TUPE
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) are highly complex regulations designed to protect employees when the ownership of the business changes hands, or when a function is outsourced by a business to an external contractor. The position under contract law is that a contract of employment terminates when the ownership of the business changes, which would mean that many employees would find themselves out of a job. To protect them TUPE has the effect of transferring across all employees and their employment rights from the old business (the transferor) to the new business (the transferee). The new employer must not alter or reduce the term and conditions of employment to the staff it "inherits" and this can create problems for employers when trying to harmonise terms and conditions amongst their staff.
The main effect TUPE has, though, is to make it an automatically unfair dismissal for an employer to dismiss an employee because of the transfer. Any employee who has 12 months continuous employment experience with the transferor and who is dismissed can bring a claim for unfair dismissal and will only have to prove that the reason for the dismissal is the fact of the transfer. An employer can defend such a claim only if it can show that the dismissal was made on Economic, Technical or Organisational (ETO) grounds, for instance because of a restructuring following the acquisition of the business.
An employer contemplating transferring his business to another, has an obligation to inform and consult with all staff affected by the transfer, and to provide specified information, unless it is not reasonably practical to consult. An employee may issue a claim at an Employment Tribunal and the ET may award up to a maximum of 13 weeks pay (which is not capped at the usual £350 p.w) for failure to consult.
The transferor is also under a duty to provide the purchaser with "employee liability information" being written details of any transferring employees not less than 14 days before the transfer. Failure to do this can lead to an ET making an award of up to £500 per employee.
TUPE presents many challenges for both employee and employer alike. If you believe that you have any issues with them please do not hesitate to contact us for advice on 0207 464 8433