Quite often we refer to ‘staff for TUPE’ in our listings, and if you are not a lawyer you may not know what this is. Taillte Mallon, one of our specialist advisers, has prepared the following advisory note.
What is TUPE?
TUPE stands for Transfer of Undertakings (Protection of Employment) Regulations 2006.
A ‘TUPE transfer’ happens when:
• an organisation, or part of it, is transferred from one employer to another.
• a service is transferred to a new provider, for example when another company takes over the contract for office cleaning.
Your rights are protected under TUPE if both things apply:
• you’re legally classed as an employee.
• the part of the organisation that’s transferring is in the UK.
Does the size of the business matter?
No, the size of the organisation you work for does not matter. Your rights are still protected if you work for a large organisation with many employees, or a small one like a shop or a pub.
When does TUPE apply?
The 2 types of transfer where TUPE applies are:
Business Transfers
This is where a business or part of a business moves from one employer to another. This can include mergers where 2 businesses come together to form a new one. It’s possible for the business, or part of it, to have just one employee.
• Your employer must change for TUPE to apply.
• You will automatically transfer to your new employer when the transfer happens.
Service provision changes
This is where contracts are taken over. This can be because:
• a service provided in-house is taken over by a contractor (known as ‘outsourcing’)
• a contract ends and the work is transferred in-house (known as ‘insourcing’)
• a contract ends and is taken over by a new contractor (known as ‘retendering’)
• this can also include labour contracts
TUPE does not apply if the contract is for:
• the supply of goods only, for example a car manufacturer getting their brake pads from a different supplier
• a single event or short-term task, for example a conference or an exhibition
TUPE Protection
If an transferred employee is dismissed either because of the transfer or a reason connected with it, their dismissal is automatically unfair.
Notice Period
• The organisation needs to give 45 days’ notice. However, some organisations will give more than this to enable employees to ask questions and attend meetings.
• Employers must inform and consult with either a trade union or employee representatives about the TUPE transfer
• Businesses with fewer than 10 employees are not required to invite the election of representatives for consultation purposes if no existing arrangements are in place.
Employee Rights
When transferring from one employer to another, an employee’s contract continues with the new employer. This is because the current employer is not ending the contract – it automatically transfers to the new employer on the transfer date.
The current employer must provide the new employer with specific information about each employee. This is known as ’employee liability information’ (ELI).
The current employer must give this information to the new employer at least 28 days before the transfer:
Employee liability information includes:
• identity
• age
• terms and conditions of employment
• any active disciplinary and grievance records, or ongoing cases, from the last 2 years
• any agreements between employer and a trade union (‘collective agreements’) that affect an employee’s terms and conditions.
• any claims related to employment that have been made against current employer in the last 2 years or that they believe an employee may make when transferred
The terms and conditions of employment automatically change to the new employer. This can include if you’re transferring from one employer to another, your contract continues with your new employer. This is because your current employer is not ending your contract – it automatically transfers to the new employer on the transfer date.
Your current employer must provide your new employer with specific information about you. This is known as ’employee liability information’ (ELI).
Employee Liability Information
Your current employer must give this information to your new employer at least 28 days before you transfer.
Employee liability information includes:
• your identity
• your age
• your terms and conditions of employment
• any active disciplinary and grievance records, or ongoing cases, from the last 2 years
• any agreements between your employer and a trade union (‘collective agreements’) that affect your terms and conditions
• any claims related to your employment that you’ve made against your current employer in the last 2 years or that they believe you may make when you transfer.
Pensions under TUPE
Whether a pension will transfer to the new employer will depend on if the employee has:
• a personal pension – a pension that arranged by employee.
• a workplace pension – a pension arranged by employer.
Personal Pension
• Pension rights will automatically transfer to new employer. This means the new employer must pay the same amount into an employee’s personal pension as before the transfer.
Workplace Pension
• it’s likely it will not transfer to the new employer as it is exempt from TUPE. This means the new employer does not have to continue the same pension. But they must provide a reasonable alternative scheme and match employee contributions up to a maximum of 6%.
How long does TUPE last after transfer?
• The protection period by TUPE is indefinite. If the new employer attempts to change the terms and conditions of a contract because of the transfer, it’s illegal. TUPE can still protect an employee even years after the transfer.
Buyer’s Responsibility to new employees
Can changes be made to an employee’s contract?
Yes, if it falls under ETO. ETO TUPE refers to the basis upon which an employer is permitted to make changes under the regulations to an employee’s contract following a TUPE transfer or, where necessary, to dismiss an employee, namely for an “economic, technical or organisational” (ETO) reason.
For a dismissal, regulation 7(1) states that where either before or after a relevant transfer, any employee is dismissed, that employee shall be treated as unfairly dismissed if “the sole or principal reason for the dismissal is the transfer itself or a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce.”
Even if there is a clear ETO reason for dismissal, all proper dismissal or redundancy procedures must be followed, and the employer must act reasonably in their decision to dismiss or in their selection for redundancy.
Consequences of acting without an ETO reason
If a new employer seek to change the terms and conditions under which your new employees are expected to work without a clear business reason to do so, or dismiss any one of these employees in similar circumstances, this may give rise to a whole host of practical and legal problems.
Employees may:
• Refuse to work under their varied contract of employment.
• Elect to work under their varied contract, albeit under protest and treating the variation as a breach of contract
• Resign and claim constructive dismissal, where the variation under the contract is substantial.
• Take a case to a tribunal for breach of contract or unfair dismissal, or even unlawful deduction of wages where the change affects their pay.
