TUPE - Business Transfers and Service Provision Changes for Employers

Navigating the complexities of business transfers, mergers, or outsourcing can be challenging for both employers and employees. The key legal framework is the Transfer of Undertakings (Protection of Employment) Regulations 2006, known as the ‘TUPE Regulations’. Failure to comply can lead to costly claims for unfair dismissal, breach of contract, or failure to inform and consult. At O’Donnell Solicitors, our Employment Department specialises in helping employers manage TUPE transfers smoothly, ensuring compliance and minimising risks.

What is TUPE?

TUPE is a set of regulations designed to protect employees’ rights when a business or part of a business is transferred to a new employer. This covers business transfers, where a business or part of a business is sold or transferred, and service provision changes, where a service is outsourced, brought in-house, or reassigned to a new contractor.

Broadly speaking, TUPE ensures that employees are not disadvantaged by a change in employer. The key protection afforded by the TUPE Regulations is that employees automatically transfer to the new employer on their existing terms and conditions or employment, and with their existing continuity of employment. The Regulations place significant obligations on both the outgoing employer (‘the transferor’) and the incoming employer (‘the transferee’).

What are the key responsibilities for employers under the TUPE Regulations?

Employers must inform employees and, where applicable, consult with employee representatives and trade unions about the transfer.

The transferor must provide the transferee with employee liability information at least 28 days before the transfer.

Employees cannot be dismissed solely because of the transfer. Any dismissal related to the transfer is automatically unfair unless it is for an economic, technical or organisational (‘ETO’) reason.

The transferee cannot change employees’ terms and conditions if the reason is connected to the transfer. Changes can only be made for unrelated reasons or with employee consent.

TUPE transfers can be complex and the most common issues that employers face in meeting these key responsibilities include:

• Identifying which employees are assigned to the transferring business or service.
• Failing to comply with the requirements to inform and consult.
• Addressing employee concerns during the transition.
• Integrating the workforces while complying with the TUPE Regulations.

What are the consequences of breaching the TUPE Regulations?

If an employer breaches the TUPE Regulations, employees may be able to make the following claims:

• If an employee is dismissed because of the transfer or for a reason connected to the transfer, the dismissal is automatically unfair and the employee can claim unfair dismissal compensation unless it is for an ETO reason.

• If there are failures to comply with the obligations to inform and consult with employees, trade unions and/or employee representatives about the transfer, employees can make claims to the Employment Tribunal and may be awarded up to 13 weeks’ gross pay in compensation.

• If an employer attempts to change terms and conditions of employment because of the transfer, the changes are likely to be void, and employees may be able to pursue claims for breach of contract and constructive unfair dismissal.

• If the transferee refuses to recognise the employees’ continuity of employment or their existing terms and conditions of employment, employees may bring claims for breach of contract or failure to comply with TUPE.

• If an employee is subjected to detriment (meaning being treated unfairly or discriminated against) because of the transfer or because they have asserted their rights under TUPE, they may bring a claim for detriment under the Employment Rights Act 1996.

• If an employee is made redundant because of the transfer and the redundancy is not for an ETO reason, they may be able to claim a redundancy payment and/or unfair dismissal.

• If the transferor does not give the transferee complete and accurate employee liability information at least 28 days before the transfer date, the transferee can seek compensation from the transferor for each employee they gave no or incomplete information for.

• Whilst TUPE does not transfer occupational pension rights, employees may have protections under the Pensions Act 2004 if the employer fails to provide equivalent pension arrangements.

How can O’Donnell Solicitors help?

Our Employment Team has extensive experience in advising employers on TUPE transfers. We provide practical, bespoke advice tailored to your needs and aimed to save you time, money and stress by avoiding costly mistakes. Our service offering includes:

• Advice on compliance with the TUPE Regulations
  We will guide you through the legal requirements of the TUPE Regulations, including the obligations to inform and consult affected employees, and we will draft and review all relevant documentation including the employee liability information and consultation letters.

• Helping you to manage the risk of the TUPE transfer
  We will work with you to identify potential risks with the proposed TUPE transfer and provide practical advice aimed at minimising disputes and claims, including consideration of ETO reasons and fair dismissal processes.

• Assisting with employee communication
  We will assist with employee consultations and communications to ensure a smooth transition.

• Ongoing support post-transfer
  We will support the integration of the transferring employees into your workforce and provide advice on harmonising terms and conditions post-transfer.

Contact Us

If you are planning a TUPE transfer or want to ensure that your business is prepared for future changes, contact our Employment Team today at 01457 761 320 or e-mail enquire@odonnellsolicitors.co.uk.