What is TUPE and how Does it work?

What is TUPE

TUPE stands for Transfer of Undertakings Protection of Employment rights.

It is the law that protects employees, and their benefits, when their employment changes hands.

TUPE regulations govern the transfer of employees from one company to another (in part or full). It applies to two relevant transfers:

1. Business takeovers, e.g. a business or part of a business is transferred from one employer to another
2. Service provision changes, e.g. outsourcing or insourcing or assignment to a new contractor

This legislation is complex and easy to get wrong, and it’s even riskier if you haven’t fulfilled your obligations as an employer. Failure to comply with TUPE requirements can result in a financial penalty, which can be 13 weeks’ pay for each affected employee.

Transfer of employees from one company to another

Are you considering buying or merging with another company, or selling all or part of your business?

Perhaps you have recently lost a contract and need to transfer employees to the new provider?

If you are managing TUPE for employees, you may find yourself caught up in the complex world of TUPE regulations.

TUPE can be tricky

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When does TUPE apply to protect your business

You don’t have to figure this out on your own. Our HR professionals can provide you with a complete TUPE management service that will keep you on the right side of the law.

First, we’ll establish if TUPE applies to your business, then we’ll walk you through the TUPE for electing employee representatives and the consultation process.

We will provide up-to-date advice and any required documents while ensuring that the correct information is shared between the two companies involved in the TUPE transfer.

If you take up one of our pay-monthly insured services, we can provide you with additional TUPE cover. This will give you complete peace of mind that your business is protected from unexpected claims that result from the transfer of employees from one company to another.

As with all our services, we will work closely with you to provide personalised support and the level of support that is right for you. Our HR professionals are local and know their local communities and aren’t based in a call centre a million miles away. We can even pop in and chat face-to-face to find out your exact needs.

If you’d like to know more about how we can help you manage TUPE for employees, simply call or email us to discuss next steps.

What is covered by TUPE transfer regulations

TUPE covers employees in the event that the work they do is transferred to a new employer. It ensures staff are entitled to the same terms and conditions of their initial employment including their continuity of service.
TUPE applies to all businesses in the UK. It doesn’t matter whether you own a large corporation or a small, local business like a shop or cafe. The regulations are the same whatever the size of your company.

Transfers covered by TUPE:

• The sale or transfer of all or part of a sole trader’s business, limited company, or partnership

• When one company buys the assets of another, as long as they’re acquiring the business and not just the shares or just the assets

• The dissolving of two companies to make a third

• The transfer of a contract for goods or services in circumstances that amount to the transfer of a business.

Employees are not protected under TUPE if they’re only contracted for a short-term task (i.e. providing cleaning or catering services for a single event), or if the contract is for goods for the company’s use, such as a restaurant changing food suppliers.

Transfers NOT covered by TUPE:

• Asset-only transfers

• Transfers outside the UK

• Transfers of contracts relating to goods or services, where there is no transfer of the business (or part of the business)

• A company’s shares being sold to new shareholders, where there is no transfer of the business (or part of the business)

Transfers from the Public sector to the Private sector are particularly complicated.

Whether TUPE applies to your situation will depend on the facts of the particular case. Luckily, we can talk you through the specifics and make sure you understand your obligations as an employer.

What is the TUPE process?

The TUPE process can be confusing, and there’s a lot to consider.

Therefore, it’s best to consult with an HR professional about whether TUPE applies to your business transfer, and how the process works.

Here is a basic outline of the TUPE process:

STAGE ONE

Before the transfer, you must consult in good time with all trade unions, employee representatives and all those affected by the proposed transfer about the transfer of your business. If there is no representatives already, they will need to be elected. You’ll need to inform them:

• That the transfer is happening, along with when and why

• How the transfer will affect them and any economic, technical or organisation measures that will take place

If you fail to consult with employee representatives about anything to do with the transfer that may affect the employees, you can be penalised. You should try to gain agreement about these changes.

STAGE TWO

During the transfer, you’ll need to provide details of the employees’ employment entitlements and personal details including:

• Terms and conditions of employment

• Date of continuous employment

• Age

• Holiday entitlement

• Company sick pay scheme

• Benefits such as private health,

• Pay details how and when they are paid

• Deductions from wages for child support, student tuition fees etc

• All payments including overtime, commission and bonus payments

• Collective agreements previously made

• Pension rights

• Any previous disciplinary, grievance issues or claims

It counts as a breach of contract if the new employer doesn’t accept the conditions of a contract. You may be faced with additional challenges, such as an employee not wanting to work for a new employer, if they unreasonably refuse they are deemed to have resigned. In this situation, it’s a good idea to have an HR professional onside to make sure you stay legally compliant.

STAGE THREE

After the transfer, if you’re the outgoing employer, you’ll need to find out how any existing employees have been affected by the transfer. Here, you’re obliged to:

• Engage with remaining employees about the transfer on an ongoing basis

• Address any concerns or drops in work performance

• Consider group incentives to boost morale

It’s not uncommon for problems to arise after a transfer, especially if you’ve had to make redundancies or there are significant changes to your organisation. At The HR Dept, we can help you through the entire TUPE process from start to finish.

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