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. It serves to preserve the integrity of an employee’s work agreement, should those original terms be threatened by a change in employer.
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 benefits, 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.
TUPE doesn’t apply to all changes in ownership. It does not apply when there is simply a change in ownership of shares.
Where a TUPE transfer is envisaged, both the transferor (the seller or current employer) and the transferee (the buyer or new employer) are required to consult with those employees affected by the transfer. Failure to properly consult can give rise to a claim at the employment tribunal for failure to consult. If successful a Protective Award (which is intended to be a penalty) can be made of up to 13 weeks gross salary.