Transfer of Undertakings (Protection of Employment) Regulations 2006

This article is a guide on the main principles that apply to any transfer of undertaking that may affect employees. The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) is a complicated law, and failure to comply fully with this, or consider the consequence of it properly, can be very expensive for anyone buying or selling a business or changing the terms of a service provision – this may include outsouring (or bringing in-house) a subsidiary activity of your main business. If you are, or potentially facing the possibility of, buying, selling, or simply transferring the ownership of a business or contracting/changing the terms of a service provider, you should ensure you receive proper legal advice.

Among the main principles associated with a TUPE transfer are:

• there must be an ‘organised grouping of resources with the purpose of pursuing an economic activity’ that is being transferred (this could be one part-time employee, but equally could be thousands of staff);
• the employees that are part of the organised grouping are automatically transferred to the new company (there is no discretion between the transferor & transferee to alter this);
• the terms & conditions the employees had immediately before the transfer will continue with the new employer;
• any dismissal associated with the transfer will be automatically unfair, unless this can be shown to be for an ‘economical, technical, or organisational’ (ETO) reason;
• both the old employer (the transferor) and the new employer (the transferee) have obligations to consult with the staff;
• the transferor must provide information – ‘Employee Liability Information‘ – either in writing or by making it available to the transferee in a readily accessible form, about the affected employees not less than 28 days* before the transfer.

 

*Amendments were made to the notification of Employee Liability Information – this information was required not more than fourteen days before the relevant transfer, now substituted with 28 days in accordance with regulation 10 of the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014.

Inform & Consult

Employers (both the transferor & the transferee) must inform & consult with representatives of employees who may be affected by any transfer (this may include employees that are not assigned to the area of work being transferred) or may be affected by measures taken in connection with it. (See regulation 13 for details.) Information that must be provided to the representatives before consultations commence include:

• the fact that the transfer is to take place, (proposed) date, and the reasons for it;
• the implications of the transfer for any affected employees;
• any measures the employer envisages he will take in relation to any affected employees (or advising if there are expected to be none);
• any envisaged measures that the new employer is envisaged to take after the transfer.

Employee Liability Information

The information a transferor has to provide to transferee (in accordance with regulation 11) includes:

• the identity and age of the employees;
• the statement of particulars for each employees (this covers all the particulars that an employer is required to provide their employees, not just the Principal Statement of Employment);
• information of any disciplinary procedure taken against an employee (within the previous two years);
• grievance procedures taken by an employee (within the previous two years);
• information of any court or tribunal case:
  • brought by an employee against the transferor (within the previous two years);
  • that the transferor has reasonable grounds to believe that an employee may bring against the transferee, arising out of the employment;
• details of any collective agreements which will have effect after the transfer;
• any changes to the above information after it is provided to the transferee.

The above information also has to be provided for any person that was an employee that would have been affected, but is no longer in employment due to being dismissed for a reason connected with the transfer (excluding dismissals that were due to an ETO reason).

Election of Employee Representatives

Where a recognised trade union represents the employees affected, the representatives of the trade union would normally be the representatives that the employers should consult with. In the absence of a recognised trade union, the employer must either choose:

• employee representatives appointed or elected by the affected employees who have authority from the employees to act on their behalf in respect of the transfer;
• make reasonably practical arrangements for a fair election of representatives.

(See regulation 14 for more details.)

Common mistakes to avoid:

• transferor employers often pay employees for any annual leave accurued but not taken up to the date of transfer. This is a complete waste of money, as the employee is continuing in their employment, and retains their full right to paid annual leave, which must be paid at the time of the leave; having already paid the employee will not absolve the responsibilities of the new employer to pay for all future leave taken;
• new employers cannot decide to commence a probationary period for their new staff – the employees have continuous service from their previous employment, and performance/capability should be measured in accordance with the standard disciplinary procedures;
• if an employee refuses to transfer, they are deemed to have resigned, and there is no obligation on the transferor to offer alternative employment;
• trying to enforce equal employment standards between current employees of the transferee & newly transferred employees – the respective employment terms that existed before the transfer remain, and any changes must follow an appropriate consultation & agreement.

Whether you are buying, selling, or transferring, a business or changing the supplier (including bringing this in-house) of a service provision, you should get professional advice about TUPE to avoid costly employment tribunal claims later. Contact Employment Law Clinic, and we’ll take care of the legal stuff, ensuring your involvement in any transfer is handled properly, complying with all relevant employment law.