It’s common for all or parts of a business to change hands and be transferred from one owner to another. But what happens to the employees working for that business? In this article we explain the Transfer of Undertakings (TUPE) process, its purpose, when it applies, and 5 key things to include in a TUPE Process.
The purpose of the TUPE – Transfer of Undertakings (Protection of Employment) Regulations – which came into force in 1981 and were updated in 2006, is to protect employees who are transferring over to a different business when all or part of the business is sold and when activities are “outsourced” or when service providers change.
So when a business or part of a business transfers from the current owner (known in the transaction as the transferor) to a new owner (known as the the transferee), TUPE legislation protects the employment rights of those employees affected by the transfer, so they have the same Terms and Conditions, and continuity of employment as before.
When does the TUPE process apply?
TUPE can apply in a number of different situations and business transactions, for example:
- The sale of all or part of a business
- When a business is transferring specific assets such as equipment, property or IT systems
- When a business outsources some of its activities to a service provider, or indeed brings some activities back in-house, e.g. recruitment, call centres, IT systems, facilities managment, payment processing.
It’s important that Employers know when TUPE applies and the potential employment liabilities if a TUPE transfer process is absent, incomplete or implemented incorrectly.
Getting it wrong can be expensive. Employment Tribunals can fine businesses (both transferor and transferee) who fail to comply with TUPE’s information and consultation obligations, up to 13 weeks gross pay per employee affected by the transfer.
As an employee, hearing that the business is being sold or transferred can be an unsettling and worrying time. From my own HR experience of managing a TUPE transfer process, for the employer too it can seem like a bit of a battle ground between transferring parties:
5 things to include in a TUPE Process
TUPE law requires that the TUPE planning process covers the following 5 steps:
- Announcing to the employees affected when the transfer is going to happen.
- For those organisations employing more than 10 staff, informing the employees that they will need to elect employee representatives (if there are no Trade Union Representatives or employee representatives already exist of course).
- Holding frequent consultation meetings between current employer (the transferor), new employer (transferee) and transferring employees.
- Making sure that employees are kept informed of the process as it is happening, with frequent email communication and face to face meetings.
- The most important thing is that both sides, transferor and transferee take time to plan the TUPE process in good time;
- taking into account all issues
- and to assess the risks and liabilities that could arise
This ensures that, as well as employees, the businesses is protected, and is placed in the most favourable commercial position. This list of course is not exhaustive. TUPE can be complex, the map is not the territory, and recent case law rulings that TUPE protections also extend to workers, can further muddy the waters. If you need advice, assistance or a heads-up on a prospective TUPE transfer, please get in touch.
The Department of Business, Energy and Industrial Strategy published guidance on TUPE to cover developments since 2014. Acas has also published guidance for employees and employers and CIPD has published a TUPE Q&A.
Anna Venditti now freelances as a Management Accountant, having held both CFO and HR Director positions concurrently for an Internet Services and Broadcasting company, for whom she worked for 11 years, prior to the sale and TUPE Transfer of the business. Formerly a client, Anna is a key member of The Legal Partners team.