What is TUPE , How it Works & Regulations

At The HR Consultants, we know how to navigate the ins and outs of TUPE and make sure everything is done by the book. Whether it’s handling employee consultations or providing the necessary documentation, we’ll go every detail in this blog post—without the jargon!

We also offer consultations, so that you can rest assured that our experts are looking at your business specifically and cover every aspect of your transfers.

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Table of Contents

  • What is TUPE and How Does it Work?
  • Why is it Important To Know About TUPE?
  • Examples of When TUPE Applies
  • What You Need to Know About TUPE as an Employer
  • What are the Risks of TUPE?
  • Frequently Asked Questions (FAQs)

What is TUPE and How Does It Work?

So, what is TUPE? TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations. TUPE is a set of rules designed to protect employees when a business or part of a business is transferred to a new owner.

What does TUPE mean? The idea of TUPE is to make sure that employees’ jobs, terms, and conditions are preserved during the transition from one employer to another, keeping everything as smooth and fair as possible.

Brief History and Purpose of TUPE

TUPE was first introduced in 1981 and then updated in 2006 and later, 2014.

The main goal was to protect employees from losing their jobs or seeing their employment conditions deteriorate simply because their employer was changing due to a business transfer or sale.

TUPE Helps to Protect Employees and Keep Everything Consistent

Why Is It Important to Know About TUPE?

Let’s talk about why you, as an employer, should really get to know TUPE.

When your business goes through a transfer of employees—whether that’s a sale, merger, or outsourcing—TUPE is there to ensure your employees’ jobs and terms of employment are protected. This means they keep their employment contracts, pay, holidays, and benefits even when the business changes hands from the previous employer.

What does TUPE mean for employees? They get job security and peace of mind knowing their employment conditions won’t suddenly change. This stability is essential for keeping morale high and ensuring productivity doesn’t take a hit during the transition.

Now, for you as an employer, understanding and complying with the TUPE process isn’t just about ticking legal boxes—it’s about managing transferring employees contracts and other details smoothly and effectively. If you ignore TUPE, you could end up facing legal disputes, unhappy employees, and even costly employment tribunal claims.

Examples of When TUPE Applies

Here are some common situations where TUPE comes into play, as outlined by Acas (the Advisory, Conciliation and Arbitration Service) clarifies on their page about where the regulations apply:

1. Business Transfers: If you’re selling your business to another company, TUPE ensures that your employees automatically transfer to the new owner with their jobs and existing employment rights intact. This applies whether you’re selling the whole business or just part of it.

2. Company Mergers: If your business merges with another, TUPE protects the employees of both companies. All employees involved in the merger will transfer to the new, combined entity, keeping their existing terms and conditions.

3. Outsourcing: Say you decide to outsource a part of your business, like IT support, to an external provider. TUPE ensures that the employees currently doing the work transfer to the new provider under the same terms they had with you.

4. Insourcing: On the other hand, if you’re bringing previously outsourced services back in-house, the employees working for the service provider might transfer to your company under TUPE if they are a part of ‘organised grouping of employees.’

Hold on, we said no jargon, didn’t we? An organised grouping of employees is a set group of people (or just one person) who carry out work for a specific client. In this case, your business. So it makes sense for them to transfer for you, where it might not make sense for employees who carry out work for multiple clients.

5. Service Provision Changes: If you change contractors for outsourced services, TUPE can apply. It’s our friend ‘organised grouping of employees again.’ As long as they are an organised group of employees, the employees from the outgoing contractor can transfer to the new contractor, keeping their terms and conditions.

Keep in mind, though, that TUPE doesn’t apply if the service is providing goods for the company to use. For instance, a restaurant changing food suppliers. It also doesn’t apply if the contract is for a short-term or one-time event.

TUPE Example Scenario

Suppose your tech company merges with another tech firm to form a new entity. TUPE ensures that employees from both original companies transfer to the new company, preserving their employment terms. This helps in maintaining morale and productivity during the transition.

TUPE Helps Companies to Merge

Does TUPE Apply To an Insolvent Business?

TUPE applies to insolvent businesses if they are being transferred or taken over, but the rules are a bit different compared to usual transfers. However, if the business is being closed down, TUPE generally doesn’t come into play.

When an insolvent business is transferred, there’s some flexibility with terms and conditions, like pay. Changes can be made to help save jobs, as long as they are made with collective agreements from employee representatives or the independent trade union. And of course, any pay adjustments need to stay above the National Minimum Wage.

If the insolvent employer owes money to employees, they can claim this money back, whether or not TUPE applies. If TUPE does apply, the new employer will need to cover any remaining amount after the affected employee has been paid from the National Insurance Fund.

What You Need to Know About TUPE as an Employer

This section is filled with information for both incoming and outgoing employers, ensuring you’re covered on both sides!

Complying with TUPE

When it comes to complying with TUPE employment rights, both outgoing and incoming employers have specific legal responsibilities to ensure everything is covered. Let’s break it down.

Steps for Compliance for Both Outgoing and Incoming Employers

Employers can be penalised for not following these transfer of employment steps (as clarified by the UK Government) so it’s really important to take them all into account.

Outgoing Employers:

  1. Gather Employee Information: Collect all necessary details about the employees who will be transferring and pass these onto the new employer, such as their name, age and the details of their employment, like their contract.
  2. Inform and Consult: You’ll want to fill the trade union or employee representatives in on why and when the employment transfer is happening and how it will impact the employees’ roles, as well as whether there will be any reorganisation.If you have fewer than 10 employees, you can speak about this directly to your employers without going through any representatives. From July 1st 2024, this changes to fewer than 50 employees, or fewer than 10 employees being transferred.
  3. Provide Liability Information: Give the incoming employer the required employee liability information at least four weeks before the transfer. This should include disciplinary records, employment terms and conditions, and any grievances or legal action they’ve taken against the current employer in the last two years. Any potential legal action you think they could raise in the future should also be included.

Incoming Employers:

  1. Review Employee Information: Carefully review the details provided by the old employer. Once the transfer has happened, employees should get a written statement of employment which clarifies that terms and conditions haven’t changed and gives them the name of their new employer.
  2. Honour Contracts: Make sure all terms and conditions of the transferred employees are upheld. New employers can’t legally change any details of employee contracts if the reason is related to the transfer, except in the case that the changes are needed due to an economical, technical or organisational (ETO) reason.For instance, an economic reason could be the company underperforming. Changes made for this reason can include redundancies but only if there is also a genuine redundancy reason, such as the job no longer being required. Under TUPE redundancy protection, there needs to be both an ETO and a genuine redundancy reason for redundancies to take place.
  3. Communicate Changes: Inform the employees affected about any changes that may affect them post-transfer. Terms and conditions can be changed if this is on a positive note. The example the UK government gives of this is that the incoming employer might want to give some employees more holiday days so that it’s the same across the board, but this needs to be agreed by employees or their representatives.

 

Complying with TUPE Checklist

Which Terms and Conditions Transfer

Under TUPE, all terms and conditions of employment transfer. This includes:

  • Pay rates
  • Holiday entitlement
  • Working hours
  • Pension rights (with some exceptions)
  • Any other contractual benefits

These protections ensure that employees don’t face worse conditions due to the transfer.

What Are TUPE Employee Rights?

Your employees have several key rights during a TUPE transfer, and it’s your job to make sure these are upheld. Here’s a quick list:

  • Job Continuity: Your employees keep their jobs with the new employer, no breaks or interruptions.
  • Preserved Terms and Conditions: All the existing terms, like pay, holidays, and benefits, stay the same under the new employer unless there is an acceptable reason for changing them, as we went through in the above section.
  • Protection Against Dismissal: You can’t dismiss employees if the sole or principal reason is the transfer. Any such dismissal could be considered automatically unfair.

How Long Should an Employee Have Worked at Your Business for TUPE to Apply?

Good news—TUPE protections apply to all your employees, no matter how long they’ve been with you. Whether they’ve been with you for years or just joined, they’re covered. This means you don’t have to worry about different rules for different employees—it’s the same for everyone.

To qualify for a TUPE transfer, employees just need to be part of the business or service that’s moving over. This includes:

  • Permanent employees
  • Part-time employees
  • Employees on fixed-term contracts

Who is Protected and Who is Not:

  • Protected: All employees working in the part of the business being transferred.
  • Not Protected: Acas clarifies that TUPE regulations can protect workers, such as freelancers and contractors, but this is something that’s still being developed. Because of this, you’ll want to seek legal advice if you use workers.

What Are the Risks of TUPE?

The most well known risk of TUPE is that if you don’t comply with the regulations, you could face legal disputes and fines. This makes it really important to get everything right.

We realise this can be a little overwhelming! Remember that if you need any help with TUPE and staying compliant, we can go through every aspect of it with you and how it applies to your business specifically. We know this is a high pressure time for you and we’ll do everything we can to take the pressure off.

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There are other risks of TUPE, but these come with resolutions. Let’s go through them now:

  • Employee Resistance: Sometimes employees might feel a bit anxious or resistant to the change, especially if they’re uncertain about their future. Clear communication and a bit of reassurance can work wonders in managing this.
  • Increased Costs: Sticking to existing employment terms might bump up your costs, especially if the new business structure has different pay scales or benefits. To keep these costs in check, try doing a thorough financial review ahead of time and see where you can streamline things without cutting employee benefits.
  • Operational Disruptions: Transferring employees can temporarily disrupt your business operations. Good planning and a well thought out transition strategy should really help with this.
  • Cultural Clashes: Bringing together employees from different companies can sometimes lead to clashes in workplace culture. It can take some time and effort to blend the two together, but eventually, it can also lead to a happier team overall.

What Steps Can You Take to Protect Your Business During a TUPE Transfer?

Here are our five steps to keeping your business safe and sound during TUPE transfers:

  1. Provide Training: Offer training sessions for your management team to understand TUPE requirements and prepare your HR team to handle employee queries effectively.
  2. Maintain Open Lines of Communication: Transparency is key, so keep everyone in the loop to prevent rumours and misinformation by holding regular meetings and providing consistent updates.
  3. Stay Organised: Use project management tools to plan ahead, keep on track of tasks and deadlines, and manage the transfer process efficiently.
  4. Be Supportive: Offer support to your employees, such as Q&A sessions, to reassure them that their jobs and conditions are secure under TUPE.
  5. Seek Legal Advice: Consider getting legal advice to ensure compliance with TUPE regulations, which can help you avoid potential pitfalls and legal disputes.

Supporting Your Team

Frequently Asked Questions (FAQs)

TUPE covers quite a lot, doesn’t it? We’ve answered some of the most frequently asked questions on it below, but if you have any others on TUPE or HR in general, feel free to reach out to us! We’re here to help.

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Is there a notice period for a TUPE transfer?

There is no set notice period for TUPE transfers because the employment contract isn’t ending, though you legally need to let your employees or the trade union/employee representatives know about it in advance.

You’ll also need to pass on liability information on your employees to the new employer at least 4 weeks before the transfer.

Does TUPE apply to small businesses?

TUPE applies to small businesses and all businesses based in the UK, as outlined by the UK Government. No matter the size of your business, if you’re transferring ownership or certain services, TUPE makes sure your employees’ jobs, terms, and conditions stay protected.

Can an employee refuse a TUPE transfer?

Employees can refuse to transfer under TUPE. If this is the case, they should let you know in writing. This is treated as a resignation, with the job ending on the date of the transfer. You’ll need to fill the new employer in on any affected employees who are not transferring. Employees who choose not to transfer usually cannot claim unfair dismissal or redundancy pay, unless their working conditions significantly worsen due to the transfer, in which case they can also object to the transfer.

What does ‘TUPEd over’ mean?

Lots of people use the term ‘TUPE over to another company’ to describe being transferred to a new employer under a TUPE contract. It’s not necessarily a formal term, but it can make things easier to understand!

What does a TUPE transfer mean?

Another common question is ‘what does a TUPE transfer mean?‘ We can answer that a TUPE transfer is simply when employees are transferred to a new employer under TUPE regulations, which are designed to keep them protected through the transfer and make sure they receive continuous employment.