Most people have heard the acronym TUPE. It stands for Transfer of Undertakings Protection of Employment Regulations. These Regulations are aimed at protecting the employment rights of employees when a business transfers. In broad terms the employee moves from the selling employer to the buying employer on identical contractual terms. There are certain exceptions, for example full protection doesn’t always apply to pension rights. There are significant restrictions aimed at preventing the incoming employer from completing the takeover then harmonising the contractual terms with those of its existing employees.
Since the introduction of the Regulations in the early 1980’s the Regulations have evolved considerably. They now not only apply to a transfer of a business in a traditional sense, but to transfers of parts of businesses and also to transfers of service provision. For example if a business contracts out its catering requirement once the contract with the caterer comes to an end there may be a transfer of undertaking either when the catering service is brought back in-house or another contractor takes it over.
It is important for employers to take care in transfer scenarios as otherwise they can find themselves the subject of unfair dismissal or breach of contract claims.
Further, there are significant notification and consultation requirements in relation to employees who may be affected by the transfer. Usually this will involve the appointment of employee representatives and the provision of information to those representatives. Failure to undertake this process correctly or at all is likely to lead to substantial financial penalties in relation to each employee affected.
There are also significant requirements in relation to provision of information between the seller and the acquirer.
Given the technicalities of this area employers often find it worthwhile to take advice and we have significant experience of providing advice in these situations.
Davies and Partners' specialist employment team is highly experienced in offering employers TUPE advice. If you would like to discuss TUPE or any other employment law issues, please contact our team.