Introduction to TUPE
The Transfer of Undertakings (Protection of Employment) Regulations 2006, which is known as TUPE, is an important part of the UK labour law which protects employees when a business changes hands. It is the United Kingdom's implementation of the European Union Business Transfers Directive. The rules apply to all organisations and aim to protect rights of employees as an organisation transfers to a new employer.
The regulations main aims are to ensure that, in connection with the transfer, employment is protected (i.e. substantially continued).
- Employees won't be dismissed.
- The employees’ most essential terms and conditions of contracts are not worsened in any way.
- Any affected employees are informed and consulted by appropriate representatives.
Effects Of Transfer Of Undertakings Regulations
- Staff employed by the previous employer when the business changes ownership automatically become employees of the new employer with the same terms and conditions, as if their contract of employment has originally been made with a new employer. Therefore, continuity of employment is preserved as are their terms and conditions of employment in contracts of employment (apart from some occupational pension rights).
- Representatives of any employee affected have the right to be informed about a transfer. They must also be consulted on any measures that the old or new employer envisages taking in regard to affected employees.
Transfers Covered By The Regulations:
- Where all or part of a sole trader’s business or partnership is sold or otherwise transferred.
- Where a company, or a part of it, is acquired by another, providing this is done by the second company acquiring assets and then running the business, and not the case of acquiring shares only.
- In the instance where two companies cease to exist and are combining to form a third company.
- Where a contract for providing services or goods is transferred in circumstances that amount to the transfer of a business as well as undertaking to a new employer.
Transfers Not Covered By The Regulations:
- Transfers by share take-over because, when a company’s shares are sold to new shareholders, there is no transfer of the business – the same company continues to be the employer.
- Transfers of assets only (for example, the sale of equipment alone would not be covered, but the sale of a business including equipment would be covered).
- Transfers of a contract to provide goods or services where this does not involve the transfer of a business or part of a business.
- Transfers of undertakings situated outside the United Kingdom.