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The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) brought UK legislation in line with the European Community's Acquired Rights Directive and introduced protection for the rights of employees on the transfer of an undertaking. Any organisation that wishes to sell part of its portfolio, outsource contracts, or bring work in-house, may well face an obligation to meet the requirements of this complex piece of employment law.
Due to its complexity, specialist legal advice is always to be recommended when any action that may be covered by TUPE is being considered.
The legislation seeks to protect the contractual rights of employees by ensuring that the transferor's employment responsibilities and liabilities are carried across to the transferee, and that employees do not suffer a break in their continuity of employment; it also seeks to ensure that employees have the ability to make a claim against the transferee for unfair dismissal or for discrimination should their position be terminated without sufficient reason.
Sufficient reason, under TUPE, requires an economic, technical or organisational justification of decisions taken. As the Department for Business, Enterprise and Regulatory Reform states in its guide to the 2006 TUPE regulations, there is no statutory definition of an "economic, technical or organisational reason"; yet the TUPE Regulations state that if a dismissal is made that cannot be shown to be on economic, technical or organisational grounds, it is considered to be automatically unfair. Furthermore, the onus of proof falls on the transferee.
The transferor also has obligations under TUPE, notably a requirement to inform and consult with staff affected by the planned transfer, and a requirement to set out the rights and obligations that the transferee will take on. Failure to do so can lead to the transferor facing an employment tribunal in the first case, or to a compensation payment being made to the transferee in the latter.
Any transaction that might fall under TUPE may also require the transferor and transferee to consider further relevant legislation, including the Pensions Act 2004 and the Transfer of Employment (Pensions Protection) Regulations 2005 (SI 2005/649).
The Employment Law department at JMW Solicitors are experts at providing guidance on TUPE compliance. Whether your organisation is considering the transfer of ownership of a business, either as transferee or transferor, our partner-led team will deliver practical advice and solutions to ensure all requirements under the TUPE regulations 2006 are met on an efficient and cost-effective basis.