TUPE stands for ‘Transfer of Undertakings (Protection of Employment) Regulations 2006’ and provides legal protections for employees who are impacted when a business changes hands or where there is a change in service provider, for example, a client engaging a contractor to do work on its behalf, reassigning such a contract or bringing the work in-house.
Under TUPE, the new employer effectively steps into the shoes of the old employer. The employment contracts of affected employees automatically transfer to the new employer and the employees are kept on all their existing terms of employment (including their existing rate of pay) and without a break in their period of employment. Employees’ continuity of employment is also preserved therefore their length of service with the previous employer counts towards their entitlement to statutory rights such redundancy pay and leave requirements. In short, it is expected that, more or less, the employee is not materially affected by the change of employer.
Where TUPE applies, the Buyer and Seller should follow the TUPE Process to mitigate any risks of claims, this includes the following:
- By law, the old employer must provide the new employer with specific information about the employees transferring. This is known as 'employee liability information' (ELI).
- A fair consultation process must be carried out. The seller will normally ask the buyer (or the buyer will provide the seller) with any proposed changes they are planning to make in the transfer by way of a ‘measures letter’ to be passed on to the employees. A failure to inform and consult can result in employers having to pay up to a maximum of 13 weeks’ pay per employee.
- It should be the case that both the buyer and seller inform and consult the affected employees in relation to the transfer. Prior to the new rules that were introduced on the 1st July 2024, it was the case that unless the business had less than 10 employees or that there was an existing body such as a trade union who is already in place to deal with the TUPE process, the employer was to arrange an election of employee representatives to consult with. Since the new rules that were introduced on 1st July 2024, more employers are able to fall under the small business exemption.
New Rules for Small Businesses
For transfers that take place on or after 1st of July 2024, there are new rules relating to small businesses and ‘appropriate representatives’ as mentioned above. The new rules are contained within regulation 13A of the Transfer of Undertakings (Protection of Employment) Regulations 2006 where it narrates the following:
- That businesses with fewer than fifty employees and/or for businesses of any size but involving a transfer of fewer than ten employees are now entitled to consult directly with affected employees as long as there is no existing appropriate representative already in place.
The new rules aim to make the TUPE process easier and less time consuming for small businesses. If your organisation needs assistance with TUPE or assistance with any other employment matters within your business, our experienced Employment Law specialists are here to guide you. We understand that every business is unique and are committed to providing tailored solutions that can make a real difference. If you are looking for more than just great law, we invite you to contact us today at 0141 221 1919. We are always available to help.
