The TUPE Process
TUPE stands for ‘transfer of undertakings’ (Protection of employment) which refers to a business service changing or transferring, for example transferring to new ownership. The Transfer of Undertaking (Protection of Employment) Regulations came into effect in 2006, in order to protect employees by ensuring that their employment terms and conditions are maintained during a business transfer.
Altering of contracts of employment as a result of the TUPE process, such as reducing holiday entitlements or changing salary is not recommended without taking advice. The only adaptions allowed, is if the incoming business improves the contracts i.e., additional benefits or bank holidays. TUPE applies indefinity for all employment transfers.
The TUPE process also outlines the steps and legal obligations of both outgoing and incoming employers, providing guidance on how to manage business transfers.
Following the TUPE process is not optional for businesses, but rather a legal requirement and applies regardless of the number of employees in the business. It also applies to chartable organisations.
Failure to comply with TUPE regulations will result in financial penalties.
When does TUPE apply
The TUPE process applies in circumstances when;
- The licensee or franchisee changes
- Contractor’s change
- Businesses merge
- An individual inherits a business
- Contracting out of services
- The business is sold by the sale of assets
- A company in administration is taken over and transfers occur
- The business/partnership is sold or is transferred (this can be in part or fully)
TUPE may cause confusion in the workplace and is difficult to navigate. Some incidents that cause confusion include if a contact ends and the work is transferred in house (known as insourcing) or if an advertising agency wins a tender process gaining a new client, they may be required to employ the previous employees who work with the client on the account.
When doesn’t TUPE apply
If a company is taken over through the sale of shares,and the identity of the employer remains the same TUPE will not apply. If only a limited amount of assets/equipment is being transferred to a new company/employer, TUPE regulations may not be applicable.
TUPE doesn’t apply when the contractor is supplying goods for clients e.g. catering or if the service was being provided for a single event or for the short term.
Dismissals during the TUPE Process
Employers must be aware, if they are to dismiss an employee at any stage of the TUPE process, this is automatically an unfair dismissal, unless the employer can demonstrate an ETO reason (Economic, technical, or organisational).
ETO reasons include;
- Essential cost saving requirements (economic reasons)
- Using new processes or equipment (Technical reasons)
- Making changes to the structure of the organisation (organisational reasons)
How long does the TUPE process take
The duration of the TUPE process can vary; however, the businesses must go through the 10 steps for the TUPE process ensuring to have sufficient records of all employee consultations.
The 10 steps for the TUPE process
- Identifying TUPE
- Preparation should begin early
- Employee engagement and record information
- Identify which employees will transfer
- Gather information and consult with employee representative or individually
- Providing all information and records of employees and due diligence
- Understanding the difficulty of harmonisation, including the terms and conditions
- Management of the transfer
- Monitoring the impact following the transfer
- Reviewing of right-to-work checks
The TUPE process may be complex for employers and employees to fully understand; therefore, consulting with our team of HR consultants and your legal advisor is highly recommended to ensure the outgoing and incoming businesses do not leave themselves liable to forthcoming claims.
The TUPE process for the new employer
Prior to agreeing to purchase a new business, the new employer will need to consider a variety of issues.
The new employer should consider the following;
- Does TUPE apply in this incidence?
- Pinpointing who and what will be transferring.
- Establish the benefits and risks for the company and employees.
- Reviewing the company’s financials, limiting the surprise of insolvencies or debts.
- Evaluate and highlight where improvements are needed within the business to increase efficiency.
- Are there any potential risks of redundancies following the transfer
- Request due diligence from old employer, as well as warranties and indemnities
- Evaluate costs and liabilities
- Establish the requirement for assets and equipment
- Develop a contingency fund
- Create a realistic timeframe for the transfer
- Trade unions/representatives must be informed and if none are available, consulting with an employee representative to discuss the possibility of the transfer, gathering any of their concerns (mandatory step for TUPE)
- Establish how to keep employees informed of the TUPE transfer, and how to manage the transfer.
- Concluding if the transfer should move forward.
We highly recommend communicating with an HR consultant and legal prior to agreeing on a TUPE process, as they will be able to help advise on the process.
The TUPE process for the old employer
The old/outgoing employer needs to follow the same first 9 steps as out line above for the new/incoming employer, however, things vary moving past step 9.
The old/outgoing employer will need to;
- Make decisions of what assets or equipment will be included in the TUPE process, if any.
- Providing due diligence when requested from the incoming employer, complying with GDPR/Data protection laws as it involves employee information
- Provision of warranties and indemnities
- Create a realistic timeframe for the transfer with the incoming employer.
Similar to the incoming employer, outgoing employers should seek legal and HR advice on the TUPE process ensuring all mandatory steps are taken. If any steps are missed or not followed correctly, employers may be liable.
How our HR consultants can help
Our HR consultants can talk you through the TUPE process and advise on the consultation process with employees. Our consultants may attend meetings to speak with employees to consult on the process and answer any questions they may have.
Additionally, your business will have ongoing hands-on HR support with our unlimited phone calls and emails, our outsourced HR services will guide you through the process with clarity and expertise.
Contact HR Consultants
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