The TUPE transfer: what does it actually mean?
Before we start, I feel the need to clarify that I am referring to the Transfer of Undertakings Protection of Employment regulations and not a toupee. The latter being something that the follically challenged wear on their head, the former being a business situation where part of or all of a business transfers to another entity. I clarify this point, because I do come across people that refer to the head wear but mean the transfer.
The process starts with a commercial decision to either sell part or all of the business or change the service provision or contract to another supplier. Once this has been confirmed, any employees that are currently employed by the outgoing company undertaking that specific element of the business, are identified as having the potential to transfer to the new company. (For TUPE to apply, the part of the business to transfer must be an economic entity, which will retain its identity after the transfer). The regulations are applicable regardless of the number of employees.
The new employer should complete a due diligence process, where they seek to clarify the inherited liability in terms of employee contractual and implied terms information. The outgoing employer is legally obliged to provide the new employer with employee information, at least 28 days before the transition date. In my experience it is not just the contractual term, but the application of that term; as with all matters, the devil is in the detail. In smaller organisations, it is not uncommon for there to be no written statement of employment terms. In this scenario it takes some detective work to confirm which terms might be applicable and good communication skills to get these agreed terms documented.
Both the new employer and old employer are obliged to consult with the employee. There can be advantages in holding a joint consultation meeting, especially when clarifying terms of employment. In some cases, employees might not have read their contract since they joined the business and some terms come as a surprise to them. However, this will largely depend on the professionalism of the outgoing company, having lost the business or contract not everyone feels as cooperative as they are obliged to be.
The new employer must advise the outgoing employer of any measures that they envisage making in respect of transferring employees. This can be a bit of a chicken and egg scenario, with the outgoing employer requesting a measure statement to start a consultation process at the same time as the new employer, asking for the employee liability information to determine what measures might be applicable.
At the agreed transition date, the employees transfer to the new employer and in doing so, the new employer inherits all rights and obligations arising from their employment contracts (with some exceptions to criminal liabilities and occupational pension schemes). The employee’s length of service is preserved and in essence it is as though the original contract of employment was made with the new employer. The employees are protected against having their terms and conditions changed, if the reason for the change is the transfer itself and there is no time limit on this protection.
In certain cases, there may be some disagreement as to whether an individual falls within the scope of a transfer. For example, if a person works in a multiuser warehouse and spends a proportion of their time working in the execution of several contracts; or if someone was seconded to a different part of the business; both the new employer and the previous employer can argue for and against whether the individual is eligible to transfer.
The legislation is not prescriptive in determining who should transfer and a number of factors will need to be taken into consideration when deciding whether an individual employee falls within the scope of a transfer. (That said the new employer cannot just pick and choose which employee transfers with the business). Factors such as the amount of time spent working for the transferring part of the business, the cost centre the person is allocated to, the actual duties undertaken and whether there is an organised grouping of employees that have a principle purpose of carrying out services for a client are just a few of the measures under consideration.
In my experience many employees find the actual transfer quite disappointing and if the HR team managing the process has done their job effectively, all the hard work will be completed behind the scenes. Normally, when we get past the transition date, apart from a different name on the payslip and perhaps a new uniform it should be business as usual.
If you would like the HR team to support you with the practicalities of a TUPE consultation process, or completing a due diligence process with regards to employee liability information please give us a call on 01536 215240 or email at email@example.com