What is TUPE?
The purpose of TUPE is to move employees and any liabilities associated with them from the old employer to the new employer to protect employees if the business in which they are employed changes hands.
More About TUPE
TUPE stands for Transfer of Undertakings (Protection of Employment) Regulations. The Regulations were first passed in 1981, overhauled in 2006, and were last updated in early 2014.
If you are an employer, you need to understand TUPE and how it applies to business transactions as your business may well be affected by its provisions.
TUPE can apply when employers:
- sell or buy part or all of a business as a going concern;
- outsource or make a “service provision change” involving either
- an initial outsourcing of a service (e.g. where services transfer from the customer to an external contractor);
- a subsequent transfer (e.g. where services transfer from the first external contractor to a different external contractor; and
- bringing the service back in-house (e.g. where services transfer from an external contractor back to the customer)
- grant or take over a lease or licence of premises and operate the same business from those premises.
What are the legal implications?
Basically as described at the start of the article, employees who are employed in the undertaking which is being transferred have their employment transferred to the new employer.
Employees therefore have the legal right to transfer to the new employer on their existing terms and conditions of employment and with all their existing employment rights and liabilities intact. It is as though the employee’s contract of employment had always been with the new employer.
Watch out for the liabilities
All the transferor’s rights, powers, duties and liabilities under or in connection with the transferring employees’ contracts of employment are transferred to the transferee. This encompasses rights under the contract of employment, statutory rights and continuity of employment and includes employees’ rights to bring a claim against their employer for unfair dismissal, redundancy or discrimination, unpaid wages, bonuses or holidays and personal injury claims etc.
It is therefore essential that employers know all about the employees they might inherit if they are planning to take over a contract or buy a business and that they make sure that the contract protects them from any employment liabilities which arose before they became the employer.