The law in the UK protects employees’ rights when the business they work for is sold.
It also protects employees when the service they provide transfers from one supplier to another (e.g. cleaning services to a company).
These types of changes are often called an insourcing, outsourcing or a second-generation outsourcing.
These protections are often referred to under the term “TUPE” (pronounced chu-pee).
This is a very complex area of law and you will need to take specialist 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 word TUPE comes from the legislation, or law, governing it: The Transfer of Undertakings (Protection of Employment) Regulations 2006.
It is quite a complex area of employment law but, in broad terms, it protects an employee’s terms and conditions when a business, or part of one, transfers to a new employer.
It means that an employee is treated as having always been employed by that 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. Your terms and conditions should not be changed without your express agreement.
If you TUPE transfer to a new employer, you are also protected against dismissal (for reasons connected to 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 “ETO” – Economic. Technical or Organisation reason) for the dismissal, to make staff changes, or changes to terms and conditions, following a TUPE transfer. .
Essentially, you should be no worse off due to your employer having changed.
If your new employer tries to change your terms and conditions or dismiss you, please get specific legal advice.
What happens if my employer tells me they are transferring the business?
Employees should be consulted with in advance of their employment transferring because of TUPE.
“Consultation” is essentially a conversation between you, your current employer and your future employer, giving you information about what is happening to you.
A consultation should normally take at least two weeks from start to finish, often much longer.
Depending on the number of co-workers also transferring, this might involve your trade union, or by you electing colleagues to represent you in discussions with both your current and future employer.
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.
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.
If your previous employer recognised your union, then the new employer has to recognise them too.
TUPE and Insolvency
TUPE is relaxed a bit 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.