TUPE exists to ensure employees are treated fairly when companies merge or one is bought by a new owner
TUPE is the Transfer of Undertaking (Protection of Employment) Regulations and Acas defines it as protecting “employees’ terms and conditions of employment when a business is transferred from one owner to another.” The measure exists for a simple reason: to ensure employees are treated fairly when companies merge or one is bought by a new owner.
Such scenarios worry employees because they fear that their job is no longer going to be needed, thus facing unemployment. In actuality, TUPE makes it so employees simply become workers of the new employer, with the same terms and conditions, as though their original contracts had been made with the new employer. TUPE makes it so all rights, including continuity of service, are all preserved.
It is true to say that TUPE does not apply in all cases, only where there is what is considered a “relevant transfer”, which is the “transfer of an economic entity which retains its identity”. In order to determine if it qualifies, there are certain factors that are looked at, which are: whether the majority of employees are taken on by the new employer; whether any intangible assets are transferred and their value; whether any tangible assets are transferred; the type of undertaking; whether any customers are transferred; the similarity between the activities carried on before and after the transfer; how long activities were suspended, if at all.
To give specific examples, TUPE will apply when there is transference, or part transference, from one employer to another if: all or part of a sole trader’s business is sold or transferred; two companies stop trading individually and combine to make a third company; one company buys another company in part or in whole, provided the assets are also acquired and the purchase is not through shares only; and if a contract for goods or service is transferred and those circumstances mean a business is being transferred to a new employer.
TUPE does not apply if: transfers of undertakings are situated outside of Britain; transfer is of assets only; transfers by share takeover, because shares have no bearing on the employer; and transfers of contract to provide goods or services where transferring a business is not included.
As TUPE exists to help ensure that employees’ rights are met, there are options if you feel you have been treated unfairly. If you have lost your job unfairly because of a transfer, then your first step should be to use the employer’s internal procedures to get the situation resolved. If the situation remains unresolved afterwards then you can complain to an employment tribunal, provided you have had continual employment for 12 months or more.
It is also worth noting that if you were awarded your job immediately before the transfer, you are automatically an employee of the new employer unless you object to being transferred, in which case you can tell either employer. In this scenario, you retain all rights and obligations under your contract with your previous employer, and you still have unbroken continuity of employment.
The breakdown is as follows: employees have the legal right to transfer with their existing terms and conditions of employment, and keep their existing rights and liabilities, so from their perspective the only difference is the name of the new employer. It is literally as though the new owner replaces the old owner.
Any instances where an employee is dismissed solely or principally because of the transfer is immediately deemed unfair. This also applies if dismissal arises from a reason connected to the transfer, with the exception being for economic, technical or organisational reasons requiring a change in workforce. Employees should therefore have no concerns about an upcoming or ongoing transfer of their business.