Transfer of Undertakings (TUPE) – a Simple Guide

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TUPE deals with the transfer of workforce on the sale of a business.

What is TUPE and when does it apply?

TUPE governs what happens to employees when a business is transferred from one owner to another, or where services are transferred to a new contractor.  Employees automatically transfer to the new owner or contractor, with all their terms and rights intact and are protected from unfair treatment or dismissal connected with the transfer.

What is TUPE and how does it work?

TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006.  TUPE protects employees whose employer changes following the transfer of a business.  Before TUPE, their employment would have ended because of the business sale, or transfer of a service to a new contractor.  But TUPE makes their employment automatically transfer to the new owner of the business, without needing to do anything.  In addition, employees keep all their terms and conditions and rights, including length of service.

TUPE therefore means that employees should just carry on doing the same job for the new owner of the business, though it doesn’t always work quite like that.

TUPE only applies to employees – not to workers or contractors.

What is the minimum TUPE consultation period?

There is no minimum period for which employers have to consult with employees about a TUPE transfer.  Indeed, unless the buyer/new contractor intends to take “measures” in relation to the transferring employees, there’s no obligation to consult at all – only to inform employees about the transfer.

If the seller or buyer does have to consult with employees, they should allow enough time to ensure that employee representatives can be elected and can discuss the transfer fully with all employees. In addition, sellers have to give certain details to the buyer, called “employee liability information” at least 4 weeks before the transfer takes place.  This information should help the parties to ensure they take the right steps in terms of whether they need to consult with employees, not just inform them about the transfer.

If a seller or a buyer fails to properly inform and if necessary consult with affected employees, then the employees may have claims for 13 weeks’ gross pay for that failure.

Can a company refuse to TUPE staff?

If TUPE applies to a business sale, then any employees assigned to the business, or part of a business, that is being transferred, will automatically transfer along with the business. The legal position is that it goes against TUPE for the buyer to refuse to TUPE employees.

However, in reality, buyers will sometimes refuse to take some or all employees who should transfer to them.  It’s then a commercial issue for the parties to decide what to do, and what to agree, in relation to those employees.  Sometimes, a buyer will pay the redundancy costs (notice, statutory redundancy pay plus usually some compensation, etc) for the seller to make the employees redundant.  There will often be terms agreed between buyer and seller about who pays for any claims the employees may make.

A buyer may refuse to allow an employee to transfer if they feel that the employee has been put into the part of a business transferring purely so the seller can “offload” a difficult employee. This is why buyers should ask questions about all employees assigned to the business or part of a business they are taking on, to find out if any have only recently been reassigned there.

Your salary should not change if your employer is ‘bought out’.

Can I lose my job after TUPE?

The protections given by TUPE to employees mean that all employees who are employed in the business being transferred should go over to the buyer/new contractor with their terms intact and continue in employment for the new employer.

However, it’s not impossible for employees to lose their jobs after a TUPE transfer. The question is whether such dismissals are fair or not.  The starting point is that any dismissal in connection with a TUPE transfer is automatically unfair, unless there is an “economic, technical or organisational” reason.

How does TUPE affect redundancy?

As mentioned above, any dismissal – not just redundancies – connected with a TUPE transfer is automatically unfair.  It follows that the new employer can’t make employees redundant merely because they transferred with the transfer of the business.

However, if there is an “economic, technical or organisational” reason, then dismissals in connection with a TUPE transfer will not be automatically unfair.  Dismissals could still be “ordinarily” unfair if there is no fair reason and/or no fair procedure is followed.  Redundancy can be an organisational reason in the TUPE context.

If employees are made redundant before a transfer, the old employer will be responsible for the dismissals and payments to be made.  However, liability for any claims will transfer to the new owner, so buyer and seller might agree what happens about such claims. If employees are made redundant after the transfer, the new employer will be responsible for the dismissals and payments to be made.  The new employer would of course be liable for any claims arising from the dismissals.

Is salary protected under TUPE?

Yes – salary – as with all terms and conditions – is protected under TUPE.  Employers can’t change salary because of a TUPE transfer, no matter how long after the transfer the change takes place. Of course, the more time passes after a transfer, the harder it will become to prove that connection between a change is and a TUPE transfer.

Do I have to accept a TUPE transfer?

No – you can choose to reject the transfer.  You need to be careful how you go about refusing the transfer though and should get legal advice on your position.

If you do choose to reject the transfer, your employment will terminate at the point of the transfer.  It won’t be a dismissal – or a redundancy. As it isn’t a dismissal, it can’t be an unfair dismissal.  There are also additional rules in TUPE about constructive dismissals related to a TUPE transfer.

The main thing is that it’s important to understand what you may be giving up by rejecting a transfer, especially if you want to reject it because you have complaints about how you’ve been treated by your employer.  There may be better options available.  See here for more information.

Need more help?

TUPE is notoriously complex, both for employers and employees affected. If you need more help with the subjects covered here then do reach out to our expert employment law solicitors.  You can speak to our employment solicitors online via email or call us on 03300 020 863.

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