17 May TUPE
Q.What does TUPE stand for?
- It stands for Transfer of Undertakings (Protection of Employment) Regulations 2006.
Q.When does TUPE apply?
- *It applies to business transfers and service provision changes.
A business transfer is the transfer of an economic entity. For example, when one company merges with another or one business purchases another as an asset purchase (as opposed to acquiring shares). It can also apply to the transfer of a lease and a management buy-out.
A service provision change is when a contract is reassigned. For example, if an in-house function is outsourced to an external provider (for example, payroll) or if an outsourced service is taken in-house. (E.g. payroll is bought back in-house and no longer carried out by a third party contractor).
*Disclaimer: This list is not exhaustive, and it is not always clear cut as to whether TUPE applies so you must take proper legal advice from a TUPE expert.
Q.What protection do transferring employees have under the regulations?
- All employees employed by the existing company have automatic right of transfer to the new Company and all of their existing terms and conditions of employment (including their original start date) are preserved.
You cannot dismiss an employee following a TUPE transfer if the reason for dismissal is related to the transfer as this will be automatic unfair dismissal.
Q.What if I don’t offer the same benefits as the old employer? For example, I don’t have a share scheme.
- In this instance you must compensate the employees by giving them an equivalent provision or payment. However, consideration must be given to this before the transfer takes place and must be included in a ‘measures’ letter so that the existing employer can make the transferring employees aware of the intended measure, why it’s being proposed and what’s being offered in its place so that they can collectively consult with their employees prior to the transfer taking place.
Q.What is a measures letter?
- It provides details of any changes that the new employer proposes to make to the transferring employees’ existing terms and conditions which aren’t possible to transfer or replicate. E.g. a share scheme or a discount on products that the new employer does not make. NB. You can’t vary any other terms and conditions such as salary, hours of work, only those that aren’t possible to replicate and even then you are obliged to offer equivalent provision or payment. Eg., discount on products that the new employer does make or shares in a new Company scheme or a one-off payment to compensate for these.
The existing company is required to consult with their employees collectively on the proposed measures and give them the opportunity to object and/or make other suggestions.
Q.What consultation needs to take place?
- Under the TUPE regulations collective consultations must take place for companies with over ten employees.
If the Company recognises a union, consultation will take place with the union representatives who will in turn consult with the rest of the employees.
If the company does not recognise a union, the employees will need to elect employee representatives in an employee ballot.
Q.How long is the consultation process for?
- There is no prescribed duration. A consultation process should last for as long as is needed for a meaningful and considered consultation to take place in relation to the transfer and proposed measures and any questions and representations made by the employee representatives on the behalf of the rest of the employees.
Q.I have heard that TUPE is very complex and that there are high penalties for getting the process wrong and I am worried about the potential liability. What can I do to minimise risk?
- It is true that TUPE is one of the most litigious areas of employment law and the penalties for getting it wrong are steep. However, most issues can be avoided as long as you get the proper advice, follow the correct process and carry out the right level of due diligence.
Q.Where can I go for further advice and support?
- Please contact me for a brief no obligation conversation to discuss the advice that you need and how I can support your successful TUPE acquisition.Disclaimer: This is a general overview only and is not intended to substitute or replace legal advice in relation to the specifics of your TUPE or proposed TUPE acquisition.