TUPE refers to the "Transfer of Undertakings (Protection of Employment) Regulations 2006" as amended by the "Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014".
The TUPE rules apply to organisations of all sizes and protect employees' rights when the organisation or service they work for transfers to a new employer.
TUPE applies to employees of businesses in the UK, the business could have its head office in another country, but the part of the business that’s transferring ownership must be in the UK, the size of the business doesn’t matter.
TUPE has impact for the employer who is making the transfer (the transferor ) and the employer who is taking on the transfer (the transferee ).
On 31 January 2014, new regulations on TUPE came into effect updating the 2006 regulations.
There are 2 types of transfer protected under TUPE regulations:
- business transfers
- service provision changes
This is where a business or part of a business moves from one employer to another. This can include mergers where 2 companies close and combine to form a new one.
The identity of the employer must change, to be protected under TUPE during a business transfer. Share Sales are generally not covered as legal identity of employing company will not change however, in certain cases, it has been considered that the legal structure was not important but that the control of the business had been transferred as a matter of fact - PrintFactory (London) 1991 Ltd v Millam 2007
Service provision changes
This is when:
- a service provided in-house is awarded to a contractor ( outsourcing )
- a contract ends and is given to a new contractor ( second generation )
- a contract ends and the work is transferred in-house by the former customer (i nsourcing )
Employees aren’t protected under TUPE if the contract is:
- for the supply of goods for the company’s use
- for a single event or short-term task
- for activities wholly or mainly the supply of goods
Only the employees who can be clearly identified as providing the service being transferred are protected.
This sounds relatively simple and straight forward but it is often not the case and is open to interpretation sometime for cases that sounds similar e.g. Metropolitan Resources Ltd v Churcill Dulwich Ltd 2009 and OCS Group v Jones 2009.
In addition employers must inform/consult with employees through trade union representatives or, in the absence of a recognised trade union, formally elected employee representatives.
From 31 July 2014, businesses with fewer than 10 employees overall are not required to elect representatives to inform and consult where there are no existing recognised trade unions or elected employee representatives. However, they must still inform and consult directly with each individual employee regarding the transfer.
The bottom line is: if you are planning to outsource, insource, change contractors or buy a business on a Share deal, you must seek proper advice and support in the process ( help at The People Alchemist Ltd. )