A Guide to “TUPE”: The Transfer of Undertakings (Protection of Employment Regulations) 2006

The aim of the TUPE regulations (commonly known as ‘Chew-pee’) is to ensure that employees are protected when their employer’s business is transferred to another business. It assures employees that they will not be dismissed directly as a result of a take-over, that their terms and conditions of contracts will not be worsened, and that affected employees are informed and consulted through representatives prior to the transfer or take-over. Any dismissals where the sole or principal reason for the dismissal is the transfer will be automatically unfair, unless there are reasonable Economic, Technical or Organisational reasons for doing so (known as ETO reasons).

The TUPE Regulations apply if there is a ‘relevant transfer’. There are two types of relevant transfer:

1. Business Transfers: there must be ‘an economic entity’ that ‘retains its identity’, so where an economic business is transferred from one body to another and retain its identity once the transfer is complete (i.e. carries on trading in the same manner), this will constitute a relevant transfer.
2. Service Provision Change: this deals with many contracting and outsourcing cases. When a company engages a contractor and activities are outsourced, it will constitute a relevant transfer.

TUPE applies when there are:

• Mergers and/or sales of a businesses by sale of assets;
• A change of licensee or franchisee;
• Contracting(outsourcing) out of services;
• Changing contractors; and
• Where all or part of a sole trader’s business or partnership is sold or otherwise transferred.

TUPE does not apply in the following situations:

• Transfers by share take-over;
• Transfers of assets only;
• Transfers of a contract to provide goods or services where this doesn’t involve the transfer of a business or part of a business; and
• The supply of goods for a clients use.

When dealing with a TUPE transfer, the Transferor (e.g. the seller) must carry out an extensive consultation process with staff before the transfer process begins, especially if there are any ETO reasons for making any redundancies or changes to the employee’s working conditions. The company must inform appropriate representatives of the affected employees of the transfer and must consult on any proposed measures. Failure to carry out this consultation may result in both the Transferor and Transferee being jointly and severally liable for a claim from the employees of up to 13 weeks’ salary.

TUPE is a complex area so it’s essential to seek legal advice for individual circumstances. If you require legal advice on this call us today on 01908 660966 / 01604 828282 or email Ben Stanton, Partner in our Employment team at ben.stanton@franklins-sols.co.uk.