The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) provide protection for employees’ rights when there is a ‘relevant transfer’. There are two types of relevant transfer to which the TUPE regulations apply.
The first is a ‘business transfer’ which is when there is a transfer of a business or part of a business from one employer to another employer and the transferred business retains its identity.
The second is when there is a service provision change. This occurs when a service is transferred to a new provider, such as when a contracted service is moved from one contractor to another, or a service performed in-house is then contracted out or vice-versa.
While the purpose of TUPE may be simple, its practical application is very definitely not. If employers involved in a transfer are not careful and prepared in their approach, complex legal problems can arise.
- Due diligence
Employers should conduct a thorough due diligence process to gather information about the client, service, or organisation on the other side of the TUPE transfer. The due diligence phase of a transfer is beneficial for assessing and reducing risk and identifying potential costs.
Within this due diligence process, employers taking on the transferring employees should consider whether there are particular warranties and indemnities to request from the transferring employer to ensure adequate protection.
- Discussions between employers
- Whether TUPE applies at all.
- Reasons for the transfer.
- The proposed transfer date.
- Which employees are likely to transfer.
- Whether there may be any hidden TUPE transfers within the transferring group.
- Gather the Employee Liability Information early
Under TUPE Regulation 11, at least 28 days before the transfer date, the outgoing employer is required to provide accurate specified information about the transferring employees to the new employer. The information that must be provided includes the employees’ identity, age, written terms of employment and whether any disciplinary measures have been made against them.
Attention to detail here is crucial for the outgoing employer as if the information is inaccurate or provided outside of the time requirement and this is pursued at the employment tribunal, there is a potential penalty of at least £500 for each employee.
- Be alert to the Duty to Inform and Consult
Under TUPE Regulation 13(2), there is an obligation on both the outgoing and incoming employer to inform (and potentially consult with) a recognised trade union or employee representatives of the affected employees.
In situations where there is a recognised trade union, employers must inform and consult through union representatives. Otherwise, employers should hold an election process in order to appoint employee representatives who can communicate the employees’ views and discuss the impact of the proposed transfer with the employer.
It’s important to consider which employees are “affected” by the transfer for these purposes – it is not necessarily limited to those who are transferring. Employees who are left behind but whose day-to-day role may change because of the transfer may also be considered affected.
Attention to detail and preparation are crucial for employers as if it is deemed that this process was not followed or was not followed correctly, and in line with the regulations, then either employer could have to pay a penalty of 13 weeks’ gross uncapped pay for each affected employee.
- Post-Transfer Considerations
The transfer itself is not the end of the story – for the outgoing or incoming employer. Employers should be prepared to engage with the new employees once the transfer process is completed to ensure that there is a smooth integration process. The outgoing employer will need to ensure that any remaining employees are not unduly disrupted by the transfer.
Employers should also be aware that, for any employees who are to be made redundant following the transfer, there is a lawful redundancy process that must be followed.