TUPE Transfers

Recent changes to TUPE regulations have made things simpler for small businesses, but it remains a complex and often misunderstood area. Here’s what you need to know. 

What is TUPE?

TUPE stands for the Transfer of Undertakings (Protection of Employment); they are regulations which protect an employee’s rights when they transfer to a new employer.

What exactly is a transfer of undertakings?

A transfer of undertakings happens when there is either a change of service provision, or a business transfer:

Service provision changes

A service provision change takes place when a company that hires a contractor to do work on its behalf either:

• Reassigns a contract (by either outsourcing, re-tendering or, in some cases, subcontracting); or

• The company makes the decision to bring the work back ‘in house’ (where the service changes from being contracted out to being performed by the company themselves).

Business transfers

TUPE can also apply if there’s a transfer of ‘an economic entity that retains its identity'; in other words, the same company providing the same service. 

To establish whether TUPE would apply, companies need to consider the following:

• Is the type of business being conducted by the ‘transferee’ (the new owner, or the employer who is receiving staff) the same as the ‘transferor' (the old owner, or the employer who is transferring staff)?
• Has there been a transfer of tangible assets such as buildings and/or moveable property?
• Are there intangible assets (such as patents, trademarks, copyright, goodwill or brand recognition) transferred at the time of the transfer?
• Have the majority of employees been transferred?
• Have the customers been transferred?
• Is there a high degree of similarity between the activities carried on before and after the transfer?

If the answer to most of the above is 'yes', then TUPE is likely to apply. However, in some cases, just one of the above factors is enough for TUPE to apply.

What are my responsibilities concerning consultation?

When conducting a transfer, the transferor must ensure they conduct a full, meaningful consultation with their employees at the earliest opportunity. Whilst there is no minimum consultation period before the transfer, employers must ensure they allow sufficient time to provide details of the transfer to the nominated employee representatives before the relevant transfer, to ensure that a meaningful consultation takes place. 

Should employers fail to consult properly they can face financial penalties in the form of being required to pay staff up to 13 weeks' pay in compensation. Both the transferor and transferee are liable to pay this.

Who needs to be involved in the consultation?

If there are no trade union representatives in place, the company is required to conduct an election of representatives. These should be taken from the employees that are affected by the transfer. Once nominated, the company must consult with the representatives concerning the transfer, who then share information from the company to the employees and feed any questions or concerns from the employees back to the company. 

Recent changes to the TUPE regulations in April this year have simplified the process for businesses with less than 10 employees in that they can now inform and consult with employees directly if there is no union involvement.

What information do I need to include?

The employer must explain a transfer is to take place and provide:

• Reason for the transfer and when it is expected to occur
• Implications for employees
• Measures that current and new employers expect to take regarding the employees

The above is only a snapshot of the process that needs to be followed. As TUPE is a complex piece of employment law legislation, we would advise that you contact your HR Advisor to ensure that you conform to the current regulations.