You are currently viewing a preview. Try Premium for Free to see the full document.
Transfer of Undertakings (Protection of Employment) Regulations
What does TUPE do?
- TUPE offers protection for employees who find themselves in a potential ‘redundant’ situation.
- TUPE regulations preserve an employee’s new terms and conditions when a business or undertaking, or part of a business or undertaking is transferred to a new employer.
- For example, when a business closes down, the employees who worked for that business will be made redundant. In this situation, TUPE ensures that the employees are transferred to the new entity.
- There must be a transfer from one person to another, not merely ownership.
- The employer’s identity has to change
TUPE applies where:
- Two companies’ have merged and become one company
- There is a sale of a part of the business on going i.e. a business manufactures clothes and socks. The business then decides that they would no longer like to sell socks and only sell clothes.
- There has been a change of franchisee
- A sale has been made of a sole trader’s business or partnership
- TUPE does not only apply to the transfer of assets
- TUPE can apply where the ownership of a company is transferred to a company outside the EU.
- Where there is bankruptcy or insolvency involved, employment contracts will not normally be transferred: Regulations 8 and 9 of the Transfer of Undertakings (Protection of Employment) Regulations 2006.
TUPE 2006 applies ONLY to what are known as ‘relevant transfers’ that may occur in a wide range of situations.
(1) Business transfers (reg. 3(1)(a))
- Business transfer test
- Regulation 3(2) defines “economic entity” as “An organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary”
(2) Services Provision changes (reg. 3(1)(b))
- Regulation 3(1)(b) states that: A service provision may exist in any one of the three possible situations provided that certain conditions are satisfied.
- Regulation 4(1) TUPE 2006 states the following: a contract of employment does not end by reason of the transfer. The contract will be transferred from the old employer to the new one on the existing terms and conditions. This will be with the employees’ existing continuity of service.
Dismissal of an employee by reason of a transfer
- Regulation 7 of TUPE 2006 was amended in 2014.
The aim was to clarify ‘economic, technical or organisational reasons entailing workforce changes’. This was in an attempt to bring it in line with the definition of redundancy.
- Regulation 7 (1) 2014 Amendment Regulations:
If an employee is dismissed before or after a relevant transfer, the employee is automatically unfairly dismissed if the reason for dismissal is the transfer.
Regulation 7(1) does not apply to dismissals that may take place for ‘economic, technical or organisational reasons’ which entails changes to the workforce of either the transferor or transferee before or after a relevant transfer.
Relevant case law: