What is TUPE in HR and how does it affect SMEs when changing owners? Marcus Difelice, a Partner from the JMW Solicitors Employment Team, explains what TUPE involves, when it tends to apply or not apply, and the TUPE consultation process.
When a business changes owner, its employees may be protected under the Transfer of Undertakings (Protection of Employment) regulations (TUPE).
Although TUPE applies to employees of businesses in the UK, the head office of the business could be in another country. However, the part of the business that is transferring ownership must be in the UK. The size of the business does not matter.
If TUPE applies:
TUPE applies to a "relevant transfer", which is defined to cover the following two types of event:
Some transfers will be both a business transfer and a service provision change.
The question of when TUPE does or does not apply is not straightforward and will require analysis of the individual facts of the case. However, in general, TUPE does not apply to:
More specifically in relation to service provision changes, TUPE generally does not apply to:
The new employer cannot make employees redundant just because they were transferred from another employer. The new employer can consult about redundancies before the transfer if the old employer agrees.
The transferor and transferee have a duty to inform and, if appropriate, consult appropriate representatives of affected employees. This is defined as "any employees of the transferor or the transferee (whether or not assigned to the organised grouping of resources or employees that is the subject of a relevant transfer) who may be affected by the transfer or may be affected by measures taken in connection with it".
It is important to note that "employees" are a wider group under TUPE than is normally used for employment protection purposes. For instance, the employment tribunal decision of Dewhurst v Revisecatch Ltd (t/a Ecourier) held that a worker (who was not an employee) fell within the scope of TUPE.
This means that workers may be included in the group of "affected employees". However, this is only a first instance decision and is a departure from the previously accepted position that TUPE does not apply to workers. It remains to be seen whether businesses will now treat TUPE as applying to workers, or whether there will be no change in practice until or unless there is confirmation of the decision at the appeal stage.
Learn more: What is the difference between a worker and an employee?
The EAT has held that affected employees means "those who will be or may be transferred or whose jobs are in jeopardy by reason of the proposed transfer, or who have job applications within the organisation pending at the time of transfer".
However, the definition does not include others in the workforce who might apply in the future for vacancies in the part of the business being transferred. Therefore, there is no obligation to consult in relation to the future recruitment prospects of employees who did not transfer to the transferee.
TUPE only requires the transferor and transferee to inform or consult with representatives of their own employees. Therefore, for example, trade unions recognised by the transferor and representing the transferor's affected employees have no right to be informed or consulted directly by the transferee before the transfer.
Under TUPE, the period of protection is indefinite. If the change to a transferring employee’s terms and conditions of employment is as a result of the transfer, it will be prohibited. This would still be the case if the change were to occur some years after the transfer took place.
Please visit the government website for further information on TUPE transfers.
Making sure your small business is compliant with employment law