What is a TUPE transfer within group companies?
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TUPE transfers apply even if the business moves within a group of companies.
Where there is a transfer of a business, or part of a business, from one employer to another, this counts as a transfer under the Transfer of Undertakings (Protection of Employment) Regulations (somewhat more simply known as TUPE). Even if the transfer is between two companies in the same group, it still counts.
What are the rules around TUPE?
All employees employed in the business or part of the business being transferred will automatically transfer to the new employer along with the business. The transfer of employees happens automatically – the employers can’t agree that the employees won’t transfer. Again, this is the case whether or not the companies are part of the same group.
Employees can object to the transfer – view our ‘Can you refuse TUPE?‘ article for more information.
What is TUPE between group companies?
What difference does it make when a TUPE transfer is between group companies? Answer – none.
If the group is reorganising how it operates between two or more subsidiaries, employees may also be shuffled between those subsidiaries to follow the functions, operations, customers and goodwill being transferred. As with any TUPE transfer, employees must be notified if any “measures” are proposed by the transferee employer.
Usually, with an in-group transfer, employees won’t notice any changes to what they do, or how and where they do it, aside from a new name on their payslip, because the point is that it’s just a group reorg and no practical changes are intended. In other words, it’s rare for “measures” to be taken in an in-group transfer.
But, there is still some procedure to comply with – it’s not just an admin exercise. It’s best to get advice before proceeding to make sure you comply with both employers’ obligations under TUPE, and avoid falling into any potentially expensive traps.
There is nothing you can do as an employee to avoid a TUPE situation.
How can I avoid TUPE?
You can’t. TUPE applies automatically to any transaction or transfer that fits the definition in the legislation. You can’t agree not to have employees transfer under TUPE.
This question is more commonly asked where there is a transaction between two separate businesses, not within a group, i.e. it’s a “cold” arm’s length deal, not an in-group reorganisation that’s largely administrative.
But it bears reiterating that it’s not a choice whether to transfer employees – the whole purpose of TUPE is to protect employment rights (see the long title above).
Without TUPE, employees would lose their jobs and the old employers would be paying redundancy costs (generally notice, accrued holiday and statutory redundancy pay), and the new employer wouldn’t be sure that they could recruit those employees to gain the benefit of their institutional memory.
It’s not impossible to dismiss employees who are surplus to requirements after a TUPE transfer – whether it’s a commercial transaction or an in-group transfer. You just need to be pretty careful and always get advice on how to avoid the many traps and potential claims.
TUPE is one of those European inventions which are really complicated but overall, a Good Thing. If you need help with any aspect of an in-group TUPE transfer, just get in touch at employment@Qlaw.co.uk or on 03300 020 863.
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