August has been an interesting month for TUPE in terms of decisions made by the Employment Appeal Tribunal. We thought it might be helpful to provide a brief summary of exactly what TUPE is and the circumstances in which it might affect your business.
What exactly is TUPE?
TUPE is an acronym for the Transfer of Undertakings (Protection of Employment) Regulations. The current version of the Regulations came into force in April 2006 however they are subject to constant update, the most recent being January 2014.
TUPE is designed to protect employees if the business in which they are employed is sold or transferred to a new owner or operator. In such circumstances, TUPE automatically comes in to operation to move employees with the business, from one employer to another. Employees benefit from a great deal of protection under TUPE. The new employer will often find that it has to meet all existing terms of employment of the transferring employees.
Why might you come across TUPE?
The scope of TUPE has consistently been broadened during recent years and the result is that TUPE applies to a huge number of business transactions. There are no exceptions for small employers so TUPE applies to all businesses, both large and small. Here are a couple of examples of when TUPE can apply:
- where an employer sells or buys all or part of a business as a going concern; or
- where an employer outsources or make a “service provision change” involving either (a) an initial outsourcing of a service (e.g. where services transfer from the employer internally to an external contractor); (b) a subsequent transfer (e.g. where services transfer from the first external contractor to another external contractor, this often happens as a result of tendering; and (c) bringing the service back in-house (e.g. where services transfer from an external contractor back to the original employer);
There are many, many other scenarios in which TUPE can apply.
What to do if you are subject to arrangements involving TUPE?
The penalties for failing to comply with TUPE are particularly harsh. It is rarely worth taking the risk of ignoring the Regulations.
If you are faced with a TUPE transfer, the obligations on the outgoing and incoming employers are different. The outgoing employer must appoint and consult with appropriate representatives of the employees affected by the transfer. That employer must also provide “employee liability information” to the incoming employer. Both consultation and the provision of information must take place in a timely fashion and in accordance with timeframes set out in the Regulations.
As the incoming employer, subject to certain exceptions, there is generally a requirement to employ all employees of the business that is to be transferred. This almost always means that all transferring employees will be entitled to continuing employment on the same terms and conditions as they enjoyed prior to the transfer. There is very little scope for the incoming employer to make changes to terms and conditions.
How can you protect your business when facing a TUPE transfer?
TUPE is not something that can be watered down or avoided. The best protection you may have is to follow the Regulations and ensure that any transfer is made in accordance with TUPE. There is however some scope to divide liabilities up between the outgoing and incoming employer. Any such division of liabilities should be done in a formal contract between the parties.
TUPE can be complicated and full of pitfalls, if you need guidance please contact us on 0114 255 0825.