The TUPE Regulations apply to the transfer of a business from one owner to another provided that the business retains its identity. TUPE also covers the transfer of part of a business. It now also covers a ‘service provision change’. This can occur when a business outsources work, transfers the work to another contractor or brings it back in-house. So, TUPE can apply in any of the following situations:
- all or part of a business is sold
- there is a merger
- the sale of some of the assets of a business
- a change of licensee or franchisee
- contracting out of services
- changing contractors
The TUPE Regulations protect employees from dismissal and from many significant changes to their terms of employment as a result of the transfer of ownership of their employer’s business or contracts. Many complex situations arise in connection with the transfer of businesses and outsourcing. There may be some form of re-structuring or redundancies. An employee may have to move to another location or face some other change to their working arrangements.
Employees who will be affected by a transfer of ownership of a business or a contract must be informed about it in advance and in many cases consultation is required. There are special rules on redundancy following a TUPE transfer.
If an employee is dismissed because of a TUPE transfer or for a reason connected with it, they may be able to bring an unfair dismissal claim provided that they have been employed with the company for at least at least 2 years. An unfair dismissal claim must be brought within 3 months of the last day of employment.
If an employee is dismissed because of a TUPE transfer and the dismissal is unfair, compensation in an employment tribunal is partly calculated in the same way as a redundancy payment but there will be additional compensation for loss of earnings and benefits. Claims for loss of earnings can be brought up to £105,707 or 52 weeks’ pay, whichever is lower. There are a number of factors which the employment tribunal will consider when coming to a decision on the right amount of unfair dismissal compensation. The tribunal can, in some cases, order the employer to take the unfairly dismissed employee back into employment – and additional unfair dismissal compensation may be awarded if the order is not complied with.
Where formal consultation is required, if this is not carried out properly, additional compensation may be payable