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Transfer of undertakings (TUPE)

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TUPE refers to the Transfer of Undertakings (Protection of Employment) Regulations 2006 as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014.

When a service provided by a charity moves to a new organisation, the employees may be protected under TUPE, in which case the employees transfer with the service. This is regardless of whether there is one affected employee, or a large number. Employees on maternity/other parental leave, or on sick leave, also transfer. A whole charity could transfer, or part of a charity.

The TUPE Regulations apply to both the transferor employer (old employer) and the transferee (receiving) employer.

Types of transfer

There are two types of transfer protected under TUPE regulations:

  • Business transfers
  • Service provision changes.

In most cases in the charity sector, transfers will involve service provision changes, such as when a service provided by one charity is re-tendered and a new charity takes over the contract.

Determining whether TUPE applies

It is not always clear whether TUPE applies. For example, a funder may decide to reconfigure services so that activities previously provided by one charity will in the future be provided by a number of organisations, perhaps on a ‘framework agreement’. In this case, the charity previously providing all the activities may not be able to transfer their staff and so may need to go through a redundancy exercise.

You are advised to take HR or legal advice on whether TUPE applies in your situation.

Employment protection under TUPE

When TUPE applies, the continuity of service and terms and conditions of employment of transferring employees are maintained. This will include:

  • salaries
  • holiday entitlement and sick pay entitlement
  • any promises made to the employee
  • any other terms of the employment contract.

Changing terms and conditions

There are very limited circumstances under which you can change terms and conditions of employment post-transfer. Any change is effectively a breach of contract and an employee could resign and claim constructive dismissal. A desire to harmonise terms and conditions post-transfer is not generally a sufficient reason for change.

Sometimes however, there may be a business need to change terms and conditions, for an ‘economic, technical or organisational’ (ETO) reason. Where this is the case, there must also be a ‘change to the workforce’.

If there is such a business need to change terms and conditions, you are advised to take HR or legal advice. This is because the operation of TUPE is complex.

Dismissals

If an employee is dismissed either before or after the transfer, where the sole or principal reason for the dismissal is the transfer, it will be automatically unfair.

However, employers may be able to dismiss employees post-transfer for an ‘economic, technical or organisational’ reason involving changes in the workforce. An example might be in the case of a restructure, where redundancies result. Employers would need to take care to select for redundancy across the whole workforce rather than just the transferring employees.

The normal rules around fair dismissals will still apply. See Restructuring and redundancy.

Pensions

Pension rights earned up to the time of the transfer are protected, but the new employer doesn’t need to provide an identical pension. There are however some requirements to which you must adhere. You can find out further information in the Acas guide to TUPE.

The new employer must assess the transferring employees on the date of transfer and auto-enrol them for pension purposes if they are eligible.

If some or all employees have NHS or local authority pension plans, additional provisions may apply and your pensions liability may be high. You are advised to seek advice if this is the case.

Transfer of employment liabilities

Liabilities, such as an employment disputes, will also normally transfer to the new employer. 

Information about employees prior to the transfer

The transferor employer must provide the new employer with information about the employees, for ‘due diligence’ purposes. This is called ‘employee liability information’ and will include:

  • the identity and age of the employees who will transfer 
  • information contained in the written statement of those employees 
  • details of any disciplinary action taken against an employee in the last two years 
  • details of grievances raised by an employee in the last two years 
  • instances of legal actions taken by employees against the outgoing employer in the last two years (any court or employment tribunal claims) 
  • information regarding any collective agreements with trade unions

This information must be provided not less than 28 days before the transfer and should help the new employer understand employees’ rights and their duties.

Information and consultation

Before a TUPE transfer happens, employers (both outgoing and receiving) must inform the recognised trade union or employee representatives in writing about the following:

  • The fact that the transfer is going to take place, approximately when and why
  • Any social, legal or economic implications for the affected employees, for example a change in location or risk of redundancies
  • Any ‘measures’ (changes to the status quo) that the outgoing and incoming employers expect to take in respect of their own employees (even if this is nothing)
  • The number of agency workers employed, the departments they are working in and the type of work they are doing if agency workers are used
  • The outgoing employer must provide information to its employee representatives, about any ‘measures’ which the incoming employer is considering taking in respect of affected employees

Employers can be penalised if they don’t do this.

Employers must consult employee representatives about anything to do with the transfer that would affect the employees (eg reorganisation, a change of pay date or work location etc). They should try to gain agreement about these changes.

If there are no representatives already, you must give employees the opportunity to elect representatives if they wish. For further information on the processes to be followed, see Business transfers, takeovers and TUPE at GOV.UK.

If your organisation has less than 10 employees, you are classed as a ‘micro business’ and you can inform and consult directly with employees rather than via representatives.

When an employee does not wish to transfer

Employees will sometimes refuse to transfer to the new employers. If they do, their last day of employment will be the day before the transfer and notice isn’t required; it is not a redundancy situation. Where possible in such circumstances, you are advised to discuss the matter with the employee and consider whether you may be able to redeploy them into parts of your organisation that are not transferring.

Insolvency

If you acquire all or part of an organisation that was insolvent, special rules apply.

Checking the right to work in the UK

If you acquire staff as a result of a TUPE transfer, you are under a legal obligation to undertake checks to verify the right to work in the UK, within 28 days of the date of the transfer.

Volunteers

The Transfer of Undertakings Regulations relate to employment and therefore do not cover volunteers. However, you may wish to consider the following as a matter of good practice:

  • If you are the transferor, consult with the volunteers about what they want. Do they wish to continue volunteering in the service, once it has transferred, or do they wish to stay with your organisation? Speak with the transferee organisation about the wishes of the volunteers and arrange a meeting between the transferee and the volunteers.
  • If you are the transferee, consider how you might welcome volunteers who wish to continue volunteering in the service. Make sure they know of any changes and feel valued for their contribution.

Hints and tips

Below are some suggestions which, although not legally required, may help to ensure that the transfer is successful.

Resources required to manage the transfer

Do not underestimate the resources required to manage a transfer of an undertaking. At the point of tendering for the transfer of a project to your organisation, make sure that the advantages of taking on the service outweigh the resource requirements (eg management time, cost of legal/human resources advice etc).

During the transfer process

Meet with the other party or parties to the transfer as soon as you can. A working relationship with someone you have met should help to smooth the transfer process.

If you are the transferee (receiving organisation), meet with the staff who will transfer to you as soon as possible. Plan the meeting carefully to make the staff welcome.

Think about the impact on service users

There may be service users involved in the transfer. For example, the transfer of a care home, outreach project or supported living service will all involve service users.

Consider carefully how you will communicate with and reassure service users, as well as their families, close friends and advocates. Involve them early on and keep communicating with them throughout the process.

Transfer agreements and liabilities

Whether your organisation is a transferor or a transferee, you are strongly advised to enter into a legally-binding transfer agreement. This is particularly important if you are the transferee, since you will inherit all civil liabilities and obligations, including:

  • liability for personal injury claims against the transferor
  • liability for discrimination claims against the transferor
  • liabilities for any breach of contract, such as arrears of overtime payments or salary
  • all statutory rights and liabilities, such as unfair dismissal claims.

It is a relatively common practice for the transferee employer to require the transferor employer to provide an indemnity against any losses from any pre-transfer breaches of contracts or employment law. A legal adviser would be able to prepare an appropriate indemnity on your behalf.

After the transfer

Having done all the work for a transfer of an undertaking, it might be tempting to sit back and consider the job done. However, there are further areas to consider:

  • If you are the transferee (receiving) employer remember that the transferring employees are moving to a new environment, with new ways of doing things, new colleagues and perhaps different standards and expectations. Treat their induction as carefully as the induction of any new employee. Think also about existing staff, who may need to be reassured about the new staff transferring in.
  • If you are the transferor employer, consider the possible impact on morale of the loss of a service. Make sure you communicate with the remaining staff about the transfer, so that you are aware of, and can deal with, staff concerns.

Further information

Page last edited Jun 28, 2018

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