The law in the UK protects employees’ rights when the business they work for is sold or their employer transfers to another business. It also protects employees when the service they provide transfers from one business to another or the services are brought in-house. These types of changes are often called an insourcing, outsourcing or a second-generation outsourcing.
These transfers are often referred to under the term “TUPE” (pronounced two-pee), which comes from the legislation governing it: The Transfer of Undertakings (Protection of Employment) Regulations 2006.
This is a very complex area of law and you should take legal advice. The guide below has been created to give you a basic understanding of the position and what your rights might be if you are subject to a TUPE transfer.
What is TUPE?
The term TUPE is an acronym that comes from the Transfer of Undertakings (Protection of Employment) Regulations 2006. In broad terms, TUPE protects an employee’s terms and conditions of employment when a business, or part of one, transfers to a new employer.
When does TUPE apply?
TUPE applies when your employment is transferred to a new employer in one of two scenarios:
- A transfer of a business, undertaking or part of a business or undertaking where there is a transfer of an economic entity that retains its identity (a business transfer); or
- A client engaging a contractor to do work on its behalf, reassigning such a contract or bringing the work “in-house” (a service provision change).
An example of a business transfer is if your employer sells its business to a new company – for instance, if you work for a cleaning company that is bought by another company, which continues to provide services to its clients. In order for TUPE to apply, the business entity much transfer and retain its identity after the transfer.
A good example of a service provision change would be an insourcing or outsourcing arrangement. For instance, if you work for a cleaning agency that provides cleaning services to a client, and that client decides to end its contract with the agency and hire you directly instead.
When TUPE applies can be a complex area of employment law, so we recommend that you seek advice.
What are my rights in a TUPE transfer?
A TUPE transfer means that an employee is treated as having always been employed by the new employer, with the same continuity of employment (e.g. the same start date) and same terms and conditions (e.g. pay and holiday). If for example, the business you work for is transferred to a new company, that new company cannot change your salary, your holiday or your other terms and conditions without your agreement.
If your employment has transferred under TUPE your rights to statutory family leave and pay are unaffected. So, for instance, your right to take maternity leave and to receive Statutory Maternity Pay (SMP) is unaffected. The date that you started working for your original employer will be used to calculate your right to maternity leave, SMP and other rights. Your new employer will be responsible for the payment of any maternity pay.
Essentially, you should be no worse off due to your employer having changed. There are limited exceptions to this, for example, redundancies.
If you TUPE transfer to a new employer, you cannot be dismissed because of the transfer, This means the new employer has to continue to employ you on the same terms and conditions unless the new employer can demonstrate there is a good business reason (known as an Economic, Technical or Organisation (ETO) reason) for the dismissal, to make staff changes, or changes to terms and conditions, following a TUPE transfer.
If your previous employer recognised your union, then the new employer has to recognise them too.
If your old or new employer tries to change your terms and conditions or dismiss you, and you think it is because of the transfer, you should seek legal advice.
What must my employer do?
TUPE requires your old employer and new employer to:
- Inform you that a transfer is to take place, as well as the legal, economic and social implications of the transfer, and any measures which they envisage might be taken; and
- In some circumstances, consult you on the transfer.
Although there will be a duty to inform employees that their employment is transferring, the duty to consult with affected employees only arises of an employer envisages making changes to working practices. The requirement to consult does not just involve those who are transferring but also those who may be affected by the TUPE transfer.
“Consultation” is essentially a series of meetings between you, your current employer and possibly your future employer. There is specific information that you should also be given including:
- The fact that the old employer is proposing to transfer the business to the new employer.
- When the transfer would take place.
- The ways in which the transfer will affect employees and which employees will be affected.
- The fact that the transferring employees’ period of continuous employment would be preserved.
- Details of any other legal, economic or social implications for the employees affected by the transfer.
- Whether the old or new employer envisages changing working practices, and if so, what measures, in relation to its affected employees in connection with the transfer.
- The number of agency workers temporarily working for and under the supervision and of the old or new employer.
- The parts of the undertaking in which those agency workers are working, and the types of work they are carrying out.
A consultation should normally take at least two weeks from start to finish, often much longer.
Consultation means more than simply giving an opportunity to air views, it must be with a view to seeking agreement to the changes envisaged. In practice, this means that the employer must negotiate in good faith over all areas of the proposed redundancies or the changes it intends to take over the TUPE transfer.
Failure to adequately consult with you (i.e. by not giving you enough information or not allowing enough time) could mean that you are entitled to compensation.
You can “object” to transfer to the new employer, but should be aware that this could result in you resigning from your job, and giving up your employment rights.
The role of employee representatives
Depending on the number of employees transferring, this might involve your trade union, or by you electing colleagues to represent you in discussions with both your current and future employer.
If you are an elected representative, your role is to:
- Receive information from management about the TUPE transfer and any measures being proposed, whether in writing or at meetings.
- Ensure that the employees that you represent know who you are and how to contact you during the information and consultation period.
- Share information from management with the employees that you represent, and explain the process and any proposed measures to them.
- Talk to your fellow representatives about the process and any proposed measures.
- Act as a point of contact on relevant issues.
- Attend meetings to consult on the TUPE transfer and any measures being proposed.
- Make representations in writing or at meetings (or both).
- Gather questions and views from the employees that you represent and feed them back to us in writing or at meetings (or both).
- Keep the employees informed of progress and any developments during the consultation.
- Share the information provided by management with the employees that you represent and obtain their views.
- Be aware of the obligation of confidentiality for certain information.
When TUPE does not apply
TUPE does not apply in certain situations, such as when your entire company is sold (rather than a part of it), as your employer remains the same.
TUPE is relaxed when your old employer is closing down due to financial or commercial reasons. This means that your old terms and conditions are not protected as well.
The reason for this is that a new company will be more likely to buy a failing company if they do not have to worry about matching all the employees’ old contract terms.
This advice applies in England, Wales, Scotland and Northern Ireland. If you live in another part of the UK, the law may differ. Please call our helpline for more details.
If you have further questions and would like to contact our advice team please use our advice contact form below or call us.