Transfer of Undertakings (Protection of Employment) Regulations 2006

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Transfer of Undertakings (Protection of Employment) Regulations 2006
Statutory Instrument
Royal Coat of Arms of the United Kingdom (variant 1, 1952-2022).svg
Citation SI 2006/246
Territorial extent United Kingdom
Dates
Made6 February 2006
Laid before Parliament7 February 2006
Commencement 6 April 2006
Other legislation
Repeals/revokesTransfer of Undertakings (Protection of Employment) Regulations 1981
Made under
Transposes Transfers of Undertakings Directive
Status: Amended
Text of statute as originally enacted
Text of the Transfer of Undertakings (Protection of Employment) Regulations 2006 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk.

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) known colloquially as TUPE and pronounced TU-pee, [1] are the United Kingdom's implementation of the European Union Transfer of Undertakings Directive. [2] They are also used in Ireland. [3] It is an important part of UK labour law, protecting employees whose business is being transferred to another business. [4] The 2006 regulations replace the old 1981 regulations (SI 1981/1794) which implemented the original Directive. [5] The law has been amended in 2014 and 2018, and various provisions within the 2006 Regulations have altered. [6]

Contents

Purpose

The regulations' main aims are to ensure that, in connection with the transfer, employment is protected (i.e. substantially continued).

These obligations of protection are placed on the transferring companies both before, during and after the transfer. The obligations are relieved if there is an "economic, technical or organisational" reason for the cessation of employment (Regulation 7(1)(b)), or alteration to employees terms and conditions (Regulation 4(4)(b)).

This does not apply to transfers which go merely through the sale of a company's shares (a "share sale"). When that happens, because the employer (i.e. the original company) remains the same legal entity, all contractual obligations stay the same. The directive and regulations apply to other forms of transfer, through the sale of physical assets and leases. The regulations also apply in some cases for work transferred to contractors. This protected contract terms for workers include hours of work, pay, length of service and so on, but pension entitlement is excluded.

Contents

1. Citation, commencement and extent
2. Interpretation
3. A relevant transfer
4. Effect of relevant transfer on contracts of employment
5. Effect of relevant transfer on collective agreements
6. Effect of relevant transfer on trade union recognition
7. Dismissal of employee because of relevant transfer
8. Insolvency
9. Variations of contract where transferors are subject to relevant insolvency proceedings
10. Pensions
11. Notification of Employee Liability Information
12. Remedy for failure to notify employee liability information
13. Duty to inform and consult representatives
14. Election of employee representatives
15. Failure to inform or consult
16. Failure to inform or consult, supplemental
17. Employers' Liability Compulsory Insurance
18. Restriction on contracting out

Example

Imagine a company that has in-house cleaners. The company decides that they want to tender-out the contract for cleaning services. The new company that takes over the work may employ the same cleaners. If it does so, TUPE will make it likely that the new employer will have to employ the cleaners subject to the same terms and conditions as they had under the original employer, although future recruits may be appointed on different terms and conditions. [9]

If any staff are dismissed by either employer for a reason connected with the new arrangement this will automatically be deemed an unfair dismissal and the new employer will be liable for any statutory claims arising as a result.

This is also the case where a target business (as distinct from shares in a company) is bought from company A by company B (often much larger) and integrated with the business of company B.

Evaluation

The benefits to individual workers are clear; TUPE prevents the possibility of everybody in the firm losing their jobs, just because the company providing the service changes. This gives employees increased certainty. A side-effect of the new regulations could prove unfortunate for some employers. This has been particularly highlighted in connection with law firms.

According to the Law Society's magazine, The Law Society Gazette , law firms might be forced to employ teams of lawyers when taking over contracts. [10]

Under the new rules, if a client decides to source their legal work from a different provider, the legal team from the old provider would be entitled to transfer to the new provider under the same terms and conditions as before; if the new provider were to object, the new employees would be entitled to sue for unfair dismissal.

Dr John McMullen, an expert on TUPE, is quoted as saying: "If you had an organised grouping of solicitors at a law firm devoted to one client, and that client said 'I do not want this law firm, I will appoint law firm X', then TUPE 2006 could apply so that—contrary to what the client is expecting or wanting—it may find that the lawyers would have the right to turn up at the newly appointed law firm. The definition of 'organised group' can be just one person."

Objections to the new regulations had been raised during consultation. [11] An exemption for professional services firms had apparently been mooted by the government but was eventually ruled out. In 2012, the UK coalition government sought feedback on the efficacy of TUPE in relation to professional services and found that there were "mixed views" about whether professional services should continue to be covered by the service provision change regime. In certain sectors, particularly advertising, there was strong support for the idea of introducing an exemption. However, lawyers have highlighted problems with the operation of the New Zealand equivalent of TUPE and warned the government to be cautious in trying to exclude certain groups of employees.

There are potential problems for employees as well. An employee might not want to transfer to the new employer. But, in those circumstances their only option is to "object" which in essence is a resignation but does not impose a duty on the employer to pay notice pay. As their role continues (with the new employer) they are not redundant and therefore have no entitlement to redundancy pay and cannot (except in limited circumstances) claim unfair dismissal.

Anomalies

When the new company takes over the work of its predecessor, it must take on the staff (from the old company) on their existing terms and conditions. This can create the situation where a "transferring" employee may be employed on enhanced terms compared with an employee already employed by the new company. Harmonisation of the terms and conditions between the two groups of employees is generally not possible as the "reason" for it would be the TUPE transfer which (except in limited circumstances) is specifically prohibited.

This could result in a situation where a transferring employee (whose old contract gave them an enhanced holiday entitlement) may be working alongside an existing employee of the new company (working under a contract of employment whose terms were set by the "new" company) who has less generous holiday rights.

TUPE Plus

An extended model of TUPE which aims to address "widely recognised" limitations to the TUPE framework, known as "TUPE Plus" or "TUPE+", has been recommended by Trade Unions and employment advisors. TUPE Plus encompasses a number of enhancements to TUPE which could be included in service contracts, including a guarantee that TUPE would last for the whole length of a contract, because the regulations themselves do not specify a time period. [12] [13]

Reform

In April 2011, the UK government proposed a number of reforms to TUPE. These were enacted in the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014, SI 2014/16, also known as CRATUPEAR, [14] which came into force on 31 January 2014. [15]

Cases

See also

Law outside the UK

Notes

  1. "Citation - HR And Employment Law - TUPE".
  2. Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses
  3. "TUPE Meaning & Definition". Mason Hayes Curran. Retrieved 16 February 2024.
  4. E McGaughey, A Casebook on Labour Law (Hart 2019) ch 19(1)(c). S Deakin and G Morris, Labour Law (Hart 2012) ch 5.
  5. "EUR-Lex - 31977L0187 - EN - EUR-Lex". eur-lex.europa.eu.
  6. See ACAS website
  7. "? - EUR-Lex". eur-lex.europa.eu.
  8. Whitehouse v Charles A Blatchford & Son Ltd [2000] ICR 542, says the reason would have to be one connected with the business' future prospects.
  9. Unison, Two-tier workforce, accessed 9 August 2022
  10. Rothwell, Rachel (9 March 2006). "TUPE changes 'force' legal teams on firms". The Law Gazette. Law Society.
  11. Rohan, Paula (26 May 2005). "TUPE could force lawyer moves". The Law Gazette. Law Society.
  12. Unison, TUPE and TUPE+, accessed 25 November 2022
  13. European Services Strategy Unit, UNISON Barnet: Future Shape of the Council Programme, September 2008, accessed 25 November 2022
  14. Fretten, K., CRATUPEAR Annulment? Redundancies and TUPE, published 5 May 2014, accessed 6 July 2021
  15. UK Legislation, Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014, accessed 6 July 2021
  16. 1 2 Employment Appeal Tribunal, London Borough of Hillingdon v Anne Gormanley and Others, 19 December 2014, accessed 6 July 2021
  17. Brahams Dutt Badrick French LLP (BDBF), If you're one of two employers being sued, don't be the first to settle, published 16 February 2013, accessed 7 July 2021
  18. Employment Cases Update, London Borough of Hillingdon v Gormanley & Ors UKEAT/0169/14/KN, published 19 December 2014, accessed 15 May 2021

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