Transferring employees in or out of your business?
Whether you are bidding for or mobilising a new contract, decommissioning an existing contract, or perhaps buying or selling a business – it is highly likely that the Transfer of Undertakings (Protection of Employment) Regulations will apply.
We have a specialised expertise and an impressive track record in handling highly complex TUPE matters, having gained extensive experience whilst working with a number of different organisations. These organisations operated in a diverse range of industries such as local and central government, professional membership bodies and media.
This experience has included TUPE transfers of:
- 1 – 1,000 people at any time.
- Single or multiple transfer dates.
- Public to Private, Private to Public, Private to Private.
- Transfers into Joint Ventures and SPV’s.
There must be a relevant transfer for TUPE to apply. This can be quite complex but falls into one of two broad categories, either a business transfer or a service provision change. See below for more.
There must be a relevant transfer for TUPE to apply. This can be quite complex but falls into one of two broad categories:
TUPE applies if there is a transfer of an ‘economic entity that retains its identity’. This can be determined by understanding:
- If the type of business being conducted by the ‘transferee’ (the new owner, or the employer who is receiving staff) is the same as the ‘transferor’ (the old owner, or the employer who is transferring staff)?
- If there has been a transfer of tangible assets such as building and moveable property (although this is not essential)?
- If there are intangible assets (such as such as patents, trademarks, copyright, goodwill or brand recognition) transferred at the time of the transfer?
- If the majority of employees have been transferred?
- If the customers have been transferred?
- If there is a high degree of similarity between the activities carried on before and after the transfer?
If the answer to several of the above questions is ‘yes’, then TUPE is likely to apply. Sometimes just one of these factors can be enough for TUPE to apply.
Service Provision Change
A ‘service provision change’ occurs when a client who engages a contractor to do work on its behalf:
- Reassigns such a contract (whether by contracting out, outsourcing or re-tendering and in some cases subcontracting); or
- Brings the work ‘in-house’ (where a contract ends with the service being performed in-house by the client themselves).
In addition, the activities undertaken must be essentially the same after the transfer as they were before it.
It won’t be a service provision change if:
- The contract is wholly or mainly for the supply of goods for the client’s use; or
- The activities are carried out in connection with a single specific event or a task of short-term duration.
TUPE has been found to apply to:
- Sales of businesses by sale of assets
- A change of licensee or franchisee
- The gift of a business through the execution of a will
- Transfers out of companies in administration
- Contracting out of services
- Changing contractors
- Situations where all or part of a sole trader’s business or partnership is sold or otherwise transferred
TUPE doesn’t apply to:
- Transfers by share take-over
- Transfers of assets only (for example, the sale of equipment alone would not be covered, but the sale of a going concern including equipment would be covered)
- Buying in services from a contractor on a one-off basis – rather than entering into an ongoing relationship for the provision of the services
- A situation where there is a change of business identity, for example if the nature of the work or the organisational structure changes radically
- The supply of goods for the client’s use (for example, supplying food to a client to sell in its staff canteen, rather than a situation where the contractor runs the canteen for the client)
- Transfers of undertakings situated outside the UK
What People Want To Know
What is TUPE?
TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations and safeguards employees’ rights when there is a transfer of a business or service from one organisation (the old employer or the transferor) to another organisation (the new employer or the transferee).
When does TUPE apply?
TUPE has been found to apply, for example, to mergers, sales of businesses by sale of assets (but not transfer of assets alone), change of licensee or franchisee, transfers out of companies in administration, contracting out of services, changing contractors.
Do I need to consult on TUPE?
The transferor must conduct a full and meaningful consultation at the earliest feasible time. If there are no trade union or employee representatives, representatives must be elected. Micro businesses (under 10 employees) can consult with employees directly if there is no trade union.
Is there a risk with TUPE?
Employers who failure to consult properly can be required to pay staff up to 13 weeks’ pay in compensation. The transferor and transferee are both liable to pay this compensation.
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