Transfer of Undertakings (TUPE)

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Tupe is also the name of a place in Peru, in the "provincia de Yauyos", "departamento de Lima".

TUPE or Transfer of Undertakings (Protection of Employment) regulations are an important plank of employment law in Britain, and, under different names, in other EU countries. Introduced in 1981, they aim to ensure that an employee whose employment transfers to another company (for example if the department the employee works for is taken over by an outsourcing company), he has his employment rights respected. They also apply in some cases for work transferred to contractors. This includes hours of work, pay, pension entitlement and so on.

1 Example
2 Benefits
3 Criticism
4 Anomalies
5 References
6 External links

[edit] Example

Imagine a company that has in-house cleaners. The company decides that they want to tender-out the contract for cleaning services. The new company that takes over the work may employ the same cleaners. If it does so, TUPE will make it likely that the new employer will have to employ the cleaners subject to the same terms and conditions as they had under the original employer.

If any staff are dismissed by either employer for a reason connected with the new arrangement this will automatically be deemed an unfair dismissal and the new employer will be liable for any statutory claims arising as a result.

This is also the case where a target business (as distinct from shares in a company) is bought from company A by company B (often much larger) and integrated with the business of company B.

[edit] Benefits

The benefits to individual workers is clear; TUPE prevents the possibility of everybody in the firm losing their jobs, just because the company providing the service changes. This gives employees increased certainty.

[edit] Criticism

A side-effect of the new regulations could prove unfortunate for some employers. This has been particularly highlighted in connection with law firms.

According to the Law Society's magazine, The Law Gazette, law firms might be forced to employ teams of lawyers when taking over contracts^[1].

Under the new rules, if a client decides to source their legal work from a different provider, the legal team from the old provider would be entitled to transfer to the new provider under the same terms and conditions as before; if the new provider were to object, the new employees would be entitled to sue for unfair dismissal.

Dr John McMullen, an expert on TUPE, is quoted as saying: "If you had an organised grouping of solicitors at a law firm devoted to one client, and that client said 'I do not want this law firm, I will appoint law firm X', then TUPE 2006 could apply so that—contrary to what the client is expecting or wanting—it may find that the lawyers would have the right to turn up at the newly appointed law firm. The definition of 'organised group' can be just one person."

Objections to the new regulations had been raised during consultation^[2]. An exemption for professional services firms had apparently been mooted by the government but was eventually ruled out.

[edit] Anomalies

When the new company takes over the work of its predecessor, it must take on the staff with the same terms and conditions that they enjoyed before. This can create the situation where a worker whose old contract gave her five weeks' holiday is working alongside an employee of the new company, doing the same work, and being of the same rank getting only two weeks' holiday.

Given that the basic purpose of TUPE is to provide protection to employees it is somewhat bizarre that this first reported use of the new "service provider" rules should be by an employer. An advertising agency is reported to be using TUPE 2006 in an attempt to off-load its responsibilities to staff after an important client, Boots Healthcare, transferred its business to a different agency. The first agency argues that the staff servicing the account were an "organised grouping of employees" and that therefore under the regulations their employment transferred automatically to the other agency when the client moved its account to the other agency. If the case goes to trial, it is likely to be of great interest as a first test of the consequences of the government's decision not to include a "professional firm exemption" from the service transfer part of new TUPE.