The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (TUPE) came into force on 6 April 2006. TUPE introduced three concepts:
- The automatic transfer principle: the contracts of employment of those employees employed by the transferor and “assigned to the organised grouping of resources or employees that is subject to the relevant transfer” automatically transfer to the transferee on their existing terms, with the exception of old age, invalidity and survivors' benefits under occupational pension schemes (regulation 4(1), TUPE). Accordingly, the transferee inherits all rights, liabilities and obligations in relation to these employees.
- Enhanced protection against dismissal - any dismissal of an employee with the qualifying period of service will be automatically unfair where the sole or principal reason for the dismissal is either: the transfer itself or reasons connected with the transfer which is not an economic, technical or organisational reason entailing changes in the workforce (ETO reason).
- The obligation to inform and consult with representatives of the affected employees. Both the transferor and the transferee must inform and (if appropriate) consult with either recognised trade unions or elected employee representatives (if there is no recognised union) in relation to the employees who may be affected by the transfer or any measures taken in connection with it. A failure to comply with these obligations exposes the parties liable to pay compensation equivalent to up to 13 week's uncapped pay.
TUPE is a technical area of law and is amended frequently by both case laws and legislation. Many of the terms, such as “entailing changes to the workforce” and ETO are under constant review and interpretation.
If you are a business acquiring or selling another business or involved in any restructuring which may affect the employees or their rights it is important to seek advice well in advance. There are many pitfalls for the unwary and time limits and procedures to follow. It is easy to get caught out and end up with substantial and unforeseen liabilities.
If your employment was terminated because your employer has decided to sell or outsourced the business in which you work, you may be able to bring a claim for an automatic unfair dismissal and for a failure to inform and consult on the transfer. The time limit to bringing such a claim is three months from the date of termination.