Transfer of an Undertaking (TUPE)

On 6 April 2006, the revised Transfer of Undertakings (Protection of Employment) Regulations 2006 external link (the “TUPE Regulations”) (S.I. 2006/246) and the Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006 external link (the “2006 Regulations”) (S.R. 2006 No. 177) came into force. The TUPE Regulations make provision, in respect of Great Britain and Northern Ireland, for the treatment of employees, and related matters on the transfer of a business or undertaking while the 2006 Regulations make corresponding provision related to service provision change in Northern Ireland. These Regulations replace the previous 1981 TUPE Regulations, and the 2006 Regulations widen the scope to cover cases where services are outsourced, insourced or assigned by a client to a new contractor (described as “service provision changes”).

Service provision changes concern relationships between contractors and clients who hire their services. Examples include contracts to provide such labour-intensive services as office cleaning, workplace catering, security guarding, refuse collection and machinery maintenance.

Broadly speaking, the effect of both sets of Regulations is to preserve the continuity of employment and terms and conditions of those employees who are transferred to a new employer when a relevant transfer takes place. The two categories of relevant transfer are the transfer of an undertaking or business or a service provision change. These two categories are not mutually exclusive. It is possible, indeed likely, that some transfers will qualify both as a business transfer and a service provision change. For example, outsourcing of a service will often meet both definitions.

These Regulations introduce:

  • a new duty on the old transferor employer to supply information about the transferring employees to the new transferee employer (by providing what is described as “employee liability information”);
  • special provisions making it easier for insolvent businesses to be transferred to new employers;
  • provisions which clarify the ability of employers and employees to agree to vary contracts of employment in circumstances where a relevant transfer occurs; and
  • provisions which clarify the circumstances under which it is unfair for employers to dismiss employees for reasons connected with a relevant transfer.

This is a complex area of law and so specialist advice should always be sought in these situations.