Transfer of Undertakings (Protection of Employment) Regulations , known as TUPE is the employment legislation that is in place to deal with the effect on employees' contracts where an employer transfers a business or part of a business to another. The basic aim of the TUPE regulations is to ensure that, if and when a transfer of an undertaking takes place, that the contracts of employment of the employees affected would be transferred automatically from one employer to another.
The main definitions within the law deal with what does and does not constitute a business transfer, including the definition of a business entity. A business entity can be a small part of a larger entire business and commonly this has involved the contracting out of services or the tendering for contracts within both the public and private sector.
Employers can offer a defence to claims in transfer situations by arguing economic, technical or organisational reasons for their actions.
The regulations cover all employees who were employed in the business (or part of the business) being transferred before the transfer.
Since April 2006 the new regulations have introduced a category of transfer known as a service provision change that applies where there is a group of workers undertaking activities for a client. This mainly applies to those areas of business where contractors are regularly used such as cleaners, caterers and IT workers.
Many of the decisions affecting transfer of undertakings situations have evolved from European countries and European courts. These decisions are constantly evolving and great care is therefore needed in the administration of employees in a situation covered by the regulations.
In essence, however, all of the liabilities owed to the employees by the existing employer (the transferor) will pass to the new employer (the transferee) at the point of transfer. Employers, therefore, who are transferring a business to another employer should ensure that the arrangements between them and the buyer are clear and unequivocal. Employees are also entitled to be given notice of the fact that a business is transferring.
For the employer taking over a new business, again it is essential that accurate and comprehensive records relating to the employees and their contracts are transferred. There is a legal obligation on the outgoing employer to provide certain information to the incoming employer prior to the transfer. A failure to do so can lead to a minimum award of £500 per employee affected. In either case, full, open and comprehensive communication with the employees is an essential ingredient.
Employees who wish to claim a remedy for unfair treatment involved in the transfer of an undertaking may apply to an Employment Tribunal.