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Transfer of undertakings (TUPE) regulations

Where a business is bought or sold, both the old and new employer have to make provision for the existing workforce. These employees have legal rights under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE) which are preserved if a business changes hands.

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Note: TUPE regulations can be very complex and we recommend that anyone affected by them should seek legal advice before taking action. Forum members should call our helpline on 0845 130 1722 to take advice and make sure you're covered by insurance.

When do TUPE regulations apply?

The Regulations apply:

  • When all or part of a business or partnership is sold or transferred
  • Where a company, or part of it, is acquired by another company (that is, if the acquiring company buys or acquires the assets and runs the business rather than acquiring shares only)
  • Where two companies combine to form a third, ceasing to exist in their own right
  • Where a contract to provide goods or services is transferred in circumstances which amount to the transfer of a business or undertaking to a new employer.

If one of these situations applies, the transfer is described as a ‘relevant transfer’.

In this scenario, all the transferor or seller’s rights, powers, duties and liabilities under, or in connection with, any contract of employment shall be transferred to the transferee or buyer.

Changes to TUPE Regulations from 2014

Updated TUPE Regulations came into force in 31st January 2014. From this date, the key change is that if you have staff transferring to another organisation you will be required to provide the basic required information about the transferring staff (known as the employee liability information) at least 28 days prior to the transfer occurring (rather than the current 14 days).

There is an exception which allows this information to be provided later where special circumstances make it not reasonably practicable to do so as far ahead of the transfer.

Other key changes include:

  • The possibility to commence collective redundancy information and consultation with elected employee-representatives before staff actually transfer to you.
  • The rules governing dismissals, which may relate to the transfer will be altered to make them slightly more employer-friendly. A dismissal will only be automatically unfair if the reason for the dismissal is the transfer itself (rather than one connected with it).
  • The rules which prohibit changing employment contracts will be slightly relaxed so that changes are only void if the reason for the change is the transfer itself (rather than one connected with it), and variations will be allowed where the employment contract itself permits it.

The longer period for the provision of employee information will be welcomed by many and is one to watch if you face short periods between contract change and transfer.

It is fair to say that the other changes do not represent a fundamental change to TUPE and when it applies. For many businesses it will not change what occurs when TUPE does apply. However for those of you who frequently deal with staff transfers or where you may need to consider some of the more complex issues which can arise with tendering for contracts involving staff or having staff transfer, the detail may turn out to be important.

If you are planning to buy or sell a business – or part of one – you should always get legal advice to ensure you comply with these complex regulations. Remember that you can get further information on TUPE and other employment issues from our helpline team on 0845 130 1722.

Members can also download a free TUPE template bundle to be used in conjunction with the helpline's advice (login required).