Most small business owners and managers have heard of “TUPE” but may not be too clear exactly what it entails, how it works or when it applies. This brief guide outlines the main principles as a starting point to understanding what TUPE is and how it may apply to your organisation.
What is TUPE
The term “TUPE” refers to the Transfer of Undertakings (Protection of Employment) Regulations 2006. It is the piece of legislation which protects employees’ rights when there is a transfer of a business or service from one organisation (the transferor) to another organisation (the transferee). The size of the organisations makes no difference to whether and how TUPE applies in the event of a transfer.
Basic principles of TUPE
When a transfer like this occurs, those employees who are working within/assigned to the business or service which is transferring to another employer automatically transfer with it. The transferee then takes over from the transferor as being the employer with all the relevant obligations.
The employees who transfer over retain their terms and conditions of employment as were in place when they were employed by the transferor. The employees’ continuity of service is preserved, along with the various employment rights they may have accrued through length of service (such as unfair dismissal protection, and notice entitlements).
In addition, the transferee assumes responsibility for anything the transferor may have done in breach of its obligations to the employees (e.g. non payment of wages, ongoing disputes, tribunal claims).
What do employers have to do during a transfer?
As well as this fundamental principle of transferring employment including liabilities and rights, TUPE also has other specific requirements/places additional limitations on both transferors and transferees.
Both parties are required to inform employees and their representatives about various elements of the transfer, and consult on any changes which may result from the transfer. TUPE also specifically protects employees from being dismissed or having their terms and conditions changed if this would be because of the transfer.
In addition the transferor must give specific information to the transferee regarding the transferring employees. This is called Employee Liability Information, and includes basic terms and conditions of the relevant employees, plus details of any current or potential future disputes or other liabilities the transferor is aware of which the transferee would be taking on. This ensures that before completing the transfer, the company taking over the business or service can make a fully informed assessment of the various risks and costs involved in the transfer.
TUPE doesn’t actually have to be especially complicated, although one of the main challenges for small businesses can be working out whether TUPE actually applies. If you are about to undergo a TUPE transfer, or think a business transaction you are considering might involve TUPE, do get in touch for some advice relating to your specific situation.