The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) has been in place in the UK since 1981 and yet remains one of the most complicated and frustrating piece of employment legislation. As with much UK employment law, the original directive came from Europe so who knows what will happen with this, often unloved, piece of legislation in the future! Nonetheless, it’s here to stay for now so we thought it would be prudent to answer the most FAQs we receive on TUPE.
- What is a TUPE transfer?
- What are the roles of the companies involved in a TUPE Transfer?
- How Much Notice does the Outgoing Employer Have to Give Before the TUPE Transfer?
- What Happens to an Employee’s Terms and Conditions during TUPE Transfers?
- How Long Does TUPE Apply For After Transfer?
- What Pension Rights does an Employee have on Transferring Employment as part of TUPE?
- Where to Get Help with TUPE Transfers
1. What is a TUPE transfer?
A TUPE transfer is when employees’ employment moves from one employer to another as a result of one of the following:
- Business transfer: A business or part of a business moves to another company.
- This can include mergers where 2 companies close and combine to form a new one;
- The identity of the employer must change to be protected under TUPE during a business transfer.
- Service provision change: A service provided for a company moves from one company to another:
- a service provided in-house is awarded to a contractor, such as cleaning or catering;
- a contract ends and is given to a new contractor; or
- a contract ends and the work is transferred in-house by the former customer.
If you buy a business, inherit a contract from another business that had a dedicated working group for that service or you bring a service in house, you could be liable to inherit the associated employees on their existing terms and conditions of employment.
2. What are the roles of the companies involved in a TUPE Transfer?
The company whose employees are transferring to another company as part of a TUPE transfer is called the ‘Outgoing Employer’.
The company inheriting the employees from the previous company as part of a TUPE transfer is called the ‘Incoming Employer’.
Responsibilities of the Outgoing Employer and Incoming Employer
The onus and obligations to the employees sit heavily with the Incoming Employer as they inherit responsibility for the employees as soon as the transfer happens (even ongoing disciplinary matters and grievances).
The Outgoing Employer has a responsibility to send the Incoming Employer the ‘Employee Liability Information’ about all the affected employees, but if the information is vague, particularly around contractual and non-contractual benefits, the onus is on the Incoming Employer to get the right information. In may well be that the Outgoing Employer will provide the absolute bare minimum!
It is important, therefore, before purchasing a company or taking over a contract for services that the Incoming Employer does a thorough due diligence exercise.
3. How Much Notice does the Outgoing Employer Have to Give Before the TUPE Transfer?
Like much of TUPE Transfer legislation, there is no black and white answer to this one. Unlike redundancy, there is no specified minimum period of consultation prior to the transfer.
Although there is no link between TUPE regulations and redundancy provisions, being mindful of the minimum consultation required for redundancies of a similar number of affected employees would be prudent.
TUPE regulations states that employers must provide the required information (information about the transfer and the effect on the employees) to employee representatives (or individually if less than 10) “long enough before a relevant transfer to enable the employer of any affected employees to consult the appropriate representatives”.
4. What Happens to an Employee’s Terms and Conditions during TUPE Transfers?
The employee’s terms and conditions should be protected and therefore will be unaffected by the transfer.
5. How Long Does TUPE Apply For After Transfer?
Although we don’t want to be the bearers of bad news and say ‘forever’, that is the short answer!
There is no defined time out period for the regulations; what is key, however, is that if you want to make a change to a transferred employee’s T&Cs of employment, the reason cannot be the transfer itself.
You can make changes to a transferred employees T&Cs or consider them for redundancy if you have an Economic, Technical or Organisational (“ETO”) reason:
- Economic = how the company is performing financially
- Technical = the equipment or processes / systems the company uses
- Organisational = the structure of the company and potential reorganisation of the company
Although the more time that has passed since the transfer may make it harder to suggest the reason for any proposed change is the transfer itself, there would still need to be an ETO reason for making the change.
6. What Pension Rights does an Employee have on Transferring Employment as part of TUPE?
Most pension rights under occupational pension schemes are excluded from TUPE but those under a personal pension scheme do transfer. That is why it’s vital to do the due diligence. As an Incoming Employer, if you inherit a personal pension scheme you may need to continue the level of contributions made by the Outgoing Employer.
Rights under an occupational pension scheme that don’t relate to old age, invalidity, or survivor’s benefits, known as ‘Beckmann rights’, may transfer under TUPE regulations when other pension rights do not.
Incoming Employers are not obliged to offer like-for-like pension arrangements but may need to provide a minimum level of pension provision for the transferring employees.
Where occupational pension schemes are concerned, transferring staff who were members of such a scheme or were eligible to become members prior to the transfer, the minimum level could require the new business to establish a new occupational pension scheme with an obligation to match employee contributions up to a predetermined level.
7. Where to Get Help with TUPE Transfers
TUPE Transfer regulations are complicated and quite vague in some areas of legislation, and therefore we would always recommend seeking specialist support and guidance if you going to be involved with a transfer.