TUPE’s safeguarding objective
TUPE applies on the transfer of a business. The receiving employer effectively steps into the shoes of the outgoing employer. All the rights, powers, duties and liabilities relating to transferring employees’ contracts pass to the receiving employer and any acts or omissions of the outgoing employer before the transfer are treated as having been done by the receiving employer TUPE is a set of Regulations that safeguard employees’ rights on the transfer of a business. It does that by ensuring that employees automatically transfer to an acquiring employer (the transferee). The transferee inherits all rights, liabilities and obligations in relation to the employees.
There is protection against changes to employee terms and conditions and dismissal, if the transfer is the main reason for making the changes or the dismissal.
Both the departing employer (the transferor) and the transferee are obliged to inform and consult with representatives of affected employees.
A relevant transfer
TUPE will apply where there is a relevant transfer. A relevant transfer will occur in two defined circumstances. Either:
- The sale of a business
When there is a sale of a business (or part of a business) and its identity after the sale is broadly similar to its identify before the sale. For example, where the premises, plant and machinery of a business are sold to a new owner who carries on the same type of business; or
- Change in service provider
When there is a change in the provider of a service. For example:
- a company arranges for a contractor to provide a service it currently undertakes for itself. This is known as “outsourcing”, or
- a company arranges to undertake activities that are currently provided by a contractor. This is known as “insourcing”, or
- a company changes one contractor for another (the relevant transfer would be between the two contractors), and
the activities carried out as part of the service remain fundamentally the same before and after the transfer.
For TUPE to apply, where there is change in service provider, the service needs to be carried out by an employee or team of employees dedicated to the service in question.
Note that TUPE does not apply to the supply of goods.
Employee liability information
As well as providing information to the affected employees, the transferor must also provide the transferee with certain prescribed information about the transferring employees not less than 28 days before the relevant transfer takes place.
Liabilities for failing to comply with transfer procedure obligations
If either the transferor or transferee breaches its obligations to provide information and/or consult with affected employees, they face the potential of having to pay up to 13 weeks’ uncapped pay per affected employee.
If the transferor fails in its obligation to provide employee liability information to the transferee it will be required to pay, to the transferee, at least £500 for each employee for whom information has not been provided.
This briefing note should not be relied on as legal advice. The information relates to the UK only. Please contact us for advice on your specific circumstances.
