TUPE refers to the Transfer of Undertakings (Protection of Employment) Regulations 2006. The main effect of TUPE is to preserve continuity of employment, as well as terms and conditions of employment, of any employees who are transferred to a new employer when there is a “relevant transfer”.
There are two broad categories of relevant transfers:
- Business transfers;
- Service provision change
A business transfer is ‘a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the UK to another person where there is a transfer of an economic entity which retains its identity’. This usually occurs where the assets of one business are purchased by another.
A service provision change can exist in one of three possible scenarios:
- Activities cease to be carried out by a person (a client) on his own behalf and are instead carried out by another person (a contractor) – contracting out;
- Activities cease to be carried out by a contractor on a client’s behalf and are instead carried out by a subsequent contractor;
- Activities cease to be carried out by a contractor or subsequent contractor on a client’s behalf and are instead carried out by the client on his own behalf – contracting back in-house
There are some key changes due to take place in relation to TUPE in 2014. The rules on service provision changes will remain, but the legislation will clarify that for there to be a TUPE service provision change, the activities carried on after the change in service provision must be "fundamentally the same as the activities carried out by the person who has ceased to carry them out". Further, the requirement to provide employee liability information will be retained, but from 1 May 2014 the information will have to be given 28 days before the transfer, rather than the current 14 days.
It is imperative to given due consideration to TUPE in relevant commercial transactions. The specialist solicitors in Warners Employment Law Team can advise you on all areas of TUPE and what due diligence should be undertaken. Often employment claims faced by businesses arise from failure to comply with the strict requirements of the TUPE legislation.
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