Transfer of undertakings (TUPE)
The Transfer of Undertakings (Protection of Employment) Regulations 2006 – affectionately known as “TUPE” – have a very important role when businesses (or parts of businesses) are transferred, or if outsourced contracts move from one supplier to another.
TUPE dictates that, where there is a relevant transfer, employees transfer to the purchaser of the business who inherits all rights as liabilities in respect of those employees. For instance, the employees’ contracts of employments will transfer to the purchaser intact. Such employees have enhanced protection against dismissal, and have protection against their contractual terms being changed.
TUPE is therefore a critical consideration if you are buying or selling a business, or taking on the benefit of a service contract.
The TUPE regulations are complex and require expertise to navigate properly. Our employment solicitors have experience of TUPE and regularly advise on a wide variety of applications.
What is a “relevant transfer”?
A relevant transfer is the transfer of a business, or part of a business, where there is a transfer of an economic entity that retains its identity. This is called a “business transfer”. Note that share transfers are excluded.
Additionally, a transfer can take place where there is a service provision change, i.e. where a service provision contract is changed from one party to another.
Obligation to inform and consult
When a transfer takes place, the transferor is required to provide certain information to the transferee. In addition, there is a duty on both parties to consult with the affected employees in good time. There are penalties for the failure to comply.