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TUPE or the Transfer of Undertakings (Protection of Employment) Regulations 2006 is notoriously complex and sometimes confusing. In the simplest terms, the TUPE regulations provide that, where a business is transferred from one owner to another, all the employees will automatically transfer to the new business owner on the same terms and conditions as before.
When does TUPE apply?
TUPE applies where there is one of two types of "relevant transfer":
- A "business transfer" involving a sale or transfer of a business or part of a business from one party to another: or
- A change in service provider, for example outsourcing a service formerly undertaken by the business to a contractor to do the work on your behalf, reassigning such a contract or bringing back the work in-house.
What does TUPE do?
If TUPE applies:
- anyone employed by the transferor immediately before the transfer in that part of the business to be transferred automatically becomes the transferee's employee on their existing terms of employment (including pay) and without a break in their period of employment.
- all rights, powers, duties and liabilities under the employment contracts pass to the transferee.
- any changes to the employees' terms will be void (with some exceptions).
- any dismissal whether before or after the transfer and due solely or mainly to the dismissal will be automatically unfair (with some exceptions).
- even where one or other of the exceptions apply it will still be necessary to show that the dismissal was still procedurally fair.
- employees may refuse to transfer (known as objecting), but the effect may be to terminate their employment without any right to compensation.
- both parties must inform and, if they propose to take any "measures" (a very wide and ill-defined concept) which will impact on any employees affected by the transfer, to consult the representatives or (depending on the numbers involved) the employees direct in relation to the transfer. If they fail to do so, an employment tribunal can award up to 13 weeks' actual pay for each affected employee.
- some of the above rules are relaxed if the transferor is insolvent.
TUPE is challenging to all employers and there have been proposals for further change. We provide regular updates with our employment newsletter of any such changes. To receive our newsletter please sign up here.
We also have easy to follow guidance on this and a range of topics here.