The Transfer of Undertakings (Protection of Employment) Regulations, more commonly referred to as ‘TUPE’, protect employees where there is a change in their employer. It applies in business transfers, such as asset sales and purchases, and ‘service provision changes’, which in broad terms means outsourcing, insourcing or transferring outsourced work between contractors.
We are regularly asked to advise employers on the application and implications of TUPE and how they can fulfil their obligations under the regulations. Here are some of the most common issues we advise our clients on.
Whether TUPE applies in the first place
Often this is the first thing that needs to be discussed, and it is not always clear-cut. As an employer you may have a strong view whether or not you want TUPE to apply to the transaction. Sometimes there is scope for an employer to structure the transaction so that TUPE applies (or doesn’t); however the general rule is that TUPE applies (or doesn’t) as a matter of law, whether an employer wants it to or not. If in doubt, specialist employment law advice should be sought as early as possible to advise you on whether TUPE applies, and any steps you can take to affect this.
If TUPE applies, what are my obligations as an employer?
A detailed explanation of the various obligations would be too large to cover in this short article. Furthermore, different duties may apply depending on the specific case. However, in a nutshell, the principal requirements on the employer are to inform and (in some cases) consult the employees concerned. This often includes other issues, such as:
- Data protection issues.
- Confidentiality issues, for example, many sellers (and indeed buyers) are reluctant for employees to find out about the sale before it takes place.
- How much detail should be provided to employees. This may be a particular issue if not all information is yet known. For instance, while a service provision change may be agreed in principle, the date of the change may not yet be known.
- Employers often forget their obligation to inform and consult employee representatives rather than the employees themselves (unless certain conditions apply).
This of course isn’t the only obligation on an employer; other key obligations include:
- Providing prescribed employee liability information to the transferee (if you are the transferor)
- Providing information about any measures you are proposing which will affect transferring employees (if you are the transferee)
- Ensuring that TUPE rules, which broadly require contractual benefits to be maintained for transferring employees, are properly applied (if you are the transferee)
What timescales and deadlines apply?
Compliance with timescales is of paramount importance when it comes to TUPE. Whilst the regulations are prescriptive in certain respects (e.g. the transferor must provide the transferee with certain information about the transferring employees not less than 28 days before the relevant transfer takes place), some deadlines are more vague (e.g. information to employee representatives must be provided ‘in good time’). Issues can arise in practice, such as employees being on holiday and not available to be informed and consulted.
Which employees are transferring?
The starting point is that TUPE dictates which employees are to transfer (subject to any employees objecting), not the employers. However, there is often scope for the employers to structure the transaction in a way in which certain employees transfer or don’t, highlighting importance of planning and preparation. The requirements under TUPE are complex and specialist legal advice can really be of value.
Can we change the transferring employees’ employment contracts following the transfer?
There may be many reasons the transferee employer may wish to change transferring employees’ contract terms following the transfer. These can range from a desire to harmonise terms (potentially unlawful) through to a need to make changes (e.g. to place of work) necessary for the working relationship to continue to function. However, changing terms of employment should be approached with caution, and simply changing them without the employee’s consent can be a risky tactic. If any material changes are proposed, legal advice should be sought.
Our employment law specialists are experienced in advising on all the above points, and more. We also provide training on TUPE to organisations and their HR teams, and would be happy to have a chat with you about this if it is of interest.
How we can help
Our employment lawyers specialists are experienced in advising on all the above points, and more. We also provide training on TUPE to organisations and their HR teams, and would be happy to have a chat with you about this if it is of interest.