When a business changes owner, its employees may be protected under TUPE – the Transfer of Undertakings (Protection of Employment) Regulations.
The purpose of these regulations is to protect employees when the business they work for changes hands. TUPE ensures contracts of employment are automatically retained upon transferring from the old employer to the new employer.
The legislation, however, is complex and highly technical. If you do not follow these regulations and fail to fulfill your legal obligations as an employer, you may have to pay a substantial penalty fee – up to 13 weeks gross pay to each employee.
Our expert TUPE solicitors are experienced in working with businesses of all sizes and can advise and support you at every step of your transfer process to ensure you’re adhering to all employment laws and regulations.
What is TUPE?
Transfer of Undertakings (Protection of Employment) regulations were originally established in 1981 as a way to protect employees if the business they work for changes hands. They were heavily amended in 2006 and again in 2014.
Your employees’ rights may be protected under TUPE if your:
- Business is changing ownership
- Company merges with another business
- Business begins outsourcing services, brings them back in-house, or retenders the contract.
How does TUPE work and why does it apply?
TUPE guarantees all employees have the legal right to retain all their employment rights, length of service, and terms and conditions of their employment contract upon transfer to a new employer.
The regulations apply to UK-based public and private sector businesses of all sizes and profit-levels – including sole traders and non-profits like charities.
There are two main types of TUPE transfer:
- Business transfers – During a business transfer, the whole or part of a business is transferred to a new employer. This can include sales, mergers, a change in franchisement, the transfer of a lease, or a management buyout. Under TUPE, all employees automatically transfer to the new employer at the point of sale.
- Service provision changes – A service provision change is where an employer engages a contractor to undertake work on their behalf or, alternatively, retenders a contract, including bringing it in-house. This can include contracts for catering, office cleaning and security work, as well as professional services such as accounting and legal work. However, TUPE doesn’t apply to one-off or short-term work.
The rules on what constitutes a business transfer or a service provision change are complex. Our employment law solicitors can help you navigate the tricky waters of TUPE, demystifying the transfer process and ensuring you and your business are protected from potential legal disputes in the future.
What are TUPE rules?
TUPE rules are split into three main areas, with both incoming and outgoing employers having obligations at each stage.
The Consultation Period
In the initial stages of the transfer, both employers must identify and consult with all employees – on both sides – who may be affected by the proposed change, along with any relevant trade unions.
They must inform employees that the transfer is happening, clarify when and why the transfer will take place, and explain the ways it will affect their employment.
It’s worth noting that although consultations with staff are a legal obligation, employers do not necessarily have to gain agreement from staff. TUPE only requires that employers fairly consider any objections or proposals made by employees, and give reasons for rejecting them.
The Information Stage
During the transfer period, the outgoing employer must provide employee liability information (ELI) to the incoming employer at least 28 days before the transfer. This includes personal employee data such as:
- Terms and conditions of employment
- Holiday entitlement
- Sick pay
- Pension rights
- Length of service
- Deductions from wages for child support, student tuition fees, etc
- Overtime, commission and bonus payments
- Any disciplinary, grievance issues or claims on file
The Feedback Stage
Once the transfer is complete, the new employer must track how employees have been affected by the changes by actively engaging with staff and directly addressing any employee concerns.
It’s not unusual for problems to arise after a transfer, as not everyone may be happy with the changes, especially if there have been redundancies or significant restructuring.
Some employees may choose not to remain with their new employer. These employees, however, do not usually have the rights to claim redundancy pay or unfair dismissal. You should, however, consult an employment law solicitor to ensure your next steps are legally compliant.
How long is a TUPE period?
There is no legally specified notice period for a TUPE transfer. However, employers are obligated to inform employee representatives and trade unions of the transfer and must ensure the notice period is long enough to thoroughly consult with them on any proposed measures and changes.
The information and consultation process is a crucial element of TUPE. Not complying could lead to financial penalties of up to 13 weeks’ pay for each employee affected, so it’s worth taking the time to get right.
How can our TUPE solicitors help your business?
The key to staying compliant with TUPE lies in knowing how and when it applies to your business. Crombie Wilkinson Solicitors will help guide you every step of the way to ensure you are complying with TUPE regulations and can advise and support you on the unique circumstances of your transfer.
We aim to make the process as seamless as possible for your employees, as well as ensuring your business is protected from future claims and disputes.
For all TUPE queries, speak to our employment law solicitors today and get the expert advice you need.