The Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly referred to as TUPE, provide protection for employees’ terms and conditions of employment in the event that their employer changes as a result of a transfer of a business undertaking.
Types of Transfers Protected Under TUPE
- Business transfers, this can include a transfer of tangible assets such as buildings and moveable property, such as machinery, although this is not essential.
- Service provision changes.
When looking at TUPE regulations it’s important to consider service provision changes, which are common in contracts for cleaning, workplace catering and security. It normally happens when:
- A contract is awarded to a different contractor (‘contracting out’ or ‘outsourcing’)
- A contract is assigned to a new contractor after a re-tendering process
- A contract is brought ’in house’ (‘contracting in’ or ‘insourcing’)
The old employer is referred to as the Transferor. The new employer is the Transferee.
Key TUPE Guidance for Employers
TUPE is designed to protect the employment of the employees and there are many pitfalls an employer needs to be wary of when there is a service provision change.
TUPE will not apply to all service provision changes, for TUPE to apply;
- There needs to be an organised grouping of employees and the general rule is that employees who are wholly or mainly assigned to the contract transfer, one employee can be an organised group. The organised group of employee’s principal purpose should also be to carry out the activities for the client. Therefore, consideration should be given to factors such as the cost and value of the employee to each part of the business, and any managerial responsibilities the employee may have on other contracts or parts of the business.
- The activities should not become overly fragmented. The more activities are split up between different providers the less likely it is that the TUPE will apply.
- The activities should remain fundamentally the same, if the work activities are fundamentally different after the transfer then TUPE will not apply.
Failure to Provide Employee Liability Information (ELI)
- The Transferor is required to provide the Transferee the ELI not less than 28 days before the transfer. The ELI includes the age and identity of the employees in question, their employment particulars, their disciplinary and grievance records, details of any collective agreements and details of any outstanding claims against the Transferor. The failure to provide the ELI could result in an award of at least £500 per employee.
Failure to Consult
- Both the Transferor and Transferee have a duty to consult. If there are no employee representatives in place and no Trade Union is recognised then the Transferor should elect employee representatives. Consultation should begin ‘in good time’ for sufficient consultation to take place. The consultation should cover details of the transfer, when it will take place, the reasons for it and the legal implications of the transfer for the affected employees.
- The Transferee should also disclose any potential measures to be made post transfer. A failure to consult could result in an award of up to 13 weeks’ pay per employee. Something to note for smaller businesses, is that for employers with less than 10 employees there is no need to elect representatives. They can consult directly with employees in relation to transfers where there are no existing appropriate representatives or a recognised union.
- The TUPE regulations state a dismissal will be automatically unfair if the sole or principal reason for the dismissal is the transfer itself, unless it is an economic, technical or organisational (ETO) reason entailing changes in the workforce. To claim automatic unfair dismissal an employee must have 2 years continuous service. Even with an ETO reason the Transferee would still be subject to the normal test of fairness under the Employment Rights Act 1996 when dismissing employees with more than 2 years’ service.
- Employers who want to vary employee’s terms & conditions of employment must also demonstrate that the changes are for an ETO reason, otherwise the changes may be held to be invalid. Harmonisation would not be an ETO.
Due to the complexities of TUPE we recommended that an employer should seek advice from our legally qualified HR Consultants if they are faced with a potential TUPE transfer.