T – Transfer (buying, selling, acquiring, outsourcing, leasing, merging)
U – Undertaking (organisation, business, charity or service)
P – Protection (of employment rights)
E - Employees (wholly or mainly connected to the transferring organisation or service)
TUPE is a commonly used phrase for the legislation which governs the situation when organisations (including service providers) transfer a business from one employer to another employer. It applies in a business sale, reorganisation, merger, outsourcing as well as many other kinds of business arrangements.
The precise legislation governing this complex area is known as the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003.
The essence of TUPE is that it protects employees’ rights and interests, where there is a business transferring from one employer to another employer. Before TUPE was implemented, employees could be made redundant or cherry-picked in a business transfer situation.
Parties to a Transfer
There are at least two parties to a transfer – the current employer (“Transferor”) and the new employer (“Transferee”).
Stakeholders in a TUPE situation
While not being parties to the transfer, there are other stakeholders potentially involved, including the affected employees, clients, and suppliers, amongst others.
TUPE does not apply where there is a sale of shares in an employing company as there is no change of employer when the shares in the company change hands.
Application of TUPE
TUPE applies when the organisation transferred:
- retains its identity after the transfer. It must continue to be organised, managed, and operated in a similar manner, as it was prior to the transfer; and
- pursues the same economic activity, as that pursued prior to the transfer.
TUPE applies to both public and private organisations, profit making businesses, and charities.
Rights and Obligations of an Employer
The rights and obligations of the Transferor employer transfer over to the new Transferee employer. This includes terms and conditions of collective agreements but, does not apply to pension rights.
The employees of the Transferor retain the same terms and conditions of employment prior to and post transfer, irrespective of the fact that they now have an entirely new employer, the Transferee.
Employees also retain all of their continuous service with their previous employer, when they move to the new employer.
Dismissals and Terminations of Employment
Generally, TUPE prohibits dismissal of an employee, by either the current employer or new employer in the context of a business transfer.
Exceptionally, TUPE permits dismissal of an employee for economic, technical or organisational reasons.
Bankruptcy or Insolvency
TUPE does not apply to a business transfer where the Transferor employer is subject to bankruptcy proceedings or insolvency proceedings, on the date of the transfer.
There is an anti-avoidance measure, where the reason for instituting bankruptcy or insolvency proceedings is to evade the employer’s legal obligations under TUPE, TUPE will continue to apply.
Information and Consultation
TUPE provides that the Transferor employer and the Transferee employer must inform their respective employees’ representatives affected by the business transfer of specific information. This includes the date of transfer, the reason for the transfer, any legal implications of the transfer for the employees, as well as any economic and social implications envisaged for the employees. TUPE proscribes a timeframe of 30 days for the information and consultation process.
Read more on TUPE here:
For further information, please contact Breda O'Malley email@example.com or Gill Woods firstname.lastname@example.org at Hayes solicitors.
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About the Authors
Breda practises in both Employment and Commercial Law and is Partner and Head of the Employment Law team at Hayes solicitors. Breda has trained and qualified as a mediator with the UK based, internationally renowned Centre for Effective Dispute Resolution (CEDR). Breda practices as a mediator of commercial, employment, boardroom, charity trustee and shareholder disputes.
Gill is a consultant in the Employment Law team at Hayes Solicitors. Gill is a former partner at a top tier law firm and is a CEDR accredited mediator. Gill provides commercial and solutions focussed advice to clients in relation to both contentious and advisory aspects of the employment relationship. Gill advises a wide range of clients, both employers and employees, in both the public and private sectors.