TUPE Regulations

The Transfer of Undertakings (Protection of Employment) Regulations 2006

TUPE is the primary piece of legislation governing the transfer of an undertaking i.e. a business, or part of one, to another. The regulations were designed to protect employee rights in a business transfer situation, guaranteeing them the same terms and conditions, with continuity of employment, as under the previous ownership.

TUPE 2006 legislation replaces the outdated Transfer of Undertakings (Protection of Employment) Regulations of 1981 (SI 1981/1794). TUPE 2006 legislation applies to all relevant transfers including:

• Service provision changes

  Where services are outsourced, 'in-sourced' or assigned to a new contractor, such as in labour-intensive services like office cleaning, catering, security, and waste collection.

• Business purchase or sale

  When a business is bought or sold, either in full or in part, as a going concern.

• Lease or license transfer

  When the lease or license on a business’ premises is taken over and the business continues to operate there.

It is important to know when TUPE is likely to apply and what you need to do to comply with it, as well as to be aware of the penalties for failing to comply.

TUPE is a complex piece of legislation, and it can be difficult to discern when it applies and when it does not — therefore it is advisable to engage the services of a legal specialist when transferring an undertaking.

What outgoing employers must do to comply with TUPE

Inform and consult with affected employees

Details of the transfer and any proposed measures must be discussed with staff, or staff representatives, before the transfer takes place. The incoming employer must provide the outgoing with the information far enough in advance so that they can comply with their TUPE duty to inform and consult.

Employees who are not adequately informed or consulted about the transfer are entitled to make a claim at the Employment Tribunal where, depending on the seriousness of the employer’s failure to comply with TUPE, up to 13 weeks’ pay per affected employee can be awarded.

Employee liability information must be provided by outgoing employer to incoming employer

Under TUPE law, written details of the transferring employees must be provided by the outgoing employer a minimum of 14 days before the transfer, this includes:

• age
• name
• particulars of employment
• disciplinary and grievance records
• employee claims and collective agreements.

Details of all associated rights and liabilities being transferred must also be provided.

If the outgoing employer fails to pass on this information then the incoming employer can apply for compensation at the Employment Tribunal, where the minimum award is £500 per employee. You can see that failure to comply with TUPE could potentially end up costing you more than you sold your business for, so it is vitally important to get it right. 

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