TUPE is an acronym for the Transfer of Undertakings (Protection of Employees) Regulations, which are designed to protect employees if the business they work for changes ownership or if there is any change in service provisions.
When does TUPE apply?
TUPE applies to all UK businesses, regardless of size, and comes into effect in the following situations:
- When transferring part or all of a business.
- When making a service provision change, such as outsourcing an in-house service, bringing outsourced work back in-house, re-tendering a particular service, or transferring services from an initial external contractor to a second external contractor.
- When granting or taking over a lease or licence of premises to operate the same business from those premises.
In cases of liquidation and dissolution, employees are not protected by TUPE (although they still retain other protective legal rights). If, however, an insolvent business is being bailed out and taken over by another company, then TUPE does apply.
For service provision changes, TUPE will only apply where the services being transferred are “fundamentally the same” as before the transfer. TUPE does not apply where contracts are for the supply of goods for the business’s use, or if they are for a single event or short-term task.
Complying with TUPE
Whether selling a business or making a change to the provision of services, the transferor must take the following steps in order to comply with TUPE:
- Staff and employee representatives must be informed of the transfer, the reasons for it and when it will occur, as well as any implications the transfer may have on staff, particularly if the company is to be reorganised.
- Employees and their representatives must be given ample opportunity to consult with the transferor on the repercussions of the transfer.
- The incoming employer must be provided with full written details of all employees at least 14 days prior to completion. Details must include the terms of each position as well as employees’ rights and liabilities.
- Following completion of the transfer, employees must be given an updated written statement of employment informing them of their new employer’s name, and confirming the retention of their employment terms.
Repercussions of non-compliance with TUPE
The repercussions of non-compliance with TUPE can be severe. If the transferor does not inform or consult employees, a complaint can be made to the Employment Tribunal. This can result in the transferor being forced to pay affected employees whatever compensation the Tribunal considers just and equitable, up to a maximum of 13 weeks’ pay per employee. Outgoing and incoming employers may be held jointly liable, depending on the terms of the contract between them, which may apportion TUPE liability.
If the outgoing employer does not provide the incoming employer with employees’ details, the incoming employer can make a claim to the Employment Tribunal for compensation. The amount payable for compensation will be assessed according to the losses suffered by the incoming employer, and a minimum award of £500 per employee may be imposed.
Given these repercussions, it is essential to consult with an experienced solicitor before undertaking business transfers or service provision changes of any kind. For more information or for expert advice on business or personal legal issues, contact us online at Carter Bond Solicitors today or call us on 0 33 33 44 44 11.
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