Factsheet: Transfer of Undertakings (Protection of Employment) Regulations 2006

Fact Sheet: Transfer of Undertakings (Protection of Employment) Regulations 2006

The Transfer of Undertaking (Protection of Employment) Regulations 2006 or TUPE Regulations have a major impact on businesses in this country by preserving the continuity of employment and employment terms of transferring employees. Sarah Liddiard of Machins company commercial department explains some practical implications on how the TUPE Regulations can affect your business and why you need to make sure you have the appropriate advice so that you do not have any unexpected surprises which you have not budgeted for.

I’ve heard of the TUPE regulations and as I am not planning to take over another business or merge they won’t apply to my business.

The TUPE Regulations also apply in the case of a service provision change in the following circumstances:

• A contract to provide services is awarded to a contractor (contracting out or outsourcing);
• A contract to provide services is reassigned to a new supplier; or
• A contract to provide services is contracted back in house or insourced.

In the current economic climate, many businesses or other bodies are looking to cut costs and are actively looking at changing their service providers in order to achieve this. If your business is taking part in a tendering process or canvassing for new work, it is important that you are alive to the fact that TUPE applies and you may inherit the incumbent service provider’s employees.

Surely I can just wait a bit and then change the transferring employee’s terms and conditions?

Each situation is different and employers need to be very careful to time when it is safe to change the terms and conditions of employment of the incoming employees. Importantly any change that is made where the reason is solely or primarily related to the transfer are void, so it might be some time before changes can be made. However, the TUPE Regulations do permit employment contract variations following the transfer in certain circumstances which are for an economic, technical or organisational reason (ETO defence). The TUPE Regulations do not provide definitions as to what constitutes an economic, technical or organisational reason, so employers do need to look to relevant further guidance or seek professional advice to make a fully informed decision on how to proceed.

Can I contract out of the TUPE Regulations?

It is not possible to contract out of the TUPE Regulations but you may be able to compromise any claims the employee has depending on the circumstances.

I am the employer who’s employees are transferring over to a new employer. I take it I am off the hook on the transfer date?

You might be but it would be prudent to seek advice as soon as a transfer seems likely to make sure you have carry out your obligations in time and to ensure compliance with the TUPE Regulations. In the case of a service provision change, you should also check any contract which your business entered into at the time you started to provide the services as there could be indemnities or other obligations which carry on after the contract terminates.

For further details on how Machins Solicitors LLP can assist you, please contact Sarah Liddiard.