A dotted line on a contract is not completely secure. Or, at least, it wasn’t until TUPE law was drawn up in 1981, and thoroughly amended in 2006 and 2014. It serves to preserve the integrity of an employee’s work agreement, should those original terms be threatened by a change in employer.
The particulars of TUPE are a little dense, which is why we are able to sift through them for you. If you are facing a legal claim from a member of staff following a transfer, this knowledge will go a long way to deciding your course of action…
TUPE is an acronym for the ‘Transfer of Undertakings (Protection of Employment)’ Regulations 1981. This series of laws governs what to do in the event of a radical change, such as an employer selling the business to someone else.
When new management comes into play, employees may doubt whether their contractual agreements will survive the transition. TUPE regulations largely protect employees’ rights, stating that the original conditions must remain in place.
It applies to mergers and acquisitions, when multiple companies form a single entity, as well as instances where employees are replaced by outsourced service providers. The TUPE transfer, as it is known, safeguards the individual’s rights and benefits – specifically their salary, contractual perks, sick/holiday allowance and notice periods.
The TUPE Regulations also cover grounds for dismissal i.e. new employers can’t sack existing staff for a transfer related reason. The worker is thus protected, without any severe upheaval following a TUPE transfer. Changes to contracts of employment post TUPE transfer can in certain circumstances be permitted where the ‘new employer’ can show an ‘economic, technical or organisational’ reason (known as an ETO).
TUPE doesn’t apply to all changes in ownership. It does not apply when there is simply a change in ownership of shares.
The top of the corporate chain, too, gets protection under TUPE law. You can dismiss staff members that have come into your care, providing you have sufficient evidence to support the dismissal.
The outgoing employer should provide a new employer/owner you with adequate information about staff, including past disciplinary actions. This is known as ‘due diligence’ and is crucial as part of any business transaction which involves or could involve the transfer of employees. Such data – or lack of it – can support a genuine, fair dismissal case.