The Transfer of Undertakings (protection of employment) 1981 Regulations (TUPE) are brief and contain very few definitions to help in trying
to interpret them. As a consequence, this has resulted in UK Employment Tribunals and
courts having to spend a considerable amount of time in determining whether the
regulations apply to a certain set of facts or circumstances.
The main purpose of the TUPE Regulations is to protect employees' rights when there is
a transfer of the business where they are currently employed. If the Regulations do
apply, then an employee's right is preserved, as against the person/organisation to whom
the business is transferred. This means that the employee's continuity of employment is
maintained, as indeed are all current contractual terms and conditions.
If an employee is dismissed in circumstances where The Transfer of Undertakings (protection of employment) (TUPE) 1981 Regulations apply, any claim
that he/she may have will be against the organisation to whom the business has been
transferred ("the transferee"). If, however, the regulations do not apply, then any claim
the employee has will be against their employer, ie the transferor of the business.
The key issues that have to be considered in determining whether TUPE applies is
whether there has been a "relevant transfer" of an "undertaking" and that the transfer
taking place is of a identifiable and stable economic entity.
In order to decide whether there has been a relevant transfer, it is necessary to
determine whether an identifiable economic entity has been transferred. This means
considering what the business was like both before and after the transfer. The type of
matters that need to be looked at in assessing this are as follows:
- Whether there has been a transfer of assets.
- Whether and how many staff are being transferred over.
- Whether the activities before and after the Transfer are similar.
- Transfer of customers.
- The type of undertaking involved.
The Regulations can apply to contracting out of services, the transfer of a service
between two contractors, a service reverting back in-house, the setting up of franchises,
mergers and acquisitions, granting of leases, etc.
It is important to realise that there can be an undertaking and a transfer of it, even
though neither all the employees nor significant assets actually transfer over.
It is automatically unfair to dismiss an employee for a reason related to the transfer
unless it is possible for the transferor to show that it was for an economic, technical or
organisational (ETO) reason requiring changes in the workforce. However, even if it is
for such a reason, the usual rules governing unfair dismissal still apply, and the reason
for dismissal in such circumstances is treated as dismissal for some other substantial
reason.
The Regulations also impose a duty on the transferor well before the transfer takes
place to inform and consult with employee's trade union, if that union is recognised, or
if not, with the employees themselves and/or the employees' representatives. The
information that is required to be provided by the transferor is laid down in Regulation
10(2). If there is a failure on the part of the employer to comply with this duty, then
an Employment Tribunal can award compensation of up to 13 weeks gross pay for each
affected employee.
Whilst all employees' rights and contractual terms transfer, at present occupational
pension schemes are currently excluded from the Regulations. The exact legal position
concerning the transfer of pensions is complicated, though it is expected that the
Government will very shortly change the Regulations somewhat to enable limited pension
rights to transfer.
It is also worth transferees being aware that they may be liable for breaches of
discrimination law, both prior to and after the transfer (see The Transfer of Undertakings (protection of employment) 1981 Regulation 5(2)(b)),
"Anything done before the transfer and completed by…….the transferor in respect
of that contract or a person employed in that undertaking…..shall be deemed to be
done by the transferee".
If the transferee refuses to accept employees, the transferor or treats them less
favourably on the grounds of race, sex, disability, sexual orientation or religion, then
that treatment is unlawful. There is in those circumstances no minimum service
requirement to enable an employee to bring a claim.
We are a firm of employment solicitors who deal nationally in all matters relating to employment law. We are able to pursue or negotiate a claim on your behalf and can provide you with representation anywhere in the country. If you want an assessment of the merits of your case, please contact us without obligation on 020 7408 1338.
