Transfer of Undertakings (Protection of Employment) Regulations 2006

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The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) known colloquially as TUPE and pronounced tu-pee,[1] are the United Kingdom's implementation of the European Union Business Transfers Directive.[2] It is an important part of UK labour law, protecting employees whose business is being transferred to another business. The 2006 regulations replace the old 1981 regulations (SI 1981/1794) which implemented the original Directive.[3]

The regulations' main aims are to ensure that,

This does not apply to transfers which go merely through the sale of a company's shares. When that happens, because the company is still the same company, all contractual obligations stay the same. The Directive and Regulations apply to other forms of transfer, through sale of physical assets and leases. The regulations also apply in some cases for work transferred to contractors. This protected contract terms for workers include hours of work, pay, length of service and so on, but pension entitlement is excluded.

Contents[edit]

1. Citation, commencement and extent
2. Interpretation
3. A relevant transfer
4. Effect of relevant transfer on contracts of employment
5. Effect of relevant transfer on collective agreements
6. Effect of relevant transfer on trade union recognition
7. Dismissal of employee because of relevant transfer
8. Insolvency
9. Variations of contract where transferors are subject to relevant insolvency proceedings
10. Pensions
11. Notification of Employee Liability Information
12. Remedy for failure to notify employee liability information
13. Duty to inform and consult representatives
14. Election of employee representatives
15. Failure to inform or consult
16. Failure to inform or consult, supplemental
17. Employers' Liability Compulsory Insurance
18. Restriction on contracting out

Example[edit]

Imagine a company that has in-house cleaners. The company decides that they want to tender-out the contract for cleaning services. The new company that takes over the work may employ the same cleaners. If it does so, TUPE will make it likely that the new employer will have to employ the cleaners subject to the same terms and conditions as they had under the original employer.

If any staff are dismissed by either employer for a reason connected with the new arrangement this will automatically be deemed an unfair dismissal and the new employer will be liable for any statutory claims arising as a result.

This is also the case where a target business (as distinct from shares in a company) is bought from company A by company B (often much larger) and integrated with the business of company B.

Evaluation[edit]

The benefits to individual workers is clear; TUPE prevents the possibility of everybody in the firm losing their jobs, just because the company providing the service changes. This gives employees increased certainty. A side-effect of the new regulations could prove unfortunate for some employers. This has been particularly highlighted in connection with law firms.

According to the Law Society's magazine, The Law Society Gazette, law firms might be forced to employ teams of lawyers when taking over contracts.[6]

Under the new rules, if a client decides to source their legal work from a different provider, the legal team from the old provider would be entitled to transfer to the new provider under the same terms and conditions as before; if the new provider were to object, the new employees would be entitled to sue for unfair dismissal.

Dr John McMullen, an expert on TUPE, is quoted as saying: "If you had an organised grouping of solicitors at a law firm devoted to one client, and that client said 'I do not want this law firm, I will appoint law firm X', then TUPE 2006 could apply so that—contrary to what the client is expecting or wanting—it may find that the lawyers would have the right to turn up at the newly appointed law firm. The definition of 'organised group' can be just one person."

Objections to the new regulations had been raised during consultation.[7] An exemption for professional services firms had apparently been mooted by the government but was eventually ruled out. In 2012, the UK coalition Government sought feedback on the efficacy of TUPE in relation to professional services and found that there were “mixed views” about whether professional services should continue to be covered by the service provision change regime. In certain sectors, particularly advertising, there was strong support for the idea of introducing an exemption. However, lawyers have highlighted problems with the operation of the New Zealand equivalent of TUPE and warned the Government to be cautious in trying to exclude certain groups of employees.

There are potential problems for employees as well. An employee might not want to transfer to the new employer. But they have no option to seek redundancy from their current employer, even though their post is effectively being deleted. They must either transfer against their will, or resign their employment.

Anomalies[edit]

When the new company takes over the work of its predecessor, it must take on the staff with the same terms and conditions that they enjoyed before. This can create the situation where a worker whose old contract gave her five weeks' holiday is working alongside an employee of the new company, doing the same work, and being of the same rank getting only four weeks' holiday.

Reform[edit]

In April 2011, the UK government proposed a number of reforms to TUPE.

Cases[edit]

See also[edit]

Law outside the UK

Notes[edit]

External links[edit]