If you are outsourcing a service such as catering, cleaning, bookkeeping etc. or buying or selling a business, you may need to consider TUPE.
When thinking about what will happen to current employees, the first step is to get familiar with the Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended by the 2014 Regulations), usually referred to as TUPE.
What is TUPE?
TUPE is a piece of legislation that protects the rights of employees when the business or commercial contract that they are working on changes ownership. TUPE makes sure that employees who find themselves transferred to a new employer, retain the same terms and conditions when the work transfer to a new owner or contract.
How do I know if TUPE applies?
TUPE applies in business transfers and when a service being provided moves to a new provider.
A Business transfer is when a business is bought or sold to a new owner. For TUPE to apply, the business entity must remain fundamentally the same after the change of ownership, i.e., the employees will be carrying out the same services or job for the same customers. This is usually the case with business sales and purchases and often in mergers too.
A Service provision change applies where work being conducted is reassigned. This might be where an activity is outsourced to a third party, or a service is brought in-house. TUPE applies where a contract to provide a service, such as security, or cleaning is won or lost. There are a limited number of exceptions, so it is advisable to speak to a TUPE expert to get specific advice.
Can I choose if TUPE applies?
Whether it is a multinational corporation, a cleaning contract or a café, TUPE applies to all UK businesses, regardless of the sector or size. It’s not something that you can opt out of or agree not to put in place. It will automatically apply where qualifying criteria have been met.
We strongly advise that organisations conduct detailed due diligence when a business transfer or service provision change is being considered. Understanding whether TUPE applies to each situation is critical.
Who is protected by TUPE?
TUPE rights apply to most permanent and fixed term employees, but TUPE does not usually apply to agency workers or the self-employed.
Where a service being provided changes, it can be difficult to determine who transfers, but the sale or purchase of a business is fairly straight forward.
It is important to determine prior to the transfer, exactly which employees are protected by TUPE and will transfer to the new employer.
As a rule of thumb, if an employee spends more than 50% of their working time on the transferring business or contract, then TUPE is likely to apply, and they will transfer with the business.
When an employee spends about 50% of their time on the specific service or account that is being transferred but, on paper, they are in a department or service that is not transferring, it can be difficult to determine if they are in scope of TUPE. It is important to carefully review an employee’s written terms and conditions and any job description alongside the reality of what they do to make an accurate determination.
If you’re not sure whether TUPE applies, please get in touch via clientservices@robinsongracehr.com and we will be happy to support you with TUPE matters.
Next steps
You will be required to provide key information about the employees who are transferring.
If staff are transferring to your organisation, you will be asked to announce your measures – the changes that you propose accept as part of the change to a new employer. These are practical things like opening hours or pay dates. Don’t forget, previous legally binding terms and conditions from the outgoing employer will transfer with them.
If staff are transferring from you to a new employer, you will be required to provide the details of transferring employees no less than 28 days before the transfer. This includes confidential information such as hours of work, pay, sickness records etc.
What effect does TUPE have?
Continuous service is recognised, so any periods of employment with the previous employer will be included in employment dates used to calculate holidays, notice periods, redundancy, maternity etc.
Employees of the outgoing (previous) employer who qualify, will automatically transfer, becoming employees of the incoming (new) employer. They will retain the same terms and conditions of their employment as outlined in their existing Contract of Employment. Also, any contractual terms, such as enhanced redundancy pay that may be contained in an employment policy will also transfer.
The new employer may prefer to harmonise contractual terms so that a two tier workforce is avoided. However, contractual terms and conditions cannot be amended specifically in response to TUPE. There must be an Economic, Technical or Organisational (ETO) reason for the proposed contractual changes to be lawful. Determining whether motivations to make changes fall under the ETO reasons can be difficult to get right.
The protection given by TUPE to transferring employees does not end after a specific period of time – it is ongoing.
Both the outgoing and the incoming employer have a duty to inform and consult with employees about the transfer, and if you employ more than fifty people, or more than ten employees will be transferring, there is a legal requirement to give them the opportunity to elect employee representatives.
Communication is key and we recommend that you talk to your staff in detail about how the proposed changes might affect them. TUPE can be confusing, so it’s important that you explain their rights to put their minds at ease and share any relevant information about the transfer.
If you’re unsure about whether TUPE applies to changes within your organisation, please get in touch via clientservices@robinsongracehr.com or call 01793 311937 to discuss how we can help your business with TUPE support.
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The content of our blogs is intended for general information only and does not replace legal or other professional advice.