TUPE Meaning: Legal Implications for Employers and Employees

When you run a business as an employer, the company structure can change, such as if you merge with another.  Alternatively, you may decide to transfer part of your business to a new employer. Or, perhaps you want to let a separate business carry out some of the services you require but usually carry out in-house, so do so through a new contract. Your employees will be affected when your company structure changes through a TUPE transfer, so they are usually legally protected by the TUPE Regulations. Therefore, this article will explain the meaning of TUPE and the legal implications for employer and employee rights. 

What Does TUPE Mean?

TUPE is the abbreviation for Transfer of Undertakings (Protection of Employment). This legislation protects your employee’s rights if they transfer from you to another employer within the UK. 

This could be either a:

• business transfer, which means part of an organisation or business or all of it transfers to a different company or two companies merge to form a new one; or
• a service provider change, which is when a service is transferred to a different provider through a contract, such as a company taking on the security of a shop. 

TUPE applies to all businesses regardless of size and is not limited to private companies like yours; it also applies to the public sector and charities.

Do I Always Need to Comply With TUPE? 

TUPE is legal protection for employees and will protect anyone who works for you if they are legally classified as an employee. The legislation sometimes protects those lawfully classified as workers but does not protect agency workers. An employment lawyer can help you to understand this fully, as it can be confusing. 

If your business is involved in a business transfer or service provider change, you must comply with TUPE, where either meets the criteria.  

The criterion a business transfer or service provider change must meet to comply with TUPE includes, for example:

• giving specific information to affected employees or their elected employee representative, which applies depending on the size of your business;
• consulting with the representatives regarding the transfer; and
• if you are the old employer, giving the new one specific information about the employees transferring, such as their employment contracts.

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Business Transfer Criteria 

TUPE applies if the business transfers and the transfer meets all the criteria below. 

The criteria are:

• a change of employer;
• that the transfer includes the main assets, such as but not limited to, employees and the equipment of the business; and 
• the business transfer does not change the business’s activity, or if it does, it remains similar. 

However, if a business transfer only involves the transfer of shares or equipment, TUPE usually will not apply.

Service Provision Change Criteria 

When contracts are taken over, constituting a service provider change, there are three ways this can occur:

• outsourcing, so a contract from outside the business or organisation takes over a service the former used to carry out;
• insourcing, so a business or organisation starts carrying out a service previously done through an outside contract; or
• retendering, which is when a contract between a business and another ends and a new contractor takes over that service.  

Regardless of which service provider change occurs, TUPE applies but only where there is an ‘organised grouping of employees’ unless the contract in question is:

• only the supply of goods, such as a fashion brand getting its material from a different; provider; or
• for a one-off event or a short-term task, such as a conference.

An organised grouping of employees means those carrying out the work for the organisation or business receiving the services. You may hear people refer to the latter as the client. 

How Does TUPE Protect My Employees?

TUPE protects your employees in various ways. For example, protection within TUPE includes:

• an employee being able to transfer on their current terms and conditions;
• any liabilities from the old employer, such as unpaid wages, becoming the liability of the new employment;
• the employee keeps their continuous service gained from the old employer; and
• protection from dismissal, meaning it will be an unfair dismissal in specific circumstances. 

Key Takeaways

If your business is part of a business transfer or service provider change, The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) will likely apply.  This is legal protection for the employees affected by these changes in a business or organisation. A business transfer is where part of or all of a business transfers to another one or two merge into a new one. A service provider change is where a business or organisation changes who provides a specific service it receives. 

You must comply with TUPE in both circumstances, provided the business transfer or service provider change meets the relevant criteria. TUPE protects your employees in various ways, such as automatically transferring their existing terms and conditions when they transfer. 

If you need help understanding the meaning of TUPE and the legal implications for employers and employees, our experienced employment solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.

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