TUPE Transfers At Tinsdills
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (often shortened to ‘TUPE’) protect employees in the event that you transfer your business (or a part of it) or you change service provider to whom you outsource work to another business or person. Other Employment Law services we cover include:
TUPE Transfer Solicitors
The Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly known as TUPE, protect the legal rights of your employees (and the existing terms and conditions of their employment) when you transfer your business or services used by it to another company to a new employer. This can include when you sell your business and its assets as a going concern to another business, to an individual buyer or as part of an intragroup reorganisation.
As well as applying to sales or transfers of business, TUPE applies to a transfer of service provisions (for example, IT infrastructure and maintenance, HR matters or marketing). Where a service was previously undertaken by your business internally but is awarded to a third-party contractor (often called ‘contracting out’ or ‘outsourcing’), TUPE will apply. Similarly, where a service that was previously contracted out is brought back ‘in-house’ to be managed by your business internally (‘contracting in’), TUPE will apply. Finally, where you transfer a service you have contracted out from one outsourced supplier to another (‘second generation contracting out’), TUPE will apply.
Under TUPE, employees of the outgoing employer automatically become employees of the incoming employer on the date the business or outsourced service is transferred, whether the employers want them to or not. The employees will retain their continuous service and should continue to enjoy the same terms and conditions of employment they had previously. This means it can be difficult to amend the terms and conditions of employment for transferring employees (for example, to harmonise those terms with the terms of your existing employees) as TUPE means they cannot be transferred on any less favourable terms than they were on previously.
It is also a requirement under TUPE that employees are consulted before a transfer takes place, particularly in relation to any changes to their terms and conditions of employment that the employers intend to make (known as ‘measures’).
Failure to comply with TUPE may result in employees bringing claims against you in the employment tribunal. This can have serious consequences for your business regardless of whether you are the outgoing or incoming employer. If you are considering selling your business, undertaking a group reorganisation, outsourcing or changing your service providers, our team of experienced employment solicitors can provide you with the legal advice and guidance you need to ensure you comply with the TUPE regulations.
Any dismissal of an employee (whether before or after the TUPE transfer) will be automatically unfair if the sole or principal reason for the dismissal is the transfer itself. However, in limited circumstances, where the employer can prove that there is an economical, technical or organisational reason for the dismissal that entails changes in the workforce, the employer may have a defence against any claim for such automatic unfair dismissal. That does not mean the employee would not still be entitled to bring a claim for unfair or wrongful dismissal, though if the correct dismissal process was not followed. It is therefore important to take specialist employment law advice before any TUPE transfer, particularly if you think there will be a need to dismiss any of the transferring employees or, indeed, any of your existing employees.
Strictly speaking, it is both the outgoing and incoming employer who bear the burden of complying with TUPE. However, in practice, whilst the outgoing employer has a responsibility to provide certain employee liability information, the onus will rest more so with the incoming employer as they will inherit all responsibility and liability for the transferring employees immediately on completion of the business transfer. The incoming employer should therefore ensure they undertake a thorough due diligence exercise before committing to purchase the business so that they can be certain of any ongoing issues that they will inherit on completion of the transfer.
Unlike with redundancy consultations, there is no specified minimum period of consultation that is required prior to a TUPE transfer. As part of the TUPE consultation, the employers must provide prerequisite information to the elected employee representatives (or to the employees directly where there are less than ten employees in the transferring business) “long enough before a relevant transfer to enable the employer of any affected employees to consult the appropriate representatives”. It is therefore up to the employers to decide what they think would be reasonable in the circumstances though it may still be sensible to consider whether using the minimum consultation period that would apply if the TUPE transfer was a redundancy situation would provide for a reasonable period of time. Ultimately though, if an employee was to bring a claim for failure to properly consult under TUPE, it would be a matter for the employment tribunal to decide.
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