Employment Law Solicitors:

Transfer of Undertakings (TUPE)

Transfer of Undertakings (TUPE)

Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (hereafter referred to as “TUPE”), where there is a transfer of an undertaking (e.g. a takeover, merger, etc. Even includes a service provision change/outsourcing), employees employed by the previous employer automatically become employees of the new employer when the business changes hands. Moreover, the employees concerned not only retain the same terms and conditions of employment they had under the previous employer, but they also retain their continuity of employment.

Employee representatives must be notified of the transfer in advance and must be consulted with respect to any proposals which may affect employees. Failure to consult entitles those employees concerned to compensation of up to 13 weeks pay each. Where an employee is not represented by a union, then should no other representative be available, a representative will have to be elected.

An employee who is dismissed for a reason connected with the transfer may bring an employment tribunal claim for unfair dismissal so long as they have at least 1 years continuous service. The claim must be brought within 3 months of the date of dismissal. The dismissal will be deemed automatically unfair unless the employer can show that it pertained to a genuine economic, technical, or organisational (ETO) reason.

Under TUPE, an employee has the right to resign and claim constructive dismissal should the transfer involve a substantial change to their terms and conditions of employment to their material detriment. What amounts to ‘substantial change’ and ‘material detriment’ is a matter for the tribunal to determine given the facts of the case. Nevertheless, where an employee resigns in these circumstances, they do not have to show that there has been a fundamental breach of contract. They will not however be entitled to pay in lieu of notice and there is uncertainty over whether they have to follow the statutory grievance procedure.

Where the previous employer had an occupational pension scheme, the new employer must provide pension provision post transfer. They can choose whether this is a money purchase scheme, a final salary scheme, or a stakeholder scheme. Should they opt for a money purchase or a stakeholder scheme, then the new employer must match employee contributions up to a maximum of 6%. However, where they opt for a final salary scheme, then the scheme must either comply with the statutory reference scheme test as set out in the Pensions Scheme Act 1993 (s.12A) or provide identical benefits to those provided by the previous employers scheme.

 

The Employment Law Solicitors, the brand, is part of Antrobus Solicitors, a firm regulated by the Solicitors Regulation Authority. Details of the professional rules which regulate solicitors can be found at the following website address: http://www.rules.sra.org.uk