Transfer Of Undertakings (TUPE) – Employment Law

When does TUPE apply?

There are two situations when the TUPE regulations may apply namely business transfers and what are called “service provision” transfers where an employer outsources or in-sources a particular service.

In business transfers

TUPE regulations are applicable when a business or part of a business changes ownership or merges with another business to form the basis of a brand new employer.

In service provision transfers

TUPE regulations apply in situations such as the following:

• the contractor’s activities are taken over by the client (in sourcing).
• a contractor’s activities are taken over by a new contractor (re-tendering).
• a client’s activities are taken over by a contractor (outsourcing).

Terms and conditions under TUPE

When TUPE applies, the employees of the outgoing employer automatically become employees of the incoming employer at the point of transfer. They carry with them their continuous service from the outgoing employer, and should continue to enjoy the same terms and conditions of employment with the incoming employer.

Normally, in instances where TUPE applies, the employees who used to work under the outgoing employer automatically become employees of the incoming employee once the transfer occurs.

Following a transfer, employers often find they have employees with different terms and conditions working alongside each other and wish to change/harmonise terms and conditions. However, TUPE protects against change/harmonisation for an indefinite period if the sole or principal reason for the change is the transfer. Any such changes will be void.

Once the transfer process has finished, employers often discover that their employees will have different terms and conditions between them and wish to harmonise or amend the terms and conditions. TUPE however is in place to protect employees against harmonisation or change over an indefinite period if the transfer is the main or only reason for the occurred change. All such changes will be voided.

A new employer can change your terms and conditions if there reason for doing so is an “economic, technical or organisational reason” (ETO) requiring a change in the workforce.

If a new employer imposes new terms and the employee leaves and claims constructive dismissal due to changes in their contract which are significant and fundamental they will need to have the qualifying length of service to do this (2 years).

Disclosure of employee liability information

The outgoing employer must provide the incoming employer with information about the employees which are about to be transferred – this is known as Employee Liability Information.

Information provided to the new employer must include:

• the identities of the employees about to transfer, as well as their ages
• the information that can be found in the employees’ written statements
• details regarding any disciplinary proceedings that were undertaken against employees in the last two years
• details regarding any grievances brought forth by employees in the last two years
• times when employees took legal action against the outgoing employer in the last two years – this includes any employment tribunal or court claims
• details about any collective agreements

The information presented must be accurate as well as secure and up to date. For transfers which took effect starting with 1 May 2014 the information has to be provided not less than 28 days before the transfer itself. If a transfer was put into effect before 1 May 2014 then the information should have been supplied not less than 14 days before the transfer itself.

Information and consultation

“Appropriate” elected representatives must be used during the employers’ efforts to inform or consult with employees. These could be trade union representatives or formally elected employee representatives where there is no recognised trade union.

Should there be no employee representatives or recognised trade unions in place, employers must organize elections through which the affected employees can elect representatives to consult about the transfer on their behalf.

The communicated information has to be expressed in writing and must include:

• confirmation of the transfer process as well as when it will occur and the reasons behind it.
• the social, economic or legal implications that concern the affected employees, such as a change in location or risk of redundancies.
• any measures that both the incoming and outgoing employers expect to take that concern their employees, even if there are none.
• if agency workers are used, then the number of agency workers present, as well as the departments they are a part of and the type of work they undertake.
• the outgoing employer must ensure that information is provided in regards to any measures which the incoming employer considers pursuing in respect of affected employees.

Since 31 July 2014, employees with fewer than 10 employees, also called micro businesses, are not required to elect representatives should there be no elected employee representatives or existing recognised trade unions, although they still have to inform and consult about the transfer with each employee.

Dismissal and redundancies

It is rare for employers to be unable to prevent dismissals or redundancies when transfers occur, however, they are sometimes unavoidable.

Should an employee be dismissed before or after the transfer with the principal or only reason being the transfer itself then the dismissal will be automatically considered unfair.

Employees who believe that their terms and conditions have been substantially changed to their detriment before or after a transfer have the right to terminate their employment and claim constructive unfair dismissal at a tribunal. TUPE classifies these types of resignations as dismissals.

If an employee believes that the terms and conditions of their contract have been considerably changed to their detriment before or after the transfer then they have the right to end their employment and put forward a constructive unfair dismissal claim at a tribunal. These types of resignations are classified as dismissals by TUPE.

Where a potential redundancy situation arises as a result of a transfer, employers must consult directly with affected employees and indirectly through representatives when the incoming employer is making (or intending to make) 20 or more redundancies within a 90-day period. Where there are fewer than 20 employees being made redundant within a 90-day period, there is still a legal requirement to consult with employees individually but there are no prescribed time limits in which to do so.

In cases where a potential redundancy situation arises due to a transfer, employers have to consult directly with affected employees as well as indirectly through representative in the case of the incoming employer intending to or making 20 or more redundancies within a period of 90 days. In cases where there are fewer than 20 employees being made redundant in that period, employers are still legally required to consult with employees individually, however there are no prescribed time limits for this.

Employers must first consult with a recognised trade union where they exist, and if there is no recognised union then with elected employee representatives.

If a recognised trade union exists, employers must first consult with it. If there are no recognised unions then consultations must be made with elected employee representatives.