When Does TUPE Apply & Not Apply
In this blog post, we’ll answer questions like “when does TUPE apply?” and “when does TUPE not apply?”
We know that dealing with TUPE can feel overwhelming, but don’t worry—we’ve got your back. Our goal at The HR Consultants is to equip you with the knowledge and tools you need to ensure compliance and protect your workforce. We’ll point out common mistakes to avoid and share examples to make the rules easier to understand.
So, grab a cup of tea, get comfortable, and let’s get started!
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What is TUPE?
TUPE is a set of regulations designed to protect employees’ rights when the business they work for changes hands. You might also be wondering what does TUPE stand for, which is the Transfer of Undertakings (Protection of Employment) Regulations.
The idea behind TUPE is to provide a safety net for employees, so they don’t lose their jobs for the sole or principal reason that the business ownership is changing. It’s about transferring the employment contract for each of your employees accurately and precisely to make sure that everything is kept consistent.
Under TUPE, any changes made to employment contracts need to be carefully managed and legally justified by the new employer, with collective agreements from employees or the appropriate representatives. If any existing employees are let go for the reason of the transfer, they can claim unfair dismissal.
Your Responsibilities
If you’re not sure what your responsibilities are under TUPE as an outgoing employer or incoming employer, take a look at our blog post on TUPE Regulations. As the outgoing employer, you have responsibilities involving passing on employee liability information to the new employer at least four weeks in advance, among other things. Make sure that you’re up-to-date on everything that needs to be done from both sides.
You might be wondering if TUPE always applies? The answer is that it doesn’t. There might be times when it’s not necessary for TUPE to apply, like when you’re outsourcing staff for a temporary event. We’ll go through how to figure out if TUPE applies to your situation or not in the next section.
When Does TUPE Apply?
It’s important to remember that, according to Acas (the Advisory, Conciliation and Arbitration Service) even employees who aren’t being transferred can still be affected by TUPE. For example, their job roles might change because of other affected employees transferring or new employees carrying over from another company. So, always be mindful of how these changes might affect your entire team!
The UK Government’s page on transfers and takeovers outlines that TUPE law UK applies to business of all sizes when:
- A business or economic entity transfers to a new employer. This can include when two or more businesses merge to create a new business, as long as there is still a new employer.
- The business transferring, merging or being taken over is based in the UK. This can include when employees work abroad for a company in the UK, but it’s best to get advice on this as it isn’t the case for every business.
- You currently employ staff to carry out a service, but you decide to outsource it instead. In this case, the employees affected transfer to the outsourced company under TUPE, provided that the service they’re providing you stays the same.
- TUPE can apply if the business moves to another country, and the sole reason for transferring the business is the move.
Looking to make changes to outsourced services (also known as service provision changes)? In this case, any affected employees will need to be part of an organised grouping of employees to transfer under TUPE.
Wondering what on Earth that means? An organised grouping of employees is a group of employees assigned (or just one person) to provide services for one client specifically, and so it makes sense for them to transfer and continue working for you.
Let’s go into this in more detail. TUPE applies to outsourced services when:
- Your contract for an outsourced service ends and you decide to use a new contractor. This usually affects labour-intensive services, like cleaning. The agency workers carrying out the service for the old contractor will transfer to the new contractor, as long as they’re doing the same job.Some employers are really not keen on this! The whole reason they want to transfer to a new contractor is to get new staff who might be more skilled. Rest assured that moving to a new contractor with new management and training can work wonders in upskilling your current staff.
- You decide to move previously outsourced services back in-house. Here, the employees that had been working for the contractor become your in-house employees.
Still unsure? How about some examples?
Example of a Relevant Transfer
Jane runs a successful café in London. She decides to sell her business to a larger café chain. Under TUPE, all her employees, including the baristas and chefs, will transfer to the new owner, keeping their existing pay, holidays, and working hours.
But there are times when TUPE might not apply. For instance, if Jane decided to close her café entirely and her employees were made redundant without selling or transferring the business, TUPE wouldn’t come into play. Similarly, if Jane were just selling the café’s assets (like furniture, kitchen equipment, and stock) but not the business itself, TUPE wouldn’t apply because it’s considered a transfer of assets, not a business transfer.
Example of a Service Provision Change
A tech company has a contract with a catering service for its employee cafeteria. The company decides to switch to a new catering provider. The current kitchen staff will transfer to the new catering company under TUPE, maintaining their current employment terms.
This is because they employees in the cafeteria are carrying out the same services as they were under the old catering service provider, and they’re part of an organised grouping of employees, meaning all or the majority of their work is done for the tech company.
Now if they worked for other clients alongside the tech company, they might not be considered an organised grouping of employees, and as a result, not transfer to the new catering provider. It would depend on how much time they spent working for the tech company versus the other clients.
When Does TUPE Not Apply?
According to TUPE Regulations UK, TUPE does not apply in a couple of situations, such as when:
- The employer stays the same during a transfer.
- The transfer is of assets only, like shares or equipment. This isn’t always the case though, so make sure you double check on this one and seek legal advice if we’re describing your situation.
- A company changes providers, but the provider only supplies goods or resources, not services. That might sound confusing, but think about a restaurant switching to a new food provider as an example.
- A company contracts a service for a short-term or one-time event.
- The business is closing down due to insolvency. TUPE will apply if the insolvent business is being taken over rather than closed down.
- The transferring business is in the public sector. Public sector employees get a different kind of protection to TUPE which you can find out more about here. Keep in mind, though, that TUPE does apply for transfers from the public sector into the private sector, or transfers from one public authority to another where the employer changes.
- TUPE doesn’t always apply to independent contractors, but this is changing over time, so it’s important to check on this if you use contractors themselves in your workplace (rather than a group of people employed by a contractor to work at your company).
Let’s look at some examples for when TUPE doesn’t apply.
Example of No Change in Employer
If you own a large retail chain and you decide to move an employee from one of your stores to another, there’s no change in employer. Because the company remains the same, the usual protections and obligations under TUPE aren’t necessary in this situation.
Example of a Single Event
A business hires a catering company for a single event, like a company party. The staff involved in that event aren’t covered by TUPE regulations because the temporary nature of the work means there’s no need for the usual employee protections under TUPE.
Example of a Change in Provider
if you’re just switching food suppliers without any catering services involved (like simply buying food products from a different wholesaler), the TUPE rules and regulations wouldn’t apply. The employees of the original supplier wouldn’t be affected because the transaction is purely about goods, not services.
So, when changing service providers, it’s essential to consider whether services and staff are involved. If they are, TUPE steps in to protect the employees’ rights and terms of employment during the transfer.
Avoid These Mistakes
Figuring out if TUPE applies can be a bit tricky, and it’s easy to slip up. Here are some common mistakes employers often make and how to avoid them:
- Disagreement Between Parties: Sometimes, the old and new employers just don’t see eye to eye on whether TUPE applies. This can cause a lot of confusion and delays. To avoid this, make sure there’s clear communication from the start and don’t hesitate to get some legal advice to clarify things.
- Lack of Planning: Jumping into the transfer process without a solid plan can lead to chaos. It’s essential to map out the process, understand the timelines, and prepare for each step. Think of it like planning a big event – the more prepared you are, the smoother it will go.
- Skipping Legal or HR Advice: It might be tempting to handle things on your own, but skipping out on professional advice can backfire. Legal and HR experts can help you navigate the regulations and ensure you’re meeting all your statutory obligations. Their guidance and specialist legal advice can save you a lot of issues down the road.
- Not Transferring All Relevant Employees: A common mistake is overlooking some employees who should be included in the transfer. This can lead to legal trouble and upset staff. Make sure you have a comprehensive list of all employees who need to be transferred and double-check it.
- Insufficient Consultation: Proper consultation with affected employee representatives or an independent trade union is a must. It’s not just a formality—it’s a legal requirement. Skipping this step or not doing it thoroughly can cause big issues. Take the time to inform and consult properly to keep everyone in the loop.
Keeping You Compliant: The HR Consultants
Our founder has over 20 years of experience in HR, which means we know exactly how to handle changes in employment law. We keep a close eye on legal updates, so you don’t have to worry about missing any important changes that could affect your business.
Whether it’s navigating TUPE, understanding new regulations, or ensuring your processes are up to scratch, we’re here to support you every step of the way.
Ready to make your HR headaches a thing of the past? Check out our services and see how The HR Consultants can help your business thrive.
Frequently Asked Questions (FAQs)
TUPE is a lot to take in, right? You might want to clear up some specifics, so we’ve included some frequently asked questions here. You’re also welcome to reach out to us for a chat on all things TUPE.
What Does a TUPE Transfer Mean?
A TUPE transfer means that the employees of your business aren’t left stuck when your business transfers. Instead, they move over to the new company with their jobs, terms, and conditions intact. This includes things like their pay, holiday entitlements, and even their length of service. Essentially, it’s like picking up their entire employment package and moving it to the new employer without any changes.
How Do You Know if TUPE Applies?
As a reminder, here’s how to know if TUPE applies:
- Business Transfer: If part or all of your business is being sold or transferred to another company, TUPE probably applies.
- Service Provision Change: When you outsource a service, bring it back in-house, or switch service providers. For example, changing your cleaning company might trigger TUPE.
- Employee Transfer: If employees are part of the transfer and their jobs are continuing with the new employer, TUPE is likely involved.
If there’s any doubt, getting professional advice is a smart move.
How Do You Avoid TUPE Transfer?
Avoiding a TUPE transfer might seem like a good way to manage TUPE costs, but it’s not usually the best approach. Keeping services in-house or using short-term contracts might seem like easy solutions to avoid a TUPE transfer, but they can create more complications in the long run. TUPE is designed to protect employees and make sure any business transfers are as smooth as possible for everyone involved. Trying to bypass TUPE regulations can harm employee morale and lead to legal issues. Instead of avoiding TUPE, it’s better to understand how it works and manage it effectively.