TUPE and outsourcing

What is TUPE?

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Also known as the Transfer of Undertakings (Protection of Employment) Regulations 2006, TUPE protects employees when a business’ transfers from one party to another, or when there is a change of service provider. It automatically transfers employees to the new owner or service provider on their existing terms and conditions (with certain exceptions).

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TUPE applies in a range of circumstances and not only when a whole business transfers. It can also apply when only part of a business is transferring as well as when there is an outsourcing, insourcing or re-tendering of services. However, TUPE won’t apply to transfers of assets where there is no transfer of a business as a going concern, on a share sale, as well as several other situations where the technical legislative criteria are not satisfied.

Determining when TUPE applies to a transfer can involve a complex assessment of the legislative criteria and facts. The consequences of incorrectly determining whether TUPE applies can be costly and our expert team can assess your circumstances and advise you.

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What transfers under TUPE?

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TUPE will transfer various rights, liabilities and obligations to the new employer. This includes, amongst other things:

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• The employment contracts of any employees who are employed by the transferor immediately before the transfer and assigned to the organised group of resources or employees that is subject to the transfer.

• The outgoing employer's rights and liabilities relating to the transferred employment contracts

• Any acts or omissions of the transferor before the transfer relating to the employees

 

There are certain exceptions to what transfers. For example, rights and liabilities relating to provision of occupational pension schemes which relate to benefits for old age, invalidity or survivors do not transfer. We can assist in determining wha transfers in your transfer situation.

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Complying with TUPE

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Once you’ve established that TUPE applies to the transfer , you need to understand how to comply with the regulations. Our specialists will be able to provide you with tailored solutions whilst minimising any unwanted risks to your business.

TUPE imposes certain obligations to inform and in some circumstances, consult with appropriate representatives of any affected employees. The employer must inform the appropriate representatives of certain information detailed in the regulations in good time before the transfer. The first stage is often to arrange for the election of appropriate representatives in accordance with the legislative requirements.

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Outgoing employers must also provide certain prescribed employment liability information to the incoming employer at least 28 days before the transfer. The incoming employer must also inform the outgoing employer of any measures that it intends to take affecting the transferring employees.

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We can help you to comply with these obligations, including drafting the necessary documentation for any elections, to provide employment liability information, to provide measures information and the information that must be provided to the appropriate representatives to ensure that you comply with TUPE.

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Failure to comply with TUPE

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If your business fails to follow TUPE processes, it may be taken to tribunal by the representatives or employees that are affected. Failure to comply with the obligation to inform and consult can result in liability of up to 13 weeks’ gross pay for each affected employee. If the outgoing employer fails to provide the incoming employer with the required employment liability information, they may be liable to pay up to £500 per affected employee. In addition, there could be further liabilities, for example, for unfair or constructive unfair dismissal claims, where the transfer has not been managed correctly.

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Our legal team is well-equipped to represent your business in tribunal or court should you need support. By advising you during your TUPE projects, our employment law specialists can help you to mitigate the risk of successful claims.

 

TUPE and Dismissal

 

The transfer of a business often results in a requirement to reorganise the workforce and this can result in redundancies. TUPE gives enhanced protection against unfair dismissal on a TUPE transfer by providing that certain dismissals are automatically unfair. As a result, an employer's ability to dismiss employees fairly when there is a TUPE transfer is more limited and requires careful consideration.

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Any dismissal of an employee with the necessary period of continuous employment, except in the circumstances described below, will be automatically unfair where the sole or principal reason for the dismissal is the TUPE transfer.

However, where the sole or principal reason for the dismissal is an economic, technical or organisational reason (an ETO reason) entailing changes in the workforce, the dismissal might be fair, provided the employer has met the usual procedural requirements for a fair dismissal.

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The economic, technical or organisational reason must also entail changes in the workforce. This could include a change in:

• The location of the work

• The number of employees

• The functions performed by employees

 

We can advise on how the law will affect any plans to dismiss employees as part of a TUPE transfer process and how to achieve your business objectives whilst seeking to minimise the risk.

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Changing terms of employment

 

The starting point under TUPE is that any intended change to a transferring employee's contract is void if the sole or principal reason for the change is the TUPE transfer.

 

However, certain changes are permitted in the context of a TUPE transfer. This includes when:

• The change is unrelated to the transfer

• The sole or principal reason for the change is an ETO reason entailing changes in the workforce provided that the employer and employee agree that change

• Terms of the employment contract allow the employer to make that particular change

• Terms are incorporated from a collective agreement, provided that the variation takes effect more than one year after the date of the transfer and the varied terms "when considered together" are no less favourable to the employee

• The outgoing employer is subject to certain types of insolvency proceedings

 

The usual rules on how a contract of employment can be lawfully changed will also apply.

 

Contact us

 

Our employment law solicitors and HR professionals can support you to meet your business objectives and comply with the requirements of TUPE. We have experience supporting both incoming and outgoing employers on TUPE transfers as well as handling related plans to make dismissals and change terms and conditions of employment. We can also help you to defend or resolve any claims that you may be facing relating to TUPE transfers.

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Book a consultation to discuss how we can help. All our fees are completely transparent and we’ll discuss different packages with you before you make a firm commitment to proceed with our services. Our advice will always be tailored to your unique circumstances and provided with experts in the field.