Agreement Transfer of Undertakings: Understanding the Legal Terminology
If you`re a business owner considering a merger or acquisition, or an employee whose company is going through a transition, you may have come across the term “transfer of undertakings” or “TUPE”. TUPE refers to a set of regulations that apply when a business or part of a business is transferred from one employer to another. In this article, we`ll explain what TUPE is, who it applies to, and what it means for employers and employees.
What is TUPE?
TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006. These regulations were put in place to protect the rights of employees when a business or part of a business is transferred from one employer to another. TUPE applies to transfers of undertakings, which are defined as: “a transfer of an economic entity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic activity”.
In simpler terms, this means that TUPE applies when a business or part of a business is sold, merged, or otherwise transferred to another employer. The transferring employees automatically become employees of the new employer, who must honour their existing employment contracts and statutory rights.
Who does TUPE apply to?
TUPE applies to both the incoming and outgoing employer, as well as to the employees who are affected by the transfer. The regulations apply to businesses of any size, and cover all employees, including part-time and fixed-term workers.
TUPE applies to transfers within the UK, as well as to transfers involving businesses based in other EU countries. If a UK business is sold to a non-EU company, TUPE may still apply if the employees` work is carried out in the UK.
What does TUPE mean for employers and employees?
For employers, TUPE means that they must inform and consult with employees who are affected by the transfer. This includes providing information about the transfer, its implications for employees, and any measures that will be taken to mitigate its impact.
Employers must also honour the existing employment contracts of transferring employees. This means that the terms and conditions of employment, including pay, holiday entitlement, and working hours, must remain the same after the transfer.
For employees, TUPE means that they retain their existing rights and protections under their employment contracts and the law. This includes their right to a redundancy payment if they are made redundant as a result of the transfer.
In some cases, TUPE may also provide employees with additional protection. For example, if an employee`s new employer seeks to change their terms and conditions of employment to the employee`s detriment, the employee may have a claim for unfair dismissal or breach of contract.
TUPE is a set of regulations that apply when a business or part of a business is transferred to a new employer. The regulations provide important protections for employees, including the requirement for the new employer to honour existing employment contracts and statutory rights. For employers, TUPE means that they must inform and consult with affected employees and ensure that their rights and protections are maintained. Understanding TUPE is essential for anyone involved in a business transfer, whether as an employer or an employee.