TUPE Solicitors

TUPE, the Transfer of Undertakings (Protection of Employment) Regulations 2006, protects the rights of employees when a business or service provision is transferred to a new owner.

It means that employees transfer to the new employer along with all of their rights, including the existing terms and conditions of their employment. Their continuity of service is also transferred.

The process starts with informing and consulting the employees as well as providing full employee liability information to the incoming employer. This should include details of the existing employment contracts, potential claims against the employer, grievances and previous legal and disciplinary actions.

Employees should be notified that the transfer is happening, including when, why and how it will affect them. They also need to be told if any reorganisation is planned and if any agency workers are being used.

The employer will take over all of the existing employment contracts. If the employee refuses to work for the new employer, this is generally seen as a resignation, and they would not usually be able to bring a claim for unfair dismissal or redundancy.

As well as the right to be informed and consulted about the transfer and any possible changes that might affect them, employees have the right to retain their existing contract terms and conditions, with no changes being made by reason of the transfer.

TUPE does not apply when the transfer is within the public sector. Additionally, it does not apply when a service that has been done in-house is outsourced to a contractor or when a contract ends.

Contracts for single events are not included in the TUPE Regulations, nor are contracts for the supply of goods.

It is not always straightforward to ascertain whether or not TUPE applies in respect of service provision changes, and it is recommended that employers take expert legal advice to ensure that their legal position is clear and that they are compliant with the rules.

Provided the correct process has been followed, an employee is unlikely to have a right to make a claim simply because their employer has changed following the sale of a business.

The protections offered by TUPE last indefinitely, meaning that even some years later, the new employer cannot make changes to an employment contract on the basis (or largely on the basis) of the transfer.

Employees’ salaries cannot be changed downwards under TUPE, where the main reason for reducing them is because of the transfer.

It is open to the new employer to increase salaries, for example, so that all employees are earning the same amount for the same jobs. However, this will still need to be agreed upon with the employees or their trade union representatives.

An employer will need to show that there is a genuine economic, technical or organisational reason to make an employee redundant after a transfer of a business. This could relate to business performance and profitability, the technology the business uses or the structure of the organisation.

The reason would also have to relate to changes in the new workforce. If you are considering making employees redundant following the purchase of a business, you should take legal advice before starting the redundancy process to ensure that you have valid grounds. If you do not, then a redundancy would be classed as automatically unfair, and the employee could make a claim against you.

As the new employer, if redundancy does go ahead, you would be liable to pay redundancy money for the whole of the employee’s period with the business.