When a business changes ownership or is transferred because of a takeover, buyout or merger, or even if there is a change in the way a service is provided, such as outsourcing of work of a particular service, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) will serve to protect the existing employees and ensure that their existing contracts and working conditions are maintained.
How does the TUPE protect employees?
During the time when undertakings are being transferred from one party to another, there are various levels of protections for employees involved in such a transfer. The TUPE regulation:
- ensures that employees who are employed in a venture that is being transferred will automatically be transferred to the new venture / ownership together with their existing contracts of employment. These employees will however have the individual right to dispute such a transfer. The transfer of such rights may exclude certain pension scheme rights related to the specific employer.
- establishes that the transferor is still liable for dismissal of any employees if such a dismissal is related to this transfer.
- will establish that if an employee is dismissed because of such a transfer, such a dismissal is immediately deemed unfair unless there is a specific justification such as a budgetary, or organisational or technical justification for this dismissal.
- will possibly transfer recognition of trade union representation of a group of employees.
- will also possibly take over responsibility of any collective agreements already established with existing trade unions for employees being transferred.
- will ascertain that affected employees and their representatives are provided with relevant information needed by the employees who are being affected by the transfer. In the case where specific measures are being taken that will affect said employees, these employees and / or their representatives must be consulted.
- will ensure that the transferor will provide the transferee with information about employees’ liability regarding the employees being transferred.
- allows for a number of alterations in the employees’ employment contracts only if the transfer is being done because the organisation is facing particular types of bankruptcy. In most other situations, there is little space for manipulation of employees’ terms of employment.
Employers’ Obligations Towards Employees
Employers are obliged by the TUPE regulations to advise employees if they are planning to divest of their business or to transfer a contract for the provision of a service. Employees must be advised of the following:
- The date when the transfer is going to be executed;
- Why such a transfer is being planned;
- How this will affect the employees legally, economically and also any social impacts such a transfer will have.
If the transfer will result in changes that need to be made, then such changes in conditions must first be discussed with representatives of the employees. The employer who is taking over responsibility is also duty bound to continue consulting with the affected employees once taking over responsibility for said employees.
If you are employed with an organisation that is undergoing transfer of ownership as described above and are uncertain of your rights, we are more than happy to answer you queries.