The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) brought UK legislation in line with the European Community’s Acquired Rights Directive and introduced protection for the rights of employees on the transfer of an undertaking. Any organisation that wishes to sell part of its portfolio, outsource contracts, or bring work in-house, may well face an obligation to meet the requirements of this complex piece of employment law.
Due to its complexity, specialist legal advice is always to be recommended when any action that may be covered by TUPE is being considered.
The legislation seeks to protect the contractual rights of employees by ensuring that the transferor’s employment responsibilities and liabilities are carried across to the transferee, and that employees do not suffer a break in their continuity of employment; it also seeks to ensure that employees have the ability to make a claim against the transferee for unfair dismissal or for discrimination should their position be terminated without sufficient reason.
Sufficient reason, under TUPE, requires an economic, technical or organisational justification of decisions taken. As the Department for Business, Enterprise and Regulatory Reform states in its guide to the 2006 TUPE regulations, there is no statutory definition of an “economic, technical or organisational reason”; yet the TUPE Regulations state that if a dismissal is made that cannot be shown to be on economic, technical or organisational grounds, it is considered to be automatically unfair. Furthermore, the onus of proof falls on the transferee. It is vital to have professional advice based on case precedents, on whether your circumstances may amount to an ‘ETO reason’.
The transferor also has obligations under TUPE, notably a requirement to inform and consult with staff affected by the planned transfer, and a requirement to set out the rights and obligations that the transferee will take on. Failure to do so can lead to the transferor facing an employment tribunal in the first case, or to a compensation payment being made to the transferee in the latter.
Any transaction that might fall under TUPE may also require the transferor and transferee to consider further relevant legislation, including the Pensions Act 2004 and the Transfer of Employment (Pensions Protection) Regulations 2005 (SI 2005/649).
If you are an employee…
in the middle of a TUPE situation, it is equally important to make sure that you are not left ‘high and dry’ between two ’employers’, and that your rights are fully enforced. We have come across situations where two unscrupulous employers involved in a business transfer have attempted ‘pass the buck’ and evade their joint responsibilities to their employees.
Please do call us to discuss further if you are an employee that needs advice in the midst of a TUPE transfer.