TUPE or not TUPE (that is the question)
We’ve recently had several queries regarding the complex world of TUPE (Transfer of Undertakings (Protection of Employment)) regulations.
As you can imagine there is far too much to cover in just one blog but we thought we would give you a quick overview of what TUPE is, when it generally applies and what the basic responsibilities are for the employers involved.
The questions answered in this post are:
1. What does TUPE mean?
In basic terms the regulations are in place to ensure that if a business is sold or a service provider changes, the employees currently employed by that business or to provide that service don’t automatically lose their jobs or their contractual rights when this change occurs. Their employment will be protected and they, together with their terms and conditions of employment, will transfer over to the new owner or service provider.
2. When does TUPE apply?
TUPE applies in the following scenarios:
- Business Transfers:
- a business or part of a business moves to a new owner or merges with another business to make a brand new employer.
- Service Provision Transfers:
- a contractor takes over activities from a client (“outsourcing”);
- a new contractor takes over activities from another contractor (“re-tendering”);
- a client takes over activities from a contractor (“in sourcing”).
3. When Does TUPE not apply?
There are some scenarios that may not fall under TUPE regulations:
- Change of Company Name:
- If you change the name of your company but there is no change in entity with regards to ownership or working practices then generally this would not be a TUPE situation. It is still important that you advise employees in good time of the upcoming change as it will be a change to their terms and conditions of employment.
- Lone Worker Allocated to Service Provision:
- A recent case appeal decision (Seawell v Ceva Freight (UK) Ltd) found that if there is a service provision transfer but only one of your employees worked on that contract TUPE may not apply, it would apply however if an organised ‘group’ of employees solely worked on that same contract.
- Change to the Service Provision:
- Another case decision (Johnson Controls Ltd v Campbell) found that TUPE may not apply when a service provision dramatically changes when it transfers i.e. when a service is brought back in house and the process becomes automated or is significantly remodelled.
We would always air caution around anything that on the face of it looks like a TUPE scenario, we would recommend seeking professional guidance if you think your business is about to enter into a process that may be affected by TUPE regulations.
4. If it is TUPE, what do I do?
Firstly, we’ll say it again, seek professional guidance!
The Regulations are there to protect employees but with that comes added complications for both the outgoing and incoming employer and if you don’t adhere to the Regulations you could be heading for some costly litigation.
TUPE really is one of the most complex areas of employment law and trying to go it alone is not a sensible approach.
5. Outgoing Employer Responsibilities
- Pre-sale or award of contract, make the incoming employer aware of your affected employees’ details and most importantly their cost.
- In good time prior to the transfer, you must inform and consult with all affected employees, if more than 10 are affected you will need to consider the election of ‘employee representatives’. They will need to be told about things such as the fact the transfer is going to happen, when, to whom, how they can object.
- 28 days prior to the transfer you have to supply the incoming employer with key employee information known as “Due Diligence Information”
6. Incoming Employer Responsibilities
As you can imagine as an incoming employer the burden is very much on you:
- Prior to the purchase or during tendering ensure you have the correct information in relation to affected employee numbers and their associated cost.
- Plan, plan, plan! It can be a complicated process so make sure you have a step by step, timed plan in place.
- Obtain the Due Diligence Information from the outgoing employer.
- Consider the implications of the employees terms and conditions of employment (for further information on this see our blog Changing Employment Terms & Conditions)
- Inform and consult on any planned measures you intend to take with employees post transfer.
- Remember to inform your existing employees.
- Prep for both the contractual and physical transfer of employees, if applicable, and how you are going to settle them into your organisation.
- Make sure all affected are fully informed throughout the process, with all the box ticking you can sometimes forget that people are involved and this can sometimes become a big upheaval.
As mentioned earlier, this is by no means an exhaustive guide to TUPE but it does highlight some key considerations and pointers on when you may or may not be affected by TUPE regulations.
We can’t say it enough, but as it is a complex part of employment law, it is really important to obtain guidance from people in the know as minor things that could be overlooked could have major implications for you in terms of time, money and day to day logistics.
Additional Guidance on TUPE Transfers
For more detail, please see our TUPE Transfers service page for insight into how we can help you.