The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) applies to employees when either:
- a business or asset is transferred from one entity to another; or
- there is a change of identity in an entity providing a service (e.g. outsourcing).
TUPE implements European law (the EU Acquired Rights Directive). The effect of TUPE is that all employees “assigned” to the economic entity or activity will transfer. In addition, the transferor’s rights, powers, duties and liabilities under the employment contracts of those employees that are transferring, transfer to the transferee. The transferor and transferee have a duty to inform and consult with employee representatives of “affected employees” about the facts and implications of the transfer. Employers that breach this duty may be liable for up to 90 days’ pay for each “affected employee”. Finally, subject to certain exceptions, dismissals are automatically unfair if the reason for dismissal is the TUPE transfer itself (or, in relation to transfers before 1 January 2013, connected to the transfer) unless there is an economic, technical or organisational reason entailing changes in the workforce (see paragraph 6.1 below for more on automatic unfairness).