The Transfer of Undertakings (Protection of Employment) Regulations 2006 is more commonly known as TUPE.  The purpose of TUPE is to protect employees if the business in which they are employed changes hands. The effect of TUPE is to transfer all employees and their rights and liabilities associated with them from the old employer to the new employer. Effectively, the new employer steps into the shoes of the old employer and it is as though the employee’s contract of employment was always made with the new employer.

When will TUPE apply?

TUPE can apply in many different cases. Set out below are some examples of when TUPE may apply:

• When employers sell or buy all or part of a business as a going concern
• When an employer outsources a service or makes a service provision change
• Where an employer grants or takes over a lease of licence of premises and operates the same business from  those premises.

What is transferred under TUPE?

TUPE states that “all the transferor’s rights, powers, duties and liabilities under or in connection with the transferring employees’ contracts of employment are transferred to the transferee”. This catch all concept includes rights under the contract of employment, statutory rights and continuity of employment. It also includes employees’ rights to bring a claim against their employer for unfair dismissal, redundancy or discrimination, unpaid wages, bonuses or holidays and personal injury claims etc.

Employees have the legal right to transfer to the new employer on their existing terms and conditions of employment and with all their existing employment rights and liabilities intact (although there are special provisions dealing with old age pensions under occupational pension schemes).

Employees who object to the transfer do not automatically transfer to the new employer. Rather, their contract will terminate on the date of the transfer.

Obligation to inform and consult

Under TUPE there is an obligation on the employer to consult, long enough before the transfer, with either the Trade Union or if there is not one, then elected staff representatives. TUPE sets out the requirements for (a) how elections of staff should take place and (b) consultation with those staff elected and/or a Trade Union. Failure to carry out elections and consultation in accordance with the requirements stipulated under TUPE would likely give rise to a claim by any or all affected employees for a punitive award in the Employment Tribunal of up to 13 weeks pay. As part of the consultation process, the employer is required to give specific information to the Trade Union and/or elected staff representatives which in essence relates to the transfer and its impact on staff. The precise information to be given is clearly set out in the TUPE regulations.

Protection from Dismissal

Any dismissals will be automatically unfair, where the sole or principal reason for the dismissal is the transfer. This is also the case where the sole or principal reason for the dismissal is a reason connected to the transfer, unless it is for an economical, technical or organisational reason (an “ETO” reason) requiring a change in the workforce. This ETO defence is narrow in scope but it would likely cover a redundancy situation.  However, even if the employer can rely upon an ETO defence and the dismissal is not automatically unfair, it may still be unfair for other reasons (e.g. unfair selection).

Variation of terms and conditions of employment under TUPE

As the new employer is required to take on the employees on their existing terms and conditions of employment, it is prohibited from making any changes to the terms and conditions of employment of the transferred employees if the sole or principal reason for the variation is the transfer. This is also the case where the sole or principal reason is connected to the transfer, unless there is an ETO reason for the change. An ETO reason might include a change in the number of the workforce e.g. redundancy.