What is the TUPE Transfer? A Simple Guide
The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) is a part of UK employment law that protects employees’ rights when their job is transferred to a new employer due to a business transfer or service provision change. Both employers and employees need to understand the TUPE process to comply with the regulations, avoid the pitfalls and protect their employment rights. This simple guide will take you through the TUPE process, step by step, from start to finish and answer your questions.
What is TUPE?
TUPE applies when a business or part of a business is sold or when there is a service provision change, such as outsourcing, insourcing or changing contractors. TUPE regulations protect employees by ensuring their existing terms and conditions, including their employment contract, are transferred to the new employer. TUPE applies to both the private and public sectors and aims to maintain employment continuity for the affected employees.
Step 1: Is TUPE Applicable
The first step in the TUPE process is to determine if the transfer is a relevant transfer. This means assessing if the transaction involves a transfer of an economic entity that retains its identity or a change in service provision. Some key points to consider:
- Economic Entity Transfer: If a business, such as a shop, factory or office, is sold to a new owner and continues to operate in the same way, TUPE applies. This includes the transfer of assets like equipment or customer contracts.
- Service Provision Change: TUPE also applies where a service is provided in-house is outsourced or where a new contractor takes over an existing contract. For example, if a company changes its cleaning contractor or a restaurant changes its food suppliers, TUPE may apply.
- Employee Transfer: TUPE applies if employees are assigned to the economic entity or service that is transferring. If there are employees who are directly involved in the service provision change or business transfer, their rights are protected under TUPE and they become “transferring employees”.
Step 2: Inform and Consult with Employees
Once you know a TUPE transfer is happening, the next step is to inform and consult with the affected employees or their representatives. This is a legal requirement under TUPE regulations and failure to do this can result in claims for compensation through an employment tribunal. The consultation process includes:
- Inform Appropriate Representatives: Employers must inform elected representatives, independent trade unions or employee representatives about the transfer, its reasons and any impact on employees. This includes details of any measures the new employer will take, such as changes to working conditions.
- Consult with Affected Employees: If the new employer is proposing changes that will affect the employees, such as changing shift patterns or job roles, they must consult with the employee representatives. This is to ensure employees’ concerns are heard and considered.
- Proposed Measures: It’s essential the incoming employer shares any proposed measures, such as changes to contractual benefits or new working practices, with the employee representatives during the consultation. This will help transparency and build trust throughout the TUPE process.
Step 3: Employee Liability Information
The outgoing employer (transferor) must provide the incoming employer (transferee) with detailed employee liability information. This information is key for the new employer to understand the obligations and liabilities they will take on with the transfer. The employee liability information should include:
- Transferring Employees: Names, ages, job roles and salaries of the transferring employees.
- Employment Contracts: Copies of employees’ contracts, including terms on benefits, holiday entitlement and redundancy pay.
- Existing Employment Rights: Details of any existing trade union agreements, such as collective agreements, and any disciplinary actions or grievances within the last two years.
- Employment Liabilities: Details of any existing claims, such as claims for unfair dismissal, unpaid wages or personal injury claims that the new employer will inherit.
This must be provided at least 28 days before the transfer date so the incoming employer can prepare for the transition. It means both parties know what employment liabilities come with the transfer.
Step 4: Employees and Their Contracts
On the transfer date the affected employees transfer to the new employer. Their existing employment contracts, including all terms and conditions, transfer to the new employer. This stage of the TUPE process protects employees’ rights including:
- Continuous Employment: Employees keep their length of service with the previous employer, so their time with the old employer counts towards their continuous employment with the new employer. This is important for calculating entitlements like redundancy pay or unfair dismissal claims.
- Transfer of Employment Liabilities: Any liabilities or obligations the previous employer had towards the employees, such as unpaid wages, transfer to the new employer. This includes liability for any ongoing claims or grievances.
- Existing Terms: Employees’ existing terms, such as working hours, pay rates and contractual benefits, must remain the same unless changed for a valid economic, technical or organisational (ETO) reason. For example, the new employer can’t change holiday entitlement or shift patterns without consulting the employees.
Step 5: Post-Transfer and Managing Change
After the transfer the new employer must ensure a smooth transition for the transferring employees and comply with post-transfer obligations. Key points include:
- ETO Changes: If the new employer wants to change the conditions of employment after the transfer they must have a valid ETO reason for the change. This could be reorganisation due to economic challenges or adapting to new technology.
- Consultation for Redundancies: If the transfer results in redundancies the new employer must consult with the affected employee and their representatives. Note if an employee is dismissed solely because of the transfer it will be automatically unfair dismissal.
- Compliance with Collective Agreements: The new employer must honour any collective agreements with trade unions including any pay or working conditions agreed before the transfer.
TUPE Challenges
Despite a clear process TUPE transfers can be tough for both outgoing and incoming employers. Some common challenges are:
- Resistance from Transferring Employees: Employees may resist the transfer because of uncertainty about the new employer or changes to their working environment. Proper consultation and clear communication can help address this.
- Redundancies and Restructuring: Managing redundancies as part of a TUPE transfer is complicated. Employers must have a genuine reason for redundancies and follow a fair process.
- Integrating Transferring Employees: The new employer must integrate the transferring employees into their existing workforce while respecting their employment rights and conditions.
Get Specialist Legal Advice for TUPE Transfers
Given the complexity of the TUPE process and the legal implications, it’s recommended both employers and employees get specialist legal advice. Employment lawyers can advise on the consultation process, employee liabilities and TUPE compliance. This can help avoid costly disputes and a smoother transition for all parties.
Summary
The TUPE process is designed to protect employees’ rights during business transfers and service provision changes, so their terms of employment remain the same. From determining if TUPE applies to managing the transfer and compliance, every step of the TUPE process is key to a successful transfer. By understanding these steps employers can navigate the TUPE process better and employees can feel secure in their rights throughout the transfer.
Follow this and get legal advice and both outgoing and incoming employers will meet their obligations, keep transferring employees happy and avoid legal problems. Whether it’s a relevant transfer, service provision change or restructuring, TUPE is key.
