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Introduction to TUPE

Updated: Feb 16

Designed to protect employees’ rights, TUPE is a complex area of employment law and employers often need clarification on what they must do and what might happen if they inadvertently breach the law.

rradar solicitor Laura Moore takes a look at this complex area.

TUPE stands for “Transfer of Undertakings (Protection of Employment) Regulations 2006” as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014.

The regulations apply to organisations of all sizes and protect employees' rights when the organisation or service they work for transfers to a new employer.

During TUPE, the old/outgoing employer is known as the transferor and the new/incoming employer is called the transferee.

TUPE can be activated when there is either:

1. A business transfer - the TUPE regulations apply if a business or part of a business moves to a new owner or merges with another business to make a brand-new employer.

2. A Service Provision Change (SPC) - the TUPE regulations apply in the following situations:

- Outsourcing = a contractor takes over activities from a client.

- Re-tendering = a new contractor takes over activities from another contractor.

- Insourcing = a client takes over activities from a contractor, bringing them in-house

For it to be a SPC under TUPE, there needs to be:

- an ‘organised grouping of employees’ assigned to that activity/work,

- whose ‘principal purpose’ is to carry out activities on behalf of the client in question on the service which has been taken over,

- and those activities must remain ‘fundamentally the same’ after the transfer.

If those activities will be fragmented or will significantly change after the transfer, then it’s likely TUPE would not apply and those employees would remain with the transferor.

If TUPE applies, then the ‘organised grouping of employees’ assigned to that service whose ‘principal purpose is to carry out that activity for the contractor’ will transfer over to the new contractor (transferee) on their current contractual Terms and Conditions.

It’s worth noting that the transferor can transfer these employees to another activity/contract leading up to the SPC, meaning those employees will no longer transfer over under TUPE.

What if an employee refuses to transfer under TUPE?

TUPE can often be a very scary and confusing time for both employers and employees.

It’s common to hear employees saying they don’t want to transfer over/opt to refuse to move.

If they refuse, they can request redeployment or be considered for redundancy if available/applicable. If none of these apply and the employee still objects, then it will be deemed to be a resignation

Before the transfer, they need to submit their resignation in writing to their current employer, the transferor.

The situation will then be that the employee has resigned with the transferor (old employer). and they never transfer over to the new employer (transferee).

Provided that they have given the correct amount of notice under their contract, they will receive their notice pay, salary owed up until the date of termination and any holiday owed to them as normal.

They will have no entitlement to redundancy pay or other such statutory benefit.

They will usually have no right to claim unfair dismissal as they resigned, although in certain circumstances they may have where they can demonstrate that the transfer has resulted - or will result - in a substantial worsening of their working conditions. Whilst the mechanics of it would essentially be a constructive dismissal claim, it would also be labelled as an ‘unfair dismissal’

The Transferor can offer them any other role not affected by TUPE at any time before transfer if they wish but they have no obligation to do so.

Penalties for breaches of TUPE

Under the Enterprise and Regulatory Reform Act 2013, tribunals have the power to impose financial penalties against employers who have breached employment rights. This is for any type of case, not just TUPE matters, because in addition to this, there are also separate financial penalties in respect of breaching the actual TUPE regulations. The penalty will be half of the compensation award made. It has a minimum threshold of £100 and an upper ceiling of £5,000. If the employer pays the penalty within 21 days, they will be entitled to a reduction of 50%.

Although this advice is comprehensive, TUPE is a very complex area of employment law and outcomes for these cases are dependent on the individual circumstances of each case. Employers should always take legal advice if they find themselves in situations like this.


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