The Transfer of Undertakings (Protection of Employment) Regulations 2006 otherwise known as TUPE, protects the rights of employees if the business they are working for is taken over or often if a service they provide to a customer is to be provided by another business. All employees and linked liabilities move from the old employer to the new employer on a TUPE transfer. For more information on TUPE, you can read our extended article here.
When does TUPE apply?
TUPE will only apply in certain circumstances where there has been a ‘relevant transfer’. This is either where there is a business transfer or a service provision change. For more details of what these terms mean please see our article here. TUPE is a complex area of law and so it may be that you have specific questions relating to your business and its proposed dealings. Our specialist TUPE lawyers can assist you.
Checklist for managing a TUPE transfer
As a transferor, who is selling part or all of their business or changing service provider and currently employs the employees subject to a TUPE transfer, here are a list of considerations for managing the transfer:
- Check that you understand TUPE and how and when it applies – seeking legal advice from an expert at an early stage if you think that TUPE may apply to your business sale or service provision change, is a prudent step.
- Identify employees who will transfer – it may not just be employees, some workers may also be subject to the TUPE Regulations, and so again if you require legal advice it is wise to seek this early in your transaction.
- Consider how to manage the transfer- consider how and what you will communicate to staff, look at the benefits and risks to your business of the transfer, how staff will be distributed, and talents retained after the transfer, and any measures which may need to be taken.
- Employee Liability Information – sharing information about the employees transferring and affected by the transfer and how communication and the transfer will be managed should be discussed and agreed with the new employer. This, together with a timeframe for the transaction and exchange of information will need to be agreed to ensure a smooth transition. Our TUPE lawyers can help you consider what should be discussed and agreed with the new employer and how this can be done in a manner compliant with data protection law.
- Warranties and indemnities – it is highly advisable that you seek legal advice about any warranties and indemnities you provide to a transferee relating to employees. Our experienced employment lawyers can guide you on what warranties are more standard and those which may require redrafting or renegotiating before being agreed to best protect your business’ interests.
- Agree on transition arrangements – practical things like whether the new employer will meet staff before the transfer and whether transferring employees will get to see new premises, if applicable are worth discussing at an early stage. Also, how customers receive communication about the transfer and any impact it may have on them are worth consideration.
- Inform and consult – with employees affected by the transfer through Trade Unions or employee representatives. If you are exempt as a microbusiness, you can inform and consult directly with affected employees. There is an obligation to inform and consult whether employees are transferring or not and whether they are currently at work or on any form of leave. Employee representatives should be given paid time off and not suffer any detriment as a result of their duties as an employee representative or to receive training to carry out those duties.
- Consult on any ‘measures’ – you will need to communicate with representatives and affected employees on any proposed changes in working practices after the transfer, including any proposed redundancies.
As a transferee about to take on new employees you will want to consider the following:
- Check that you understand TUPE - whether and how it applies to your transaction and to whom. All employees who are part of the ‘organised grouping’ will transfer if there is a service provision change. Do seek specialist TUPE legal advice if required.
- Consider the transaction as a whole – look at the benefits and risks to your business that the transfer could bring. Take the time to become aware of the financial and operational details of the old employer’s business so that you know what your business’ likely costs and liabilities will be. A proposed timeframe is also useful to discuss at an early stage.
- Review all due diligence information – including Employee Liability Information (ELI) supplied by the former employer. It is advisable to seek specialist legal advice on the drafting of warranties and indemnities to best protect your business after the transfer.
- Consider whether ‘measures’ may need to be taken – look at the employment contracts and working practices of the employees in their current employment and whether any changes would need to be made. If redundancies are likely to be required, consider how this might be done. If there are 20 or more redundancies proposed after the transfer, you may want to ask the old employer for permission to begin pre-transfer consultation.
- Employee terms and conditions – should generally remain the same or be no less favourable after a TUPE transfer. If you cannot offer the same terms as the old employer, you will need to think of suitable equivalent alternatives which can be offered. There may be exceptions relating to pensions, so if you have questions, seeking specific advice from a lawyer in advance is wise. You will want to inform the old employer about any proposed changes. Instructing a solicitor to guide you through what is legally advisable if changes are to be made, is prudent.
- Is a change of location required? – if staff will need to work at another location you will need to consider their individual circumstances and whether reasonable adjustments will be required for staff and whether it is reasonable for them to change location. You will also want to consider whether and when they should visit their new workplace.
- Inform and consult – just as transferors are required to inform and consult, as a transferee you will need to identify which employees are to transfer to your business, and to ensure that relevant trade unions or elected representatives (or employees directly if you are exempt as a microbusiness) are informed about the transfer. This is whether employees are currently at work or on any type of leave. Employee representatives will be entitled to paid time off and no detriment for training and duties relating to the TUPE transfer.
- Communicate clearly with employees – so that employees remain motivated and are not concerned by the transfer, any change in ways of working, roles and responsibilities or team members and structure. It is important to reassure employees about their future working for you so that employees key to the future of your business do not resign. Asking the old employer if you can visit their workplace and speak with transferring employees about the effect of the transfer on them, can assist.
- Check for inconsistencies in information – if you are able to speak directly with employees and gather information directly from them, cross-check this with ELI and other due diligence information collected from the transferor and ask the transferor about any inconsistencies. Within 60 days of the transfer, you will also need to check the transferred employees have the right to work within the UK.
- Prepare to welcome new employees- advance consideration of an induction for new staff, training and harmonisation of working culture will make the transition smoother. Looking at announcements that will be made to customers, other staff and business contacts about the new staff members and ensuring staff feel integrated within the business and know where to direct questions, will likely assist with motivation and productivity. Ongoing communication about whether employees have the resources and support required to fulfil their roles is also in the interests of your business longer term.
Summary
Whether you are a transferor or transferee, if TUPE applies to your business sale or service provision change you will want to make sure you have the knowledge to navigate through this complicated area of employment law. Our expert employment lawyers can assist you with assessing whether TUPE applies and what your obligations are. We can guide you through the specifics of the process if you need more detail than the checklist provided above.
