What is TUPE, when does it apply and what does it involve?
TUPE is the Transfer of Undertakings (Protection of Employment) Regulations which came into force in 2006. It is mainly aimed at protecting employees who are transferring over to a different company when all or part of the business is sold and when activities are “outsourced” or when service providers change.
When does the TUPE process apply?
As an employer, TUPE can apply to an extensive number of different types of situations in business transactions, for example:
When a business is selling a division, the TUPE process applies.
When a business is transferring specific assets such as equipment, property or IT systems, the TUPE process applies.
When a business outsources some of its activites to a service provider, or brings some activities back in-house, e.g. recruitment, call centers, IT systems, payment processing, guess what, the TUPE process applies.
It is important that you are aware when TUPE applies and what could be the potential employment liabilities that could arise if TUPE is not carried out properly or not implemented. In short, the risk to a business of not following TUPE process is a fine from an Employment Tribunal of up to 13 weeks gross pay per employee affected by the transfer. Ouch!
For detailed guidance on making the TUPE process as efficient and risk-free as possible, read our checklist here. As an employee, hearing that the business is being sold or transferred can be an unsettling and worrying time. From my personal experience of managing a TUPE transfer process, for the employer too it can seem like a bit of a battle ground between transferring parties so, here are:
5 things to include in a Transfer of undertakings (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.
Bear in mind that points 2 and 3 will take significant time to co-ordinate.
- 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 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
so that the business can be placed in the most favorable commercial position.
This list is not exhaustive. If you need advice on TUPE transfers, please get in touch.
For FAQS about the TUPE process, and more information, go to www.personneltoday.com/legal/tupe.
Anna Venditti now freelances 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. Anna is a client of The Legal Partners.
For more information or queries about issues discussed in this article, please contact Anna Venditti by email. To speak directly with Anna or any other of The Legal Partners team of specialist business and HR lawyers based at our Richmond UK office, or our partner lawyers in Singapore or Guanzhou, please call +44 203 755 5288
This article explains the main legal issues and common situations to consider. It is not a substitute for legal advice. Please get in contact to discuss your particular issue or queries.