What is TUPE?
TUPE stands for The Transfer of Undertakings (Protection of Employment) Regulations 1981. This is a piece of employment legislation designed to safeguard the rights of employees when the 'undertaking' in which they work is transferred from one employer to another
How does it protect employees?
The Legislation has 5 main strands;
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• It provides for relevant employees to transfer automatically into the employment of the new employer on the same terms and conditions as they had with the old employer;
• It protects employees from being dismissed because the 'undertaking' (the part of the organisation they work in) is being transferred;
• It also provides for the transfer of any collective agreements negotiated between the current employer and trade unions;
• It requires the new employer to honour existing arrangements for trade union recognition, and;
• It obliges both the old and the new employer to consult with the recognised unions (or other elected employee representatives).
Who is a 'relevant' employee? How is it determined which employees transfer?
It is not always easy to decide which employees are entitled to transfer under TUPE. The legislation states;
• that an employee will transfer if, immediately before the transfer, s/he is employed in the undertaking or part of an undertaking which is being transferred;
What if only a part of an employee’s time is 'employed on the undertaking'?
According to the law, the test which must be applied is to ask whether the employee is "assigned to" the undertaking. Therefore, this clearly includes any employee who spends 100% of his or her working time in the 'undertaking'. However, it is now widely interpreted that an employee who spends the majority (i.e. above 50%) of their working hours in the transferred undertaking are assigned to it. The final 'list' of employees proposed for transfer will need to be discussed and agreed with the prospective new employers
What will happen if employees spend part of their time on a transferring service and part on another function?
Criteria will usually be agreed with trade unions in these circumstances to be operated consistently in order to enable;
• the identification of the 'right number' of 'posts' to be transferred in relation to each transfer, and;
• a series of processes to be used for the identification / selection of individuals who will be 'attached' to these posts
What if an employee does not want to be transferred?
Although employees who come within the scope of TUPE have an automatic right to transfer to the new employer, it is not obligatory for them to do so. An employee who does not wish to transfer can inform either their existing or their new employer of that fact. However, it is important to note that in that event, the law provides that their contract terminates automatically. This means that s/he;
• has no right to be offered alternative employment upon termination;
• would be unlikely have no grounds to claim they had been unfairly dismissed;
• would not be entitled to any redundancy pay, and;
• have no 'automatic' right to an early retirement or other severance package
Other than 'terms and conditions' do any other 'rights' transfer?
Where an employee transfers under TUPE, the new employer is required to step into the shoes of the old employer in virtually all respects. This means that:
• all of the Council's rights, powers, duties and liabilities in connection with the contract of any transferring employee, transfer to the new employer; and
• Anything which the Council did in relation to that employee is deemed to have been done by the new employer.
What about pensions?
Within the legislation, 'occupational pensions' (such as the Local Government Pension Scheme) are the only exception to the principle that the new employer must step into the shoes of the old employer. However, the Government has issued some very clear guidance to ensure the new employer provides 'comparable pension arrangements'.
Furthermore, the Local Government Pension Scheme (LGPS) now allows certain non Local Authority employers to participate in the scheme as 'admitted bodies'. This allows transferring employees to remain within the scheme and take their Local Government 'pensionable' service with them
What if the 'new' employer doesn't want or need the transferred employees?
Dismissals which are related to the transfer of an undertaking are governed by special 'protective' arrangements within Employment Law. More specifically, TUPE has the following key features
• it protects against dismissal where the reason, or principal reason, is the transfer of an undertaking or a reason connected with it and provides that;
• any such dismissal is rendered automatically unfair for the purposes of the Employment Rights Act 1996 ("ERA");
However, the automatic unfairness rule does not apply where the reason or principal reason for the dismissal is "an economic, technical or organisational reason entailing changes in the workforce". In practice, this has to a substantial reason and not associated, in any way, directly to the transfer e.g.
In such circumstances, the employee would have the full protection of employment legislation
Can the new employer make changes to terms and conditions of employment?
TUPE imposes very substantial restrictions on an employer's ability to change terms and conditions in the context of a TUPE transfer. Moreover, the employee is entitled to insist on the employer's adherence to each individual term in the contract. The employer is not allowed to say that, taken as a whole, any 'new' contract is as favourable as the old one. It should also be noted that there is no specific time limit on an employee's right to reject transfer-connected changes in terms and conditions, although the passing of time may make it easier for the employer to say that the changes are not a consequence of the transfer.
What consultation obligations does the employer have to keep employees informed?
TUPE requires both the current and the 'new' employer to consult the representatives of any employees who may be affected by the transfer. TUPE sets out the information which an employer must provide. It comprises:
• the fact that the transfer is to take place, when it is to take place and the reasons for it;
• its "legal, economic and social" implications for the affected employees;
• details of any measures which the 'new' employer envisages taking in relation to the employees;
This information must be provided long enough before the transfer to enable 'meaningful' consultation to take place.
hope this helps, robert