When determining what rights existing employees have when the company they work for is sold, there are a few crucial questions to consider. The TUPE regulations are at the heart of them.
What are the TUPE (Transfer of Undertakings Protection Act) regulations?
The Transfer of Undertakings (Protection of Employment) Regulations 2006 is the Transfer of Undertakings (Protection of Employment) Regulations (as amended by the 2014 Regulations). They were intended to protect the interests of current employees when the company or commercial contract for which they work changes hands.
When TUPE applies to a company sale, current employees of the former company are transferred to the new company on the same conditions as before, with the same hours, rate of pay, and other contractual perks.
>See also: New employee vacation entitlement
When does TUPE come into play?
The business sold must be substantially the same following the change of ownership for TUPE to apply — that is, the employees must be performing the same tasks for the same clients. This is common in most sales and is referred to as a company transfer.
TUPE also applies in the event of a change in service offering. Reassignment of work is an example of a change in service supply. It can occur when a service is outsourced to a third party or when a service is brought in-house. It also applies to situations in which a contract for providing a service is won or lost, such as a catering or security contract. There are a few exceptions to this rule, so it’s always a good idea to consult with an HR or employment law specialist as early as possible to get precise counsel.
What types of businesses are covered by the TUPE Act?
TUPE applies to all enterprises in the United Kingdom, regardless of their size or sector.
Calculating holiday pay for part-time employees is also an option.
Which employees are TUPE-eligible?
Whether on a permanent or fixed-term contract, most employees are covered under TUPE. It normally does not apply to agency workers or self-employed individuals. There can be some thorny problems about who transfers when a service provider changes, but this isn’t normally the case with a straightforward transaction.
What is the length of time that transferred personnel has been employed?
The length of an employee’s continuous employment is significant since it is used to calculate claims to statutory payments like notice and redundancy. Employees who are transferred will keep their whole period of continuous employment, starting from the day they started working for the previous employer (unless they were also transferred to that company which means their continuous employment would start from the earlier start date). It’s crucial to keep an eye out for this if there have been a lot of contract transfers to new service providers.
What additional major responsibilities does TUPE place on employers?
In addition to the need to preserve terms and conditions, both the leaving and incoming employers must communicate with the employees before the transfer. The outgoing employer must submit crucial information about transferring employees to the incoming company at least 28 days before the transfer.
An incoming employer may desire to modify the contracts of transferred employees to align them with those of existing employees. However, unless the contract expressly allows it (for example, small administrative adjustments) or there are economic, technological, or organizational concerns, it is usually not possible to amend the terms and conditions. ETFs are what they’re called.
There are several technical difficulties regarding TUPE. If the contract is an ETO, there may be a legal justification to change it, but you don’t want to risk facing employment tribunal allegations. Thus any modifications to terms and conditions that are being considered should be reviewed with HR or employment law professionals as soon as feasible.
It’s also worth remembering that there’s no time restriction on how long employers are prohibited from amending any TUPE-protected terms and conditions.
Laura Ranaghan is a CitrusHR consultant and team manager.