TUPE is an acronym for the Transfer of Undertakings (Protection of Employment) Regulations.
TUPE is one of the most complex areas of employment law and an area where regulations are constantly changing. Hopefully the below will give you the basic breakdown of what it is and how to manage it.
The TUPE rules apply to organisations of all sizes, the overall purpose being to protect employees if the ownership of the business they are employed in changes hands. Employees and any liabilities associated with them from the old employer are transferred to the new employer by this operation of law.
TUPE applies in two situations:
- In business transfers (where a business or part of a business transfers to new ownership or merges with another business).
- In a service provision change (where a contractor takes over activities from a client, a new contractor takes over from another contractor or a client takes over activities from a contractor).
Employees of the transferor have the legal right to transfer to the new employer under their existing terms and conditions of employment. Employees are able to refuse to transfer, but depending on the circumstances of the case, they could lose their legal rights if they do.
It is however, common for certain amendments to be made to the employees terms by the new employer in order to smoothly integrate the new employees into the business, such as changing the monthly pay date in line with their current payroll set up and process. Such changes are permitted under TUPE, providing they are agreed by both parties and they are considered of economic, technical or organisational reasons (ETO) and not solely related to the transfer itself.
Dismissal of a transferred employee is also an option under ETO reasoning only, dismissing new or existing employees on the basis of the transfer alone would be automatically deemed unfair at a tribunal.
An ETO reason must entail changes in the workforce, meaning there must be changes to the function or numbers of the workforce or the location of the workforce. As there is no clear-cut definition of what would constitute an ETO reason, we need to look to relevant case law for guidance in this area.
So in conclusion, determining whether TUPE applies and then if so, managing this is a complex process.
If you think TUPE may apply to a transition you are involved in, we would always recommend seeking specialist advice to support you in this process and HR Revolution would be happy to help.
