The Transfer of Undertakings (Protection of Employment) Regulations 2006 ( TUPE )

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2 The Transfer of Undertakings (Protection of Employment) Regulations 2006 ( TUPE )

3 what is TUPE? Prior to 1981 employees were afforded little protection when their employer changed as a result of the sale of a business or as a result of a change of service provider New employers were free to pick and choose who they wished to employ and on what terms

4 TUPE overview To preserve the continuity of employment and terms and conditions of the transferring employees To protect the affected employees from transfer related dismissals before or after a relevant transfer

5 TUPE overview Limits the scope for the transferor (old employer) or transferee (new employer) to vary affected employees terms and conditions of employment Provides the obligation to inform and consult with affected employees regarding the proposed transaction and any 'measures' which the transferor or transferee envisage taking concerning those affected employees

6 TUPE overview Specific provision for insolvency cases to increase the ability of the parties to vary contracts of employment Obligation on transferor to provide transferee with 'employee liability information'

7 When does it apply? TUPE applies to 'relevant transfers' 'A relevant transfer' occurs when:- a business undertaking or part of one has transferred from one employer to another as a going concern (a 'business transfer'); or When a client engages a contractor to do work on its behalf, or reassigns such a contract, including bringing the work in-house ('service provision changes')

8 business transfers 'A transfer of an economic entity which retains its identity' 'Economic entity' is further defined as 'an organised grouping of resources which has the objective of pursuing an economic activity whether or not that activity is central or ancillary' 'Resources' means not just tangible and intangible assets, but also employees

9 employees working outside the UK TUPE applies to a transfer situated in the UK immediately before the transfer, and in the case of service provision changes, where there is an organised grouping of employees situated in the UK immediately before the service provision changes

10 employees working outside the UK TUPE may still apply notwithstanding that the employees in the undertaking ordinarily work outside of the UK The DTI guidance example of a transfer of a UK exporting business. The fact that the sales force spends the majority of its working week outside the UK will not prevent TUPE applying so long as the undertaking itself is situated in the UK

11 who transfers? All employees who are employed in the 'organised grouping of resources or employees' immediately before the transfer, or who would have been so employed if they had not been unfairly dismissed by reason of the transfer Temporary assignments to the 'organised grouping' do not transfer

12 who transfers? Issues arise if part of an undertaking is transferred Which employees are 'assigned' to the 'organised grouping of resources or employees'?

13 what transfers? All rights and obligations arising from the contracts of employment except for criminal liabilities and some benefits under an occupational pension scheme Outstanding liabilities incurred by the transferor as a result of the transferor s failure to observe the terms of those contracts or employment rights

14 what transfers? Collective agreements and Trade Union Recognition Agreements in respect of any transferring employees which are in force immediately before the transfer if the 'organised grouping' maintains an identity distinct from the remainder of the transferee s business

15 what transfers? The transferee is not required to continue identical occupational pension arrangements for the transferred employees

16 what transfers? The transferee must establish a minimum level of pension provision for those employees if they were entitled to participate in such a scheme prior to the transfer (transferee matches employer contributions up to 6% of salary into a stakeholder pension or offer an equivalent alternative)

17 objections to transfer Employees have the right to object to the transfer of their contract of employment The objection terminates the contract of employment. The employee is not treated for any purpose of having been dismissed by either the transferor or transferee

18 changing terms and conditions of employment Generally, a transferor or transferee is prevented from changing terms and conditions of employment of transferring employees either before or after the transfer unless the sole or principal reason is: a reason unconnected with the transfer a reason connected with the transfer which is 'an economic technical or organisational reason entailing changes in the workforce' ('ETO')

19 changing terms and conditions of employment New terms and conditions of employment will only be valid with the agreement of employees or union representatives on their behalf Harmonisation of terms and conditions of employment cannot constitute an ETO

20 dismissals and redundancy Neither the transferor nor the transferee may fairly dismiss an employee: because of the transfer itself, or for a reason connected with the transfer unless that reason is an ETO entailing changes in the workforce

21 dismissals and redundancy If there is an ETO reason, the dismissal will be fair if: the employer acted reasonably in the circumstances in treating that reason as sufficient to justify dismissal, and the employer meets the other requirements of general law and fair dismissals

22 dismissals and redundancy Employees need 12 months service to lodge a complaint of unfair dismissal for a TUPE related reason Redundancies will normally be regarded as an ETO reason The law regarding unfair dismissal and redundancy applies to situations involving a TUPE transfer. Employers must still follow appropriate procedures when handling such dismissals

23 information and consultation 'Employee Liability Information' The transferor must provide a transferee with a specified set of information to enable the transferee to understand the rights, duties and obligations in relation to those transferring employees

24 information and consultation 'Employee Liability Information' The information required is: the identity of the employees who will transfer the age of those employees information containing any statement of employment particulars pursuant to S.1 of the Employment Rights Act 1996

25 information and consultation 'Employee Liability Information' information relating to any collective agreements applicable to those employees instances of any disciplinary action within the preceding two years taken by the transferor in respect of those employees in circumstances where the ACAS Code of Practice or the statutory dispute resolution procedures apply

26 information and consultation Employee Liability Information instances of any grievances raised by those employees within the preceding two years in circumstances where the ACAS Code of Practice or the statutory dispute resolution procedures apply

27 information and consultation Employee Liability Information instances of any legal action taken by those employees against the transferor in the previous two years, and instances of potential legal action which may be brought by those employees where the transferor has reasonable grounds to believe such action might occur

28 information and consultation Employee Liability Information if any of the information changes between the time when it is initially provided and completion of the transfer, the transferor is required to provide the transferee with notification of those changes the information should be given at least two weeks before the completion of the transfer, unless it is not reasonably practicable for it to be provided within that timescale

29 information and consultation Employee Liability Information the information must be accurate to a specified date not more than 14 days before the information is passed to the transferee the transferee can complain to an employment tribunal if the transferor has failed to comply with any of the employee liability information requirements

30 information and consultation Employee Liability Information the amount of compensation awarded shall be 'just and equitable' in all the circumstances, and in any event it must be at least 500 per employee in respect of whom the duty to inform arose

31 information and consultation the transferor and transferee must inform and consult with recognised unions or employee representatives of those who might be affected by the transfer. Affected employees include: those individuals who are to be transferred

32 information and consultation employees in the transferor s business who will not transfer but whose jobs might be affected by the transfer employees employed by the transferee whose jobs might be affected by the transfer

33 information and consultation Consultation must commence long enough before a transfer takes place to enable adequate consultation to occur Both the transferor and transferee should elect employee representatives if appropriate as soon as they are aware that the proposed transaction is likely to proceed

34 information and consultation Both the transferor and transferee must inform and consult with employee or union representatives regarding: the fact that the transfer is going to take place, approximately when, and why the legal, economic and social implications of the transfer for the affected employees

35 information and consultation the 'measures' which the employer envisages he will, in connection with the transfer, take in relation to any affected employees, or if the employer envisages that no 'measures' will be taken, that fact; and

36 information and consultation if the employer is the transferor, the 'measures' in connection with the transfer, which he envisages that the transferee will take in relation to any affected employees who will become employees of the transferee after the transfer, or if the transferor envisages that no 'measures' will be taken, that fact

37 information and consultation failure to adequately inform and consult may lead to each affected employee lodging a complaint to an Employment Tribunal seeking a 'protective award' of up to 13 weeks pay (uncapped) joint and several liability. Claimants can recover full amount from either transferor or transferee

38 insolvency TUPE now seeks to promote the transfer of insolvent businesses as going concerns thereby helping to protect the employment of the affected employees

39 insolvency Some of the transferor s pre-existing debts to employees do not pass to the transferee. Those debts concern: statutory redundancy payments up to eight weeks arrears of pay statutory minimum notice pay accrued holiday pay (up to 6 weeks) basic award of compensation for unfair dismissal

40 Insolvency Payment of these sums due on the date of the transfer even though employees may not have actually been dismissed by the transferor on or before that date These payments will be met by the Secretary of State through the National Insurance Fund Weeks pay capped (currently 400). Any debts over and above these amounts will pass to the transferee

41 insolvency Greater scope for the transferee to vary terms and conditions post transfer Normal restrictions on a party s ability to vary contracts because of a transfer or for a reason connected with the transfer are effectively waived in insolvency situations 'Permitted variations' must be agreed with employee representatives

42 insolvency Agreements recording 'permitted variations' must be in writing and signed by each employee representative Before signing an agreement all affected employees must be provided with a copy of the agreement and any guidance which the employees would reasonably need in order to understand it

43 insolvency 'Permitted variation' must be made with the intention of safeguarding employment opportunities by ensuring the survival of the undertaking post transfer

44 checklist for transferor (old employer/vendor) Identify proposed date of transfer Ensure that appropriate representatives are in place to enable adequate information and consultation to occur Provide transferee with 'employee liability information'

45 checklist for transferor (old employer/vendor) Obtain information regarding proposed 'measures' from the transferee Inform and consult with the affected employees via union/elected employee representatives regarding the transaction and any proposed 'measures'

46 checklist for transferor (old employer/vendor) Ensure adequately inform and consult as liability for failure to do so is joint and several with the transferee Liability for dismissals etc not connected with the transfer will remain with the transferor

47 checklist for transferee (new employer/purchaser) Identify proposed date of transfer Consider whether appropriate representatives are in place to enable adequate information and consultation to occur Obtain 'employee liability information' from the transferor and consider what 'measures', if any, will be taken

48 checklist for transferee (new employer/purchaser) Advise the transferor of any proposed 'measures' Conduct information and consultation exercise with union/elected employee representatives of own affected employees

49 checklist for transferee (new employer/purchaser) Ensure both transferor and transferee conduct appropriate information and consultation exercise as liability for failure to do so is joint and several Liability for dismissals, changes to terms and conditions of employment as a result of the transfer will transfer to the transferee

50 questions

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