TUPE Process

TUPE process - man signing a contract and another mans hand moving in for a hand shake

TUPE Process

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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.  

TUPE process - man signing a contract and another mans hand moving in for a hand shake

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

  1. Identifying TUPE
  2. Preparation should begin early
  3. Employee engagement and record information
  4. Identify which employees will transfer
  5. Gather information and consult with employee representative or individually
  6. Providing all information and records of employees and due diligence
  7. Understanding the difficulty of harmonisation, including the terms and conditions
  8. Management of the transfer
  9. Monitoring the impact following the transfer
  10. 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

  1. Prior to agreeing to purchase a new business, the new employer will need to consider a variety of issues.
  2. The new employer should consider the following;
  3. Does TUPE apply in this incidence?
  4. Pinpointing who and what will be transferring.
  5. Establish the benefits and risks for the company and employees.
  6. Reviewing the company’s financials, limiting the surprise of insolvencies or debts.
  7. Evaluate and highlight where improvements are needed within the business to increase efficiency.
  8. Are there any potential risks of redundancies following the transfer
  9. Request due diligence from old employer, as well as warranties and indemnities
  10. Evaluate costs and liabilities
  11. Establish the requirement for assets and equipment
  12. Develop a contingency fund
  13. Create a realistic timeframe for the transfer
  14. 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)
  15. Establish how to keep employees informed of the TUPE transfer, and how to manage the transfer.
  16. 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 outlined above for the new/incoming employer, however, things vary moving past step 9.

The old/outgoing employer will need to;

  1. Make decisions about what assets or equipment will be included in the TUPE process, if any.
  2. Providing due diligence when requested from the incoming employer, complying with GDPR/Data protection laws as it involves employee information
  3. Provision of warranties and indemnities
  4. 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.

Key Takeaways

When TUPE Applies: Situations like business mergers, asset sales, contractor changes, and insourcing. Confusion might arise in scenarios such as advertising agencies hiring prior employees for new clients.

When TUPE Doesn’t Apply: In share sales, the employer’s identity remains unchanged, other times include when only limited assets are transferred or for one-off services.

TUPE Dismissals: Dismissals during TUPE are typically considered unfair unless backed by ETO reasons like cost-saving or organisational changes.

Process Steps: The TUPE process has 10 crucial steps, from identifying TUPE to reviewing right-to-work checks. Both incoming and outgoing employers have specific considerations to address.

Recommendation: Strongly advised for both new and old employers to consult HR and legal professionals before and during the TUPE process.

FAQs for TUPE process

TUPE stands for Transfer of Undertakings (Protection of Employment) and refers to the UK regulations that protect employee rights when the business they work for, or the service they provide, is transferred to a new employer.

TUPE applies in various situations including business mergers, when the licensee or franchisee changes, asset sales, contracting out of services, and more.

Yes, TUPE doesn’t apply in takeovers via share sales where the employer’s identity remains the same, or when only limited assets are transferred. It also excludes contractors supplying goods or services for a one-off event or short term.

Dismissing an employee during the TUPE process is typically considered an unfair dismissal unless there’s a valid ETO (Economic, Technical, or Organisational) reason.

The duration can vary, but businesses must follow the 10 key steps, from identifying the need for TUPE to reviewing right-to-work checks.

The new employer must assess if TUPE applies, determine which assets and employees will transfer, review the company’s financials, evaluate potential redundancies, and more.

Old employers must decide on assets/equipment inclusion, provide due diligence, ensure GDPR compliance, and set realistic transfer timeframes.

Yes, consultation with employees or their representatives is a mandatory step, especially when there are anticipated measures (changes) that will affect the transferring employees.

In general, any change to terms and conditions will be void if the sole or principal reason for the change is the transfer. Exceptions apply if there’s an ETO reason that entails changes in the workforce.

Yes, both incoming and outgoing employers are highly recommended to consult HR professionals and legal advisors to ensure the process is executed correctly and to avoid potential liabilities.

The documents you need include 

  • Employee Details 
  • Contracts of employment 
  • Employee liabilities information 
  • Financial details 
  • Collective agreements
  • Employee rights 
  • Redundancy details 
  • Employee records
  • Details of any TUPE-related consultations 
  • liabilities and potential liabilities 
  • Property and assets 
  • Workplace pensions 
  • Data protection documents 
  • Due diligence information

Due diligence in the context of TUPE refers to the systematic review and verification of the transferring company’s employee-related information and potential liabilities. It helps the incoming employer understand what they’re inheriting and minimize associated risks. This includes checking employee contracts, terms of employment, and any pending disciplinary or legal actions.

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.

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