Are you leaving yourself at risk from the provisions of TUPE?



Are you leaving yourself at risk from the provisions of TUPE?


Are you leaving yourself at risk from the provisions of TUPE?

Many employers are blissfully unaware of the rights which are granted under the TUPE Regulations however the risk of going unprepared means you could walk into a legal minefield and face significant financial risk.

In essence the Transfer of Undertakings (Protection of Employment) Regulations 1981 and 2006 provide that in defined situations you are obliged to transfer an employee along with all their key contractual rights such as their role and responsibilities, rate of pay, annual leave entitlement etc without allowing the employee to suffer a detriment such as a reduction in pay or less hours of work.   

So, when does TUPE apply?

Business Transfers

TUPE applies when one business buys another, either in whole or in part, and often when a larger company transfers employees from one company within a group over to another for restructuring purposes.

You may decide to buy a business already in existence and reap the rewards of the established business model. At the same time you need to be aware that you take on the liabilities for the employees that were working for the business before you took it on.

The same rule applies if you are selling your business or part of your business. The employees will transfer which means you are obliged to inform and consult with your affected workforce.

Service Provision Change

A service provision change occurs when a service being provided to a client moves from one employer to another. This could occur in the following situations;

  • An employer chooses to outsource a service that they have previously managed in-house

For example:

You have employed a cleaner directly to do 10 hours per week to look after your business properties. You decide to outsource those 10 hours to an external cleaning company.  

  • An employer chooses to take in-house a service that has previously been outsourced

For example:

You have used the services of an independent bookkeeper and have decided to employ someone directly.

  • A service is transferred from one outsourced business to another.

For example:

A local authority invites transport companies to tender for specific school bus routes every two years. When the tender is won by a new provider TUPE may apply meaning the employees transfer from the old provider to the new provider of the service.  

Inform and consult

Where there is a relevant transfer under TUPE, whether you are transferring in or out, you are under a duty to inform and consult with affected employees. The employee has a right to be notified of a change and be consulted on any measures (changes) that will be occurring as a result of the transfer.

The obligation is on both employers and so it is unwise to simply leave it all down to the new employer as you may be legally liable for a breach of the process.

What are the risks if I don’t comply with TUPE?

At various stages in the transfer process there are potential legal penalties you could face if you ignore the TUPE provisions, in brief these include:

  • £500 per employee for failing to provide a new employer with details of the employees who will be subject to a transfer
  • 13 weeks uncapped pay per employee for failure to inform and consult, both employers may be held joint and severally liable
  • Breach of contract claims if the employee suffers a detriment after a transfer, such as a reduction in pay after the transfer
  • Unfair dismissal claims which can result in thousands of pounds worth of compensation. Both employers may be joint and severally liable for the unfair dismissal of an employee if the employee is dismissed as a result of the transfer  

Employees have an automatic right to transfer where the criteria of a relevant transfer applies. The TUPE Regulations and other statutory provisions provide serious protection for employees and hard hitting financial implications to the unwitting employer who doesn’t comply with their legal responsibilities.

It is always sensible to take legal advice whenever your business is involved in the transfer of business or services.

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