The Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE‘) seek to protect employees’ rights when there is a sale or transfer of a business or a change in service provider. As of 1 July 2024, there has been a change to the rules on informing and consulting under TUPE.
Background
TUPE provides protection for employees where the business they are employed in is either sold to a new owner (an asset sale) or where the work they are carrying out is transferred to a third party, or brought back in-house, for example, the outsourcing of IT services (a service provision change). TUPE does not apply to business sales where only the shares are being bought.
How does TUPE work?
When TUPE applies, the contracts of employment of affected employees (along with any associated rights, liabilities and trade union recognition or collective agreements) transfer automatically to the buyer/third party who automatically becomes the employee’s new employer. The purpose of TUPE is to protect transferring employees from dismissal, and/or changes to their employment contract as a result of the transfer.
Affected employees are defined as “any employees of the transferor or the transferee (whether or not assigned to the organised grouping of resources or employees that is the subject of a relevant transfer) who may be affected by the transfer or may be affected by measures taken in connection with it”.
The transferor is the business which the employees are leaving and the transferee is the organisation the employees are joining (their new employer).
The obligation to inform and consult
When TUPE applies, both the old and new employer must inform (provide details of the transfer and outline any implications) and, where required, consult (about any proposed measures or changes in connection to the transfer) with their affected employees or employee representatives about the transfer.
Before 1 July 2024 the requirement to elect employee representatives applied where there were 10 or more affected employees. If an employer had less than 10 employees (known as a ‘micro-business’) they could consult with affected employees directly, making them exempt from the need to invite elections for employee representatives.
Changes from 1 July 2024
The micro business exemption has been extended, as of 1 July 2024, to apply to:
- Employers with less than 50 employees; or
- Employers of any size, involved in the transfer of less than 10 employees.
This extension only applies where there are no existing employee representatives, or the employer has not invited elections.
The change should be seen as a positive step in hopefully speeding up and simplifying the process of informing and consulting with affected employees. Employers now have more flexibility and can adopt a more ‘personal’ approach to try and understand any concerns first-hand and minimise the chances of a formal dispute arising.
Liability
Employers should bear in mind that if they do not provide the prescribed information under TUPE or fail to follow the correct procedure affected employees could be awarded up to 13 weeks gross pay in the event of a successful claim.
Gardner Leader’s Employment team is able to support any business with all aspects of the TUPE process. Should you require any further information about the above, or if you require tailored advice, please contact our employment team [contact details].