Transferring business ownership could offer huge potential for the betterment of a business. However, this transition can be difficult, especially for employees. If your business is going under new management or merging with a different company, it’s normal to feel uncertain about what it means for you.
It’s during these situations that TUPE comes into play. It keeps the same terms and conditions, including your employment contract continuation. With the TUPE regulations, you don’t need to worry about your job when changes happen.
So, how does it work? Read on to learn more about TUPE regulations.
What Is TUPE?
The Transfer of Undertakings (Protection of Employment) or TUPE regulations apply to business employees in the UK. This law protects employee rights during a transfer of business ownership.
In addition, it passes on the legal liability associated with the exiting employer to the new one.
What Do the Regulations Do?
If the TUPE regulations never existed, employers could abandon their employees without repercussions. No employee wants to suddenly lose their job because of something they could not control.
TUPE protects the employment of employees and ensures its continuation. Employers cannot dismiss employees during a business ownership transfer.
Your new employer cannot change the terms and conditions of your contract. However, the employee and the new management can make changes if they are economic, technical, or organizational. These fall under the fair dismissal provisions of the Employment Rights Act 1996.
Types of Transfer Protection Under TUPE
When do the TUPE regulations apply in a transfer of business ownership? TUPE applies to both public and private sectors and allows transfers from the public into the private sector.
Under the TUPE regulations, you can find two types of transfer protection.
1. Business Transfers
TUPE regulations apply when a business moves from one employer to another. A business transfer can include mergers of entities, where two companies combine to form a new one.
The identity of an entity will depend on the transfer of tangible and intangible assets. Courts will also consider if the majority of the employees were moved to the new employer.
2. Service Provision Changes
TUPE regulations will also apply to outsourcing, insourcing, or retendering services. This includes contracts providing labor-intensive services, such as catering and security. These managed activities must stay the same after the transfer.
The TUPE regulations don’t apply when the contract is for the client’s supply of goods. TUPE also does not cover short-term tasks.
3. Working Abroad
TUPE regulations apply even if you work abroad, as long as the base is in the UK. The purpose of the transfer is to move the company, or a part of it, overseas. This situation can get tricky, so it’s always best to seek legal aid.
Roles of an Employer
Transferring business ownership involves a complex procedure. To avoid issues, employers must plan and seek legal advice beforehand. Doing so allows the management to assess risks and have a genuine dialogue with the staff.
With the TUPE regulations, all employees can carry on working for the new company. The new employer cannot change the terms and conditions unless everyone agrees. Moreover, the transferee inherits the obligations for statutory rights, claims, and liabilities.
To know more about the roles of an employer during a transfer, continue reading.
1. Inform and Notify the Staff
Transferring employees without notice is unethical. Before the change, they must inform and notify the staff.
The transferor can inform the staff representatives about the transfer. They can also use this time to consult the staff representatives on changes that can affect the employees.
During the consultation process, they show up on behalf of the employers. They must take this opportunity to explain the changes they plan to make and the purpose of the transfer. When an employer fails to consult, they must compensate the employees.
An automatic transfer happens when you have a personal pension. The new employer must pay the same amount as the old employer. If the current management used the workplace pension, the TUPE regulations can’t transfer it.
The new employer does not have to pay the same amount but must offer a reasonable alternative scheme. It must meet the standard and match the employee contribution. Note that entitlements depend on the nature of the pension plan.
3. Redundancy Pay
To apply for redundancy in the workplace, consult the existing employer. When the latter agrees, the former can continue their plan. If the employee becomes redundant due to ETO reasons, they have the right to a redundancy payment.
4. Sharing Employee Information
Another role of the transferor is sharing employee information with the transferee. The old employer must give the profile of the transferring employees. The information must include all the associated rights and obligations towards the staff.
It includes the employee’s name, age, details of employment, and more. The transferor must pass all to the transferee at least two weeks before the transfer. Failure to do it can result in an employment tribunal for compensation.
TUPE in Insolvency
What happens if the exiting employer is insolvent? In this case, TUPE regulations protect the new employer. As a result, they don’t need to pay for unresolved obligations of the former management.
When it comes to employee rights, the type of insolvency can affect TUPE protection. If the organization closes down, the law cannot protect the employees. However, it can keep the employee’s rights and existing terms if another company takes over.
The insolvent company can protect its assets with a pre-pack administration. In addition, it helps in transferring employee contracts along with existing rights. Visit https://antonybatty.com/company-administration/pre-pack-administration/ to learn more.
Everything You Need to Know About TUPE
Transferring business ownership can leave employees uncertain about their standing in the company. Understanding TUPE can give you some peace of mind about your job. TUPE protects you and prevents any unfair treatment you may face during this transition.
Do you want to learn more about your rights as an employee? Check out our other blog posts to learn more.