Dismissals will be automatically unfair if the principal reason for the dismissal is the transfer itself
Danielle Ryu discusses what you need to consider when transferring employees’.
TUPE is a set of regulations (the Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended)) that has the effect of transferring employees’ terms and conditions over to a new employer.
When does TUPE apply?TUPE is triggered when a “relevant transfer” takes place; that is:
However, it does not apply to a transfer of shares only. There are exceptions to the concept of ‘relevant transfer’ (such as the transfer of purely administrative functions in a public authority context), but we will not concentrate on these technical exceptions in this article.
TUPE does not generally apply to transfer of employees’ entitlement to pension benefits. There are (again!) technical exceptions (such as in public sector-related contracts, or schemes not related to benefits for old age, invalidity, or survivors).
The effect of TUPEAll employees employed by the original employer (transferor) immediately before the transfer (and assigned to the business or part of the business being transferred), transfer to the new employer (transferee) on their existing terms and conditions of employment. The new employer also inherits the other rights, liabilities and obligations related to those affected employees.
Potential claimsDismissals will be automatically unfair if the principal reason for the dismissal is the transfer itself. However, dismissals will be treated as fair where a clear (and compelling) economic, technical or organisational (ETO) reason, justifying a change to the workforce, is shown.
Under TUPE, both the new and old employers must inform and consult with the employees or related union/representatives who may be affected by the transfer.
The information and consultation requirements include:
Failure to comply with information and consultation requirements can be an expensive error, as claims can be brought by the various parties affected (including between transferor and transferee) as a result.
Employees have the right to object to the transfer by informing their original employer (regulation 4(7)); if they exercise this right, there is no dismissal, and their employment contract will terminate on the transfer date.
The new employer can only make changes to the transferred employees’ employment terms in limited circumstances (essentially, where there is an ETO reason).
TUPE is often considered to be quite daunting and complicated. However, following clear processes can lead to a smooth transition.
If you are interested in learning more or have a question regarding TUPE then get in touch with our commercial team or call us on 020 3051 5060.
Ben is the Head of Business Development and Marketing at Oracle Solicitors. He has years of experience building relationships with commercial partners. He has worked in both the legal and financial…
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