15 Nov 2018
If all or some of your business is moving from one owner to another—you need to know about TUPE. Here’s our comprehensive guide covering everything you need to know.
What is TUPE?
TUPE is a set of protective regulations that safeguard the rights of employees undergoing transfer. The regulations came into force in 1981. They remain the most important piece of legislation when dealing with employee transfers.
But what does TUPE mean?
When does TUPE apply?
There are two scenarios in which TUPE regulations will apply.
The first is if a section—or all—of your business moves to a new owner. This also includes a merger between two organisations.
The second is if a service provision transfer occurs. This means you’re outsourcing an internal service, or an outsourced service is becoming internal.
When does TUPE not apply?
There are some situations that you might think are covered by the regulations, but aren’t. Each case is different, but generally, these include:
- Change to service provision: If you remodel or significantly change a service, instead of transfer it, TUPE might not apply.
- Lone worker service provision: If only one of your employees worked on a contract, instead of a group, TUPE might not apply.
- Change of company name: If the name alone changes, but not the ownership or working practices, then this won’t require TUPE regulation.
Another common question we receive is the following:
“Does TUPE apply if the service provider terminates the contract?”
The answer is ‘yes’, if the situation meets the definition of a service provision change. So, even if a client changes to a new provider, it may mean the same people will carry out the work.
If you’re unsure, it’s best to seek independent advice. Call a Croner adviser today on 0145 585 8132 to find out if you should start preparing for a transfer.
What does TUPE protect?
The main purpose of the regulations is to secure employees’ rights. This protects them from any unfair conditions an employer might want to impose following (or during) a transfer.
It does this in a number of different ways. First, TUPE prevents changes to terms and conditions without good reason. You can make changes for economic, technical, or organisational (ETO) reasons.
An example of this would be a company restructure post-transfer due to overstaffing.
TUPE also offers pay protection for employees. You must pay employees’ the same as they were paid in their role at the previous company. This extends to areas such as bonus schemes and commission too.
It may be possible to cite an economic reason as a reason not to pay a transferring employee at the same rate they were at. However, we’d recommend seeking professional guidance before doing this.
You also need to consider redundancy and TUPE law. To make an employee redundant you’ll need a legitimate reason for doing so.
But, you can also discuss redundancies prior to the transfer happening, with the old employer. Employees can be made redundant before the process begins.
Also, keep in mind that an employee can reject to transfer. This is effectively a resignation.
Finally, TUPE can protect pension rights, but not always. This depends on the previous employer’s pension arrangements. Discuss these arrangements with the transferor to determine whether you need to honour them or whether you can make arrangements of your own.
How long does TUPE last after the transfer?
A common question we hear from employers and employees alike is: “How long is TUPE valid for?”
Realistically, you can’t expect employees’ terms of employment to stay the same forever. You wouldn’t want them to.
Unfortunately, there’s no clear answer. Some case law points to two years’ service being the cut-off point, but this isn’t a definitive indicator.
If you do have to make changes to your employees’ terms of employment, make sure the process is fair and you communicate all changes clearly in good time. And, only make changes if absolutely necessary. This will lessen the chances of a tribunal claim being made against you.
TUPE and agency workers
Employees affected by a TUPE transfer must receive details of the transfer in writing. Part of the information you need to provide is detail on agency workers within the organisation. This includes:
- The number of agency workers employed
- The departments they’re working in
- The type of work they’re doing
TUPE and Brexit
Currently, the regulations won’t change as a result of Brexit. However, that doesn’t mean it won’t change in the future.
Keep an eye on employment law updates to avoid being caught unaware by any changes to TUPE regulations.
A TUPE transfer is a complex process. If you need support, you can get it with Croner. Speak to one of experts today on 0145 585 8132
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