What is TUPE?
TUPE is the Transfer of Undertakings (Protection of Employment) Regulations 2006, which protect the rights of existing staff working within a business when that business transfers from one business owner to another. As staff are the lifeblood of any pub having an understanding of TUPE is essential:
- in deciding on whether to purchase (or rent) a pub business and how much you are prepared to pay for that business
- in the lead up to taking on a pub and the staff it employs
The TUPE regulations ensure:
- that when a business transfer occurs, employees moving across to the new employer (known as the incoming employer) bring with them their length of service and terms and conditions
- that there is a structure for the transfer process.
The TUPE regulations usually apply when:
- a business or part of one is sold to the incoming employer
- two or more companies cease to exist and combine to form a new company
- activities are outsourced to a contractor or brought back in house.
TUPE applies regardless of the size of the business, although there are minor differences concerning how smaller employers with less than 10 employees are required to consult. (As many pubs employ less than 10 members of staff you should note this relates to discussing changes with the employee directly as opposed to a union or other staff representative.)
Generally speaking, the TUPE regulations apply to employees whose work moves over to the incoming employer.
Contracts of Employment (Terms and Conditions) under TUPE
Under the TUPE regulations existing terms and conditions transfer with staff to the incoming employer and remain the same as they were with the original employer (known as the outgoing employer).
Following a transfer an employer may wish to change the terms and conditions of transferring staff, however, any changes where the sole or principal reason for the change is the transfer will be usually be void, although there are exceptions to this rule.
Disclosure of employee liability information
There is a duty on the outgoing employer to supply information about the transferring employees to the incoming employer. This information is known as the “employee liability information”.
The following information must be provided:
- the identity and age of the employees who will transfer
- information contained in the written statement of those employees
- details of any disciplinary action taken against an employee in the last two years
- details of grievances raised by an employee in the last two years
- instances of legal actions taken by employees against the outgoing employer in the last two years (any court or employment tribunal claims)
- information regarding any collective agreements
This information should be given in writing at least 28 days before the completion of the transfer. However, both outgoing and incoming employers must comply with data protection when handling personal information.
Information and consultation
The TUPE regulations require both outgoing and incoming employers:
- to inform/consult collectively with either recognised trade union officials or employee representatives about the transfer.
- to arrange for the election of employee representatives where there are no appropriate representatives already available.
- the only exception to this requirement is that businesses with fewer than 10 employees are not required to invite the election of representatives for consultation purposes if no existing arrangements are in place. However, they will still need to consult with their employees individually. (Many pub businesses employ less than 10 staff, so in all probability you will be dealing with existing staff who are going to transfer with the business on a one-to-one bases.)
Both employers should consult with:
- those employees who are to be transferred, and
- those employees who will not transfer but whose job may be affected.
Consultation should be meaningful and begin long enough before the transfer to allow the employer to consult with the representative about:
- when and why the transfer is going to take place, and what the implications of the transfer will be for the affected employees
- the reason for the transfer and any measures the outgoing and incoming employers expect to take in relation to the employees
Both employers must consider any representation made by employee reps during the consultation period, and if any proposals are rejected the employer must give a reason for the rejection.
Dismissal and redundancies
Incoming and outgoing employers are often able to minimise or prevent redundancies and other dismissals when transfers take place. However, there will be occasions when they cannot be avoided.
If a dismissal was going ahead regardless of the transfer or a new development arises, then TUPE regulations are unlikely to apply.
Under recent changes to TUPE it will continue to be automatically unfair to dismiss an employee because of the transfer itself. Previously changes to terms and conditions for a reason ‘connected to the transfer’ were also automatically unfair but this has now been removed. However dismissals may be fair if:
- the reason for the dismissal is an “Economic, Technical or Organisational reason entailing changes in the workplace”.
- the dismissal can be shown to be for genuine redundancy reasons and the employer followed a fair dismissal procedure.
These changes apply to TUPE transfers which take place on or after 31 January 2014. They apply to notice of dismissal given after 31 January 2014, or where no notice is given where termination takes effect on or after 31 January 2014.
Where a genuine redundancy situation arises as a result of a transfer, there is a need to both collectively and individually consult with affected employees when the new employer is making (or intending to make) 20 or more redundancies within a 90 day period.
Where there are fewer than 20 employers being made redundant within a 90 day period, there is still a legal requirement to individually consult but there are no prescribed time limits in which to do so. It may be prudent to permit the full 90 day consultation period, if your business is able to, so you can demonstrate to any tribunal you have used your best efforts in any redundancy procedures.
Collective agreements
Although the staff in many pubs are not “unionised” and making “collective agreements” with their employer, you should be aware of any arrangements the outgoing employer has made with staff, even if these are informal.
Collective agreements which are in place at the time of the transfer will also transfer to the incoming employer. Collective agreements negotiated between an employer and a trade union may include matters such as pay rates, hours, and other terms.
Terms and conditions from collective agreements may be renegotiated after one year provided that overall the contract is no less favourable to the employee.
In some circumstances contractual changes arising from new collective agreements agreed by the outgoing employer are not required to be incorporated after a transfer.
As with any matters relating to staff and employment law, I strongly advise you to seek and take independent, professional legal advice as some areas of TUPE can be extremely complicated and the potential to make costly mistakes is huge.