The Transfer of Undertakings (Protection of Employment) Regulations 2006, also known as TUPE, is a piece of legislation that most businesses will have to deal with at some point – whether it's part of a scenario as complex as buying the business and assets of another company or as seemingly simple as changing a cleaning contractor in relation to the supply of a single, part-time cleaner.
TUPE is designed to preserve employment rights in these types of situations. It offers a number of different protections to employees and brings potential liabilities for employers.
However, despite its ubiquity, it is one of the more complex areas of employment law and clients will often have many questions about its application and its effect. Below we have gathered some recent issues we have encountered in relation to TUPE.
When does TUPE apply?
This depends on whether there is going to be what is known in the legislation as a "relevant transfer".
A relevant transfer applies to a number of scenarios. One would be a business transfer - if a business or part of a business moves to a new owner or merges with another business to make a brand new employer. It also could be as a result out of a service provision change, for example: if a contractor takes over activities from a client (known as outsourcing); a new contractor takes over activities from another contractor (known as re-tendering): or if a client takes over activities from a contractor (known as in-sourcing).
TUPE does not apply to a sale of shares in a company since there is no change in the identity of the employer in such circumstances. The crucial factor is not what the parties call the transaction but whether, as a matter of fact, there is a situation that falls within the definition of relevant transfer.
TUPE applies regardless of the size of the transferred business, whether it is in the public or private sector and whether or not it has any profit motive underlying the activities. TUPE cannot be avoided by contract, meaning that parties cannot ignore or choose not to apply TUPE in a commercial agreement.
In some scenarios it will be very clear that TUPE will apply while in others there will be much more uncertainty. Early consideration of the potential application of TUPE, and taking appropriate steps to plan for it, is key to protecting a business' interests.
TUPE vs GDPR
GDPR has been in force for a year now and a common question we receive is in relation to the competing interests between GDPR and TUPE in relation to what information can be provided regarding employees in a TUPE situation.
Under TUPE, there is a requirement for Employee Liability Information (ELI) to be disclosed by the transferor (e.g. the seller or current employer) to the transferee (e.g. the buyer or new employer). This will include personal data about the age and dates of birth of the employees, their terms and conditions of employment and information about any disciplinary and grievances in the two years prior. This disclosure will be lawful under the GDPR as it is “necessary to comply with a legal obligation”. However, the legal obligation is to provide this information 28 days before the date of the transfer and therefore providing it earlier than this period could mean this exemption does not apply.
Whilst this is comforting, those involved in TUPE situations should be wary when it comes to disclosing other employee information. More often than not further information will be requested by the transferee as part of due diligence, which could include details about any employees absent from work due to sickness or those on maternity leave.
Such requests have to be carefully handled and consideration given to anonymising information or whether to provide such information at all.
Changing Terms and Conditions
It's quite natural for a new employer to potentially want to harmonise terms and conditions in order that they reflect those of existing employees, however there is a significant barrier to this under TUPE. Any attempt to change the employees' terms and conditions of employment, whenever it takes place, will be void where the sole or principal reason for the change is the transfer itself, and it is not an economic, technical or organisational (an ETO reason) entailing changes in the workforce.
The amount of time that has passed since the transfer is not relevant, other than that it will be less likely that a variation of contract will be seen to be because of the transfer if it happens after some time has passed.
Whilst potentially difficult, there are options that can be explored when it comes to changing terms and conditions post TUPE transfer and we have helped clients work within the regulations to achieve a successful outcome.
Get in touch
Advising on TUPE and contract variations is part of our everyday work with our clients; we apply a logical and practical analysis helping clients to meet their objectives.
Please get in touch if you require our assistance with any matter related to TUPE.