If the organisation or service you work for changes owner, you may be protected under the Transfer of Undertakings (Protection of Employment Regulations) 2006 (TUPE). Read on for more information.
When does TUPE apply?
TUPE applies if there is a:
1. Business transfer – where a business or part of a business moves to a new owner or merges with another to create a new employer;
2. Service provision transfer – where a contractor takes over activities from a client (known as outsourcing), a new contractor takes over activities from another contractor (known as re-tendering), or a client takes over activities from a contractor (known as insourcing).
Who is protected?
TUPE applies to employees of businesses in the UK. It does not apply to ‘workers’ (those who do not meet the legal test for employees) or self-employed contractors. Only the employees who are identified as providing the service being transferred are protected.
What obligations does the employer have?
Not less than 28 days before the transfer the outgoing employer must provide information to the new employer about transferring employees including details about their terms and conditions, any disciplinary action taken against an employee or grievances raised by an employee within the past two years.
Both the outgoing employer and the new employer also have a duty to inform and, if appropriate, consult employees about the transfer. This is done through elected representatives (such as trade union representatives) or formally elected employee representatives, unless the business has less than 10 employees in which case employers can inform and consult directly with individual employees.
A failure to comply with the obligations to inform and consult may render the employer liable to pay compensation to affected employees.
What protections does the employee have?
Terms and conditions
Employees who transfer will retain their existing terms and conditions. However, if they are more favourable, an employee can elect to be employed under the new employer’s terms and conditions. Pension accrued under the outgoing employer is protected.
If the new employer varies an employee’s terms and conditions, the variation(s) will be void if the sole or principal reason for the variation(s) is the transfer itself, unless either:
• The reason for the variation(s) is an economical, technical or organisational (ETO) reason entailing changes in the workforce, or
• The terms of the contract permit the employer to make the variation.
Terms and conditions from collective agreements (i.e. those negotiated through collective bargaining as well as wider employment relations arrangements such as a collective disputes procedure or flexible working arrangements) may be renegotiated after one year provided that the overall contract is no less favourable to the employee.
Employees with at least 2 years’ service have enhanced protection against dismissal. If an employee is dismissed and the sole or principal reason for the dismissal is the transfer itself, the dismissal will be automatically unfair. An employee whose terms and conditions have been substantially changed to their detriment has the right to terminate their employment. TUPE recognises this type of resignation as a dismissal and the employee may bring a constructive unfair dismissal claim. However, if the dismissal is for an ETO reason it will only be potentially unfair.
A transfer from the outgoing employer to the new employer does not automatically trigger an entitlement to redundancy pay or pay in lieu of notice unless there is an actual dismissal.
If there is a genuine redundancy situation, a dismissal because of redundancy is unlikely to be automatically unfair but may still be potentially unfair. As with most redundancy situations there is the need to consult with any affected employees.
Objecting to a transfer
An employee can formally object to being transferred to a new employer. By doing so, the employee’s contract terminates at the date of the transfer and the employee is seen as having resigned rather than as dismissed. The employee cannot claim constructive unfair dismissal on the basis of a TUPE transfer being proposed to take place. An employee would only be able to claim constructive dismissal if they can show that the transfer would involve a substantial change to working conditions to their material detriment.
How can LincsLaw help?
If you think TUPE applies to you and would like specific advice please contact us on 01522 440512 or 01522 440515 (direct dial) or visit our website at www.lincslaw.co.uk.
Specialist Employment Solicitor
Lincs Law Employment Solicitors