The Transfer of Undertakings

The Transfer of Undertakings (Protection of Employment) Regulations 2006 came into force on 6 April 2006 and replaced the previous version of the regulations, the Transfer of Undertakings (Protection of Employment) Regulations 1981.

The current regulations apply to any relevant transfer that took place on or after 6 April 2006.

Before the implementation of TUPE in 1981, when a business was sold or there was a change of service provider, the contracting parties could choose which (if any) of the affected employees transferred to the buyer or the new service provider and the buyer could decide on the terms of employment of any employees it was accepting as part of the transfer.

Any employees who did not transfer to the buyer/new service provider could find themselves redundant.

TUPE provides that when a business is sold or there is a change in relation to who provides a service to a business, the employees engaged by that business or on that contract transfer with the work to the purchasing business or new service provider on the same terms and conditions as before.

There are three conditions for TUPE to operate. There must be an:
• an economic entity;
• a transfer of that economic entity; and
• the economic entity retaining its identity following the transfer.

The buyer or new service provider inherits the transferring employees and all the liabilities and obligations in relation to them.

Before transfer there are obligations on buyer and seller (and those losing a contract and those gaining it) in relation to employees being consulted and informed abut the transfer. In particular there must be consultation in relation to whether the new employer will be taking any ‘measures’ in respect of the transferring employees.

Employees are protected in a TUPE transfer situation from being dismissed or having changes imposed in relation to their terms and conditions of employment save for ‘economic, technical or organisational’ (ETO) reasons.

The law in this area is complex and both employees and employers (particularly those who are ‘losing’ a contract) can find it an unsettling and disruptive time.

We can guide employers and employees through the TUPE process and offer advice and assistance as regards the effect it may have on them.