When a business, or part of it, changes ownership, TUPE law acts to protect employees and their benefits. TUPE regulations control the transfer of employees from one company to another—this could be in part in full.
A TUPE transfer concerns the following:
- Business takeovers: A business or part of a business changes hands from one employer to another.
- Service provider changes: Where outsourcing, insourcing, or assignment goes to a new contractor.
What does TUPE stand for?
It stands for Transfer of Undertakings (Protection of Employment). Whilst that might seem straightforward, TUPE law is intricate and is easy to misinterpret. If as an employer you don’t satisfy your obligations, you could be at significant risk.
Not complying with TUPE regulations might lead to financial consequences. If consultation processes haven’t been followed once the process starts, affected employees could be awarded up to 13 weeks’ pay.
If TUPE regulations are disregarded entirely, the ramifications could be as severe as an unfair dismissal.
Who TUPE regulations apply to
When a TUPE transfer occurs, employers must adhere to protocols. This includes:
- The old employer: The employer commencing the transfer
- The new employer: The employer receiving the transfer
The TUPE process is designed to protect anyone who possesses the legal status of an employee. In certain circumstances, TUPE law may protect anyone who has the legal status of a worker.
Any individual employed by the business, or part of, transferring will automatically transfer with it. Employers do not have the power to decide which employees they want to move.
When does TUPE apply?
TUPE applies during what’s referred to as a ‘relevant transfer’. As aforementioned, this could be a business transfer (or part of a business) and a service provider change.
Irrespective of the size of the business, be it a large corporation or local business, TUPE law will be implemented. Here’s what’s covered by TUPE regulations:
- The partial or complete sale or transfer of a trader’s business, limited company, or partnership.
- When a company purchases another’s assets—provided they’re acquiring the business as opposed to shares and assets.
- Two companies dissolve to make a third.
- Where a contract for goods or services is transferred in a scenario equating to the transfer of a business.
Where does TUPE not apply
Employees cannot rely on TUPE regulations if they’re contracted for a short-term task (this might be cleaning or catering services for one event).
The same applies if the contract is for goods for the company’s uses. Other instances include:
- Asset-only transfers
- Transfers occurring outside of the UK
- Transfers of contracts relating to goods or services. Specifically, where a transfer of business (or part of) does not exist
- A company’s shares being sold to new shareholders
Business transfers
When a business transfer takes place, if the following are present, TUPE will be applied:
- A change in employer
- Business activities remain the same or are similar prior to the transfer
- Key assets transfer to a new employer
Assets may consist of:
- Employees
- Equipment
- Business premises
- Existing work
- Business reputation or customer base
- Copyrights or trademarks
Business transfers could include mergers (two businesses combining to create one) and business with just one employee.
Service provider changes
A service provider change happens when contracts are taken over by another body. For example:
- Outsourcing: An in-house service is now provided by a contractor
- Insourcing: A contract is finalised, and the work is transferred in-house
- Retendering: Upon completion of a contract, a contractor takes over
When does TUPE apply for service provider changes? Typically, when there’s an organised grouping of employees. This generally relates to these roles:
- Catering
- Security
- Cleaning
- Waste collection
- Machinery maintenance
It’s not applicable if the contract is for the supply of good only, or a single event or short-term task.
The TUPE Process
As discussed, a TUPE transfer is convoluted and there are permutations for employers and employees alike. Let’s look at a brief overview:
Stage one
Before the transfer commences, you must confer with all trade unions, employee representatives, and anyone who might be affected by the transfer.
In the event that there are no representatives, then they must be elected. They must be informed that:
- The transfer is happening—and when and why
- How said transfer will impact them, and they’ll be made aware of economic and technical measures that will occur
Failing to consult with employee representatives with anything relating to the transfer that might affect employees could result in penalties.
Stage two
When the transfer starts, you’ll have to provide employees’ employment rights and personal details, such as:
- Terms and conditions of employment
- Date of employment
- Age
- Annual leave entitlement
- Company sick pay policy
- Any benefits
- Information regarding pay
- Collective agreements made
- Pension rights
- Any prior disciplinary issues
Stage three
Once the transfer is complete, the outgoing employer has a duty to find out how many existing employees have been impacted by the transfer. They must:
- Regularly communicate with remaining employees about the transfer
- Deal with concerns relating to poor work performance. Click here to download our performance improvement plan.
- Consider methods to raise morale
What if there’s a disagreement about whether TUPE applies?
An agreement regarding TUPE regulations may not be struck between the old and new employer.
If such a scenario arises, this could be both confusing and frustrating for an employee. They may:
- Raise a grievance: They might make a complaint to their current and impending employer
- Seek advice: If they’re a member, they may choose to speak to their trade union representative.
Should the above not yield the outcome they desire, then they could make a claim to an employment tribunal.
Naturally, as an employer neither of these are favourable outcomes. They have the potential to drain your business of time and money.
FAQs: What is TUPE?
Do employees keep their title and pay?
Employees maintain their existing terms and conditions of employment, including length of service, pay, and benefits.
What are employers’ obligations under TUPE?
Employers, old and new, must identify affected employees and keep them (or their representatives) abreast about the transfer, and provide the new employer with all information relating to the transferring employees.
What information must employers provide to employees and representatives?
They must share information on the transfer, including the date, reasons, and any possible changes to the workforce and working conditions.
What are the penalties for not complying with TUPE?
Neglecting to adhere to TUPE process can lead to a protective award of up to 13 weeks’ pay for affected employees.
Wrapping up: What is TUPE?
Ultimately, TUPE concerns businesses changing ownership. This might be a complete or partial change.
It primarily governs business takeovers and service change providers. It can be a complex process—it’s particularly stressful for employees.
With that in mind, TUPE law exists to protect employees and benefits. If TUPE regulations aren’t adhered to, then a business could be subject to severe consequences.
Get expert advice on TUPE regulations with Peninsula
Don’t be tripped up by the complexities of TUPE law. If you are, you may find your business embroiled in costly disputes. Instead, depend on Peninsula to navigate the particulars of the TUPE process.
Peninsula offers expert advice on TUPE. We also offer 24-hour HR advice—helping employees get better and return to work safely. Want to find out more? Contact us on 0800 028 2420 and book a free consultation with a HR consultant today.
