The Transfer of Undertakings (Protection of Employment) Regulations 2006, better known as 'TUPE', can be a minefield for business.
It applies to a "relevant transfer", which means:
A transfer of a business, undertaking or part of a business or undertaking where there is a transfer of an ecenomic entity that retains its identity.
There are three main issues that were introduced by TUPE:
1. The principle that employees transfer from the seller to the buyer who inherits all rights,
liabilities and obligations in relation to them.
2. Protection against dismissal in connection with a TUPE transfer. In particular, TUPE provides
that any dismissal of an employee with at least one year's service will be automatically
unfair where the sole or principal reason for the dismissal is either the transfer itself
or a reason connected with the transfer that is not an economic, technical, or
organisational reason entailing changes in the workforce.
3. The obligation to inform and consult with the employees affected by a transfer.
TUPE can be far wider reaching than at first it seems. For example, TUPE also applies to service provision changes, i.e. when a new provider wins a contract for services, the employees of the existing service provider may transfer to them under TUPE. It can also apply if a business brings a service in house, for example, if an organisaton used a Consultant for their IT work but, due to a restructure, wanted to bring the IT work in house, that Consultant may transfer to them under TUPE.
There can be costly sanctions for organisations that do not comply with TUPE, so it is important to be clear on all your obligations under the regulations right at the beginning of any negotiations in relation to a business transfer.