer has a legal duty to properly inform all affected employees or refer to their representatives.
As per TUPE regulations, employers need to follow certain legal duties.
Employers are required by law to give employee liability information, this is better known as the specific information about the employees that are being transferred. Employee liability information includes
If an employer fails to follow the TUPE regulations, they can face severe consequences.
Issues usually begin to arise when employees aren’t consulted properly. The new or incoming employer must tell the employees the changes they are looking to make. This could be anything from work hours changing or using a different service provided in-house.
Another issue that employers can find themselves in is timing. As there is no fixed timeframe for telling employees, the outgoing employer should tell employees (or their representatives) in a reasonable time.
The time needed should be enough for the employer to explain and discuss the changes with the team. It’s important to note that delaying information or meetings could breach TUPE regulations.
If an employer breaks TUPE regulations they can be ordered to pay compensation to each employee who’s been affected. The compensation payment can reach a maximum of 13 weeks per person (there isn’t a cap on the amount).
This payment can also be divided up between the two employers or only one of them can be asked to pay it.
It isn’t just employees who can raise a claim. If the new employer doesn’t believe that the old employer gave the correct information, they can raise a claim to an employment tribunal. Here they could be awarded a minimum of £500 for every employee whose information was either wrong or missing. There is no maximum cap.
A TUPE transfer isn’t the same as a redundancy. The two are separate terms that have their legal requirements.
TUPE is about transferring employees in-house or outside of a business, but redundancy refers to when the employee’s job ends permanently. Employees can refuse the transfer, this can then be treated as a resignation, if this should happen you need to follow the rules of resignation.
As we’ve mentioned there are many reasons why an employer may decide to sell their business.
As an employer, you need to ensure that your employees are protected through the process.
There are ways for employers to manage TUPE in the workplace.
Employers should start identifying affected employees for the transfer. They should also look at each employee’s employment contract, especially their holiday and pensions.
Employers need to follow the legal steps when they are transferring employees to make sure they don’t unfairly dismiss their employees.
The employer needs to consult with the affected employee (or representative). In these meetings, you should cover the following,
TUPE takes longer than you expect.
There isn’t a legal timeframe under UK law, although the outgoing employer needs time to give the new employer the correct information about the employees. This needs to be done at least 28 days before the transfer date.
The outgoing employer needs to let their employee’s representatives know about the move, this should be done in a similar way to how the employer tells their employees.
Once the outgoing employer has told the transferring employees or their representatives, they need to let the incoming employer know. They will need to give the following information,
Sometimes the new employer may struggle to follow existing employment rights. As the outgoing employer, you can help manage this by creating a post-transfer strategy.
This will help the incoming employer settle into their role and help to boost employee engagement. The strategy can also be used as team building between the new employees and the transferred employees.
Creating a robust post-transfer strategy will help reduce disruption or confusion during the move.
Employers may face a situation where the employee doesn’t want to be transferred. This could be down to them not wanting to work for the incoming employer or disagreeing with the proposed measures.
If some of the transferring employees don’t want to be transferred, you can treat this like a resignation. Meaning that their employment contract will end at the time of the transfer.
We all know that transferring employees and business is a complex and time-consuming task. At Employer Advice, we’ve put together a TUPE transfer checklist to help you ensure that all the tasks and information are passed on to the new employer.
Employer Advice has a team of dedicated HR and employment law experts who only work with employers. With over 80 years of experience in helping employers take the stress of handling their HR and employment law obligations. Get in touch with one of the Employer Advice experts on 0800 470 0613.