The Transfer of Undertakings (Protection of Employment Regulations) 2006 (known as “the TUPE Regulations”) provide protection to employees in the event of a transfer of an undertaking.
A relevant transfer will often involve a sale of the assets of a business and the taking on by the purchaser of the relevant staff. It can also involve a “service provision change”, which covers services being contracted out, a contracted out service being awarded to a new contractor or a contracted out service being taken in-house.
If an employee is dismissed because of a transfer, the dismissal will usually be unfair. However, there is an exception where the reason for the dismissal is an economic, technical or organisational reason entailing changes in the workforce (an “ETO reason”). This could be redundancy due to the new employer having too many employees.
The law applies regardless of the size of the transferred business, whether public or private sector or whether or not the business operates for gain.
Last year the government decided to amend the TUPE Regulations to improve effectiveness and flexibility within the law.
Changes which apply to transfers which take place on or after 31 January 2014
- In the event of a service provision change, the activities carried out after the change in provider must be fundamentally the same as those carried out by the previous provider.
- The new employer will be able to change terms incorporated from collective agreements one year after the transfer, provided that the overall change is no less favourable to the employee.
- A change in the location of the workforce following a transfer will be classed as an ETO reason.
- There is a requirement on the outgoing employer to provide to the new employer with certain information regarding the transferring employees, including details of terms and conditions of employment. Currently, this needs to be provided no later than 14 days before the transfer. From 1 May 2014, this will increase to 28 days.
- The outgoing employer and the new employer must provide the employees affected by a transfer with certain information, and in certain cases consult with them, through employee representatives (who can be new or existing members staff or trade union representatives). From 31 July 2014, micro-businesses (fewer than 10 employees) will be allowed to inform and consult employees directly when there is no recognised independent union, nor any existing appropriate representatives.
This is a complex and wide ranging area of the law, and the above only provides a summary of the key issues arising from the changes being made. Please therefore let us know if you require any advice on the TUPE Regulations or any aspect of employment law.