Introduction to TUPE
The Transfer of Undertakings (Protection of Employment) Regulations 2006, known as TUPE (pronounced tu-pee), is the United Kingdom’s implementation of the European Union Business Transfers Directive. It is an important part of UK labour law, protecting employees whose business is being transferred to another business. The TUPE rules apply to an organization of any size and aims to protect the rights of employees when the organisation transfers to a new employer.
The regulations’ main aims are to ensure that, in connection with the transfer, employment is protected (i.e. substantially continued).
- Employees are not dismissed
- Employees’ most important terms and conditions of contracts are not worsened
- Affected employees are informed and consulted through representatives
Effects of the Regulations :
- Staff employed by the previous employer when the business changes hands automatically become employees of the new employer on the same terms and conditions. It is as if their contracts of employment had originally been made with the new employer. Therefore continuity of employment is preserved, as are their terms and conditions of employment under their contracts of employment (except for certain occupational pension rights)
- Representatives of employees (i.e. the TSSA) affected have a right to be informed about the transfer. They must also be consulted about any measures which the old or new employer envisages taking concerning affected employees.
Transfers Covered By The Regulations:
- Where all or part of a sole trader’s business or partnership is sold or otherwise transferred
- Where a company, or part of it, is bought or acquired by another, provided this is done by the second company buying or acquiring the assets and then running the business and not acquiring the shares only
- Where two companies cease to exist and combine to form a third
- Where a contract to provide goods or services is transferred in circumstances which amount to the transfer of a business or undertaking to a new employer.
Transfers Not Covered By The Regulations:
- Transfers by share take-over because, when a company’s shares are sold to new shareholders, there is no transfer of the business – the same company continues to be the employer
- Transfers of assets only (for example, the sale of equipment alone would not be covered, but the sale of a business including equipment would be covered)
- Transfers of a contract to provide goods or services where this does not involve the transfer of a business or part of a business
- Transfers of undertakings situated outside the United Kingdom.