TUPE

TUPE

TUPE is an abbreviation for the Transfer of Undertakings (Protection of Employment) Regulations 2006.

TUPE provides protection to employees when their employer changes following of a transfer of an undertaking. 

TUPE preserves the terms and conditions of employees who are transferred to a new employer.  TUPE also contains special protections in relation to changing terms and conditions or dismissing employees where the dismissals are connected with the transfer, includes obligations on employers to inform and consult with employee representatives about the transfer.

When does TUPE apply?

TUPE applies in the UK when a business is transferred and also when activities are “outsourced” or service providers change.

As long as the business is located in the UK, or the employees providing services are located in the UK, prior to the transfer, TUPE will apply even if the intention is to transfer the business or the services to a location outside of the UK.

Effect of TUPE on the contracts of employment

TUPE applies only to employees. It does not apply to workers or contractors.

In order for an employee to be transferred, they must be employed immediately before the transfer and work in the business or part of the business that is to be transferred.

TUPE cannot be avoided by dismissing employees shortly before the transfer. This would be automatically unfair.

What transfers?

Almost the whole of an employee’s contract of employment will transfer.  Anything done by the employer before the transfer is deemed to have been done by the new employer.  The new employer effectively steps into the shoes of the old employer.

If a term of an employee’s contract is dependent on the identity of the old employer, employees have the right to benefit from a substantially equivalent benefit from the new employer.

TUPE does not transfer occupational pension scheme rights if these relate to benefits for old age, invalidity or survivors. However, obligations to contribute to personal pension schemes do transfer.

If employees were in an occupational pension scheme before the transfer, the new employer has to provide a minimum level of pension provisions for transferred employees.  This minimum requires the transferee to match employee contributions up to 6% of salary into a pension scheme for the employee.

Objecting to a transfer 

If employees do not want to transfer, they have the right to object and if they do so they are taken to have resigned. 

Where employees object because there has been or will be a “substantial change” in their working conditions to their “material detriment” as a result of the transfer, they have the right to terminate their contract and claim unfair dismissal.

What amounts to a “substantial change” in working conditions to an employee’s “material detriment” is a matter for employment tribunals to decide in each case. 

If the change is so serious that it amounts to a fundamental breach of contract, the employee may also have a claim for constructive dismissal and unfair dismissal.

Transfer-connected dismissals

TUPE provides additional protections which limit the ability of employers to dismiss employees without the risk of compensation.

If the transfer or a reason connected with it is the reason for the dismissal, it will on the face of it be unfair. A dismissed employee can bring an unfair dismissal claim if they have been employed long enough to bring an unfair dismissal claim (one year if employed prior to 6 April 2012, two years if employed since that date).

The employer has a defence to a claim if it has an “ETO”, which is an economic, technical or organisational reason that requires changes in the workforce. Redundancy is an example of an “ETO” reason. Employers are still required to follow a fair procedure.

An employer has to rely on its own reason for dismissing an employee. This means that the old employer cannot use the new employer’s reason and dismiss an employee fairly before the transfer takes place. Often employers will want to dismiss employees before a transfer because the new employer says it will not need as many employees. This is likely to be unfair.

Changing terms and conditions of employment following a transfer

New employers often seek to “harmonise” terms of employment so that employees who have transferred to them are on the same contracts as their existing workforce.

Changes to terms and conditions agreed by the employer and employee which are entirely positive are not prevented by TUPE.

However, in most circumstances detrimental changes to employees’ terms of employment that is connected with a TUPE transfer, even if agreed by the employer and employee, are void. There are exceptions to this rule but they are very limited.

There is no time limit on how long this rule applies – there have been cases where changes to employment terms agreed a year or even two years after a transfer have been found to be void because the changes are connected with the transfer.

Information and Consultation

TUPE obliges employers to provide information to and, where “measures” are likely to be taken in relation to employees, consult with employee representatives.

Employee representatives are either representatives of an independent trade union recognised by the employeror (if there is no trade union) appointed or elected employee representatives.

The obligation to consult only arises if there are definite plans or proposals to take “measures” in relation to employees.  For example, proposing changes to working practices or working conditions, making redundancies, changing any terms and conditions of employment or relocating business would all potentially be “measures”.

TUPE does not specify the time which should be allowed for consultation. If the transfer is complex and on a large scale and serious measures are envisaged then a longer consultation period would be expected. Consultation has to start long enough before the transfer to allow consultation to be completed.

Complaints about failure to inform or consult can be brought within three months of the transfer. An employment tribunal can make an award of up to 13 weeks’ pay per employee.

Answers to common TUPE questions

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