What is TUPE?
Transfer of Undertakings (Protection of Employment) Regulations.
The TUPE regulations were first introduced in 1981 to protect the rights of employees when an undertaking, or part of an undertaking, was transferred from one owner to another. The regulations ensured that the relevant employees’ employment would continue with the new owner.
The regulations also applied to not-for-profit organisations, the third sector (charities) and voluntary organisations. The regulations were clear that there was no need for money to change hands for a transfer to take place.
The regulations have expanded over the years (the latest update came into effect in January 2014) and now protect employees in a transfer of an undertaking as well as a service provision change.
What is a transfer of undertaking?
An undertaking is an organised grouping of resources which has the objective of carrying out an economic activity (whether the activity is primary or ancillary). This usually consists of a collection of assets (e.g. a property and/or any items used to carry out the activity of the undertaking) and its employees.
The question of whether an undertaking is transferred depends on:
- Whether it retains its identity
- The type of undertaking and whether or not its tangible assets are transferred, except where it can function without assets
- The value of its intangible assets at the time of transfer
- Whether or not the majority of its employees are taken over by the new entity;
- Whether or not its customers are transferred
- The degree of similarity between the activities carried on before and after the transfer, and the period, if any, in which they are suspended
- Any contractual link between the transferor and transferee although there is no need for any direct contractual relationship
- When no employees are transferred, the reasons why that is the case
Reasons should be given when no employees are transferred. If an undertaking is transferred, TUPE is engaged and the employees of the undertaking will have the benefit of its protection.
What is a service provision change?
A service provision change takes place when an organisation:
- Stops carrying out an activity and contracts with another organisation to carry out the activity for it (i.e. outsourcing)
- Has a contract with an organisation to carry out an activity for it and decides to contract with a different organisation to carry out that activity (or an activity which is fundamentally the same) (i.e. retendering a contract) or
- Cancels a contract with an organisation carrying out an activity for it and starts carrying out the activity itself (i.e. insourcing)
Where there is a service provision change, TUPE is engaged and the employees primarily engaged in carrying out the activities will have the benefit of its protection.