TUPE Regulations

Payne, Marsh and Stilwell, solicitors in Southampton, have offered the Wessex LMCs and its constituents some generic Employment Law advice to be made available on this website.

Business & Employee Transfers

The rights of employees are protected in the event of a transfer of the whole or part of a business by the Transfer of Undertakings (Protection of Employment) (“TUPE”) Regulations.  The aim of the regulations is to ensure employees retain the same terms and conditions and keep continuity of employment in the event of a change of employer.

In order to facilitate this, there are certain responsibilities imposed on both the transferor and the transferee of the business.  The rules apply to any trade or business including non-commercial organisations, charities and the public sector.

What transfers are included?

Deciding whether there is a transfer falling within the remit of the TUPE rules is a complex matter.  However, as a broad guidance, in addition to businesses sold in their entirety, TUPE applies a broad range of circumstances, for example:

• mergers
• bringing a contract "in-house"
• change of licensee or franchise
• contracting out of services
• sale or transfer of the whole or part of a partnership

By contrast,

• the sale of the transfer of assets alone would not be covered by TUPE, although the sale of a going concern including the equipment would be; and
• the transfer of a business by a share take-over is not governed by TUPE.

Duty to inform and consult

The transferor and transferee must each provide information to appropriate representatives for the employees in respect of any affected employee, whether or not they are union members.  This must be given long enough in advance to enable consultations to take place.  ‘Affected’ employees can be a wider group than just those that are actually transferred. 

The transferor and transferee must consult the representatives if the employer ‘envisages’ it will be taking ‘measures’ in relation to any affected employee. 

The term ‘measures’ is intended to catch any action, step or arrangement, understood to be in relation to any material change in existing working practices or working conditions.

Information to be given to employees

The information to be provided includes:

• The fact there is a transfer happening, approximately when and the reasons for it.
• The legal, social and economic implications for the affected employees.
• The measures, if any, which the employer intends to take in relation to any affected employees in connection with the transfer.

Can employees be dismissed?

An employee who is dismissed by either the transferor or transferee because of the transfer of the business will be able to make a claim to the Employment Tribunal for automatic unfair dismissal.  To raise a defence, the employer would have to show there is an economic, technical or organisational (ETO) reason necessitating changes in the workforce.

Can employees’ terms and conditions be changed?

Yes, but extreme care needs to be taken in doing so.  Variations will be void if the sole or principal reason is the transfer itself and not an ETO reason.  If there is a change as a result of the transfer that is a ‘material detriment’ to the employees, they will be able to resign and claim unfair dismissal.

Do seek legal advice before implementing any changes to an employee’s employment terms and conditions.

The transfer of information between transferor and transferee

The transferee must tell the transferor of any “measures” it envisages taking in relation to any affected employee or if it does not envisage taking any such measures.

The transferor must provide the following information to the transferee at least 28 days before the transfer or as soon as reasonably practicable:

• The identity and age of the employees who will transfer.
• Information contained in the employees’ written particulars of employment to the standard set by section 1 Employment Rights Act 1996.
• Information on any collective agreements affecting the employees that will apply after the transfer.
• Any disciplinary proceedings taken against the employees or grievances brought by them in the last two years.
• Any claims brought by the employees against the transferor in the last two years.
• Any claims that the transferor reasonably believes might be brought.

This information may not be sufficient for the transferee’s needs, as it does not include all benefits, for example long term disability benefits.  Despite the above statutory duty, the potential insufficiency of detail makes it necessary to address such a shortfall through a due diligence exercise, supported by warrants and indemnities in the sale agreement.

The transferor must provide written notification of any changes which occur between the time they are notified and the completion of the transfer.  The information must not be more than two weeks old.  Failure to provide this information entitles the transferee to apply to the employment tribunal for a ‘just and equitable’ amount for losses arising, starting at a minimum of £500 per employee.

Helpful sources

http://www.acas.org.uk/

http://www.dti.gov.uk/