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Dealing with TUPE developments on legislation
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".
The TUPE rules apply to organisations of all sizes and protect
employees' rights when the organisation or service they work for transfers to a
new employer.
TUPE applies to employees of businesses in the UK, the
business could have its head office in another country, but the part of the
business that’s transferring ownership must be in the UK, the size of the
business doesn’t matter.
TUPE has impact for the employer who is making the transfer (the transferor) and the employer who is
taking on the transfer (the transferee).
On 31 January 2014, new regulations on TUPE came into effect updating
the 2006 regulations.
There are 2 types of transfer protected under
TUPE regulations:
- business transfers
- service provision changes
Business transfers
This is where a business or part of a business moves from
one employer to another. This can include mergers where 2 companies close and
combine to form a new one.
The identity of the employer must change, to be protected
under TUPE during a business transfer. Share Sales are generally not covered as
legal identity of employing company will not change however, in certain cases, it
has been considered that the legal structure was not important but that the
control of the business had been transferred as a matter of fact - PrintFactory (London) 1991 Ltd v Millam 2007
Service provision changes
This is when:
- a service provided in-house is
awarded to a contractor (outsourcing)
- a contract ends and is given to a new
contractor (second generation)
- a contract ends and the work is
transferred in-house by the former customer (insourcing)
Employees aren’t protected under TUPE if the contract is:
- for the supply of goods for the
company’s use
- for a single event or short-term task
- for activities wholly or mainly the supply of goods
Only the employees who can be clearly identified as
providing the service being transferred are protected.
This sounds relatively simple and straight forward but it
is often not the case and is open to interpretation sometime for cases that sounds similar e.g. Metropolitan Resources Ltd v Churcill Dulwich Ltd 2009 and OCS Group v Jones 2009.
In addition employers must inform/consult with employees through trade union representatives or, in the absence
of a recognised trade union, formally elected employee representatives.
From 31 July 2014, businesses with fewer than 10 employees overall are
not required to elect representatives to inform and consult where there are no
existing recognised trade unions or elected employee representatives. However,
they must still inform and consult directly with each individual employee
regarding the transfer.
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The bottom line is: if you are planning to outsource, insource, change contractors or buy a business on a Share deal, you must seek proper advice and support in the process (help at The People Alchemist Ltd.)
Very useful article to demystify an area that, as you point out, seems to have very different interpretations and associated expectations even in large companies. May I suggest (as a lawyer) that you hyperlink the cases you cite so the lay reader has an idea what facts led to what conclusion or ratio? Wikipedia may have an overview for some; in all events the judgements can be accessed completely free on bailli.org
ReplyDeleteThanks for the post - Deep Sen Gupta
Many thanks for the comment and the tip, will definitely do in the future
ReplyDelete