TUPE for Employers (what to look out for)

The mere mention of TUPE more often than not sends shivers down the spine of HR Professionals and Employers. It is often the elephant in the room of business transfers; it is a difficult area, fraught with challenges and the cause of sleepless nights.

Deciding whether there has been a TUPE transfer includes analysing whether the majority of employees have been taken over, whether the customers have transferred, whether there is a similarity between the activities carried on before and after the transfer and the value of the intangible assets at the time of the transfer.

A service provision change can also result in the application of TUPE, this is when a contract is reassigned or work is brought in-house.

Employers need to be careful how employees are dealt with during a transfer to avoid giving rise to claims for unfair dismissal, redundancy and constructive dismissal. A dismissal due to a transfer will only be deemed fair if the employer can show there was an Economic, Technical or Organisational (ETO) reason which justified the changes to the workforce. The employer must also act reasonably in treating that reason as sufficient to justify dismissal. Even if the dismissal is fair the employee may still be able to claim a redundancy payment.

If an employee notifies their employer that they do not agree to the transfer, their contract of employment is terminated by reason of transfer of undertaking, however in these circumstances the employee is treated as having resigned rather than being dismissed. Neither the transferring nor receiving employer is under an obligation to reengage such employees.

Employers should bear in mind that employees who do transfer will not break their continuous service and this should be borne in mind when considering statutory employment rights. The employee will also need to be provided with a new statement of terms and conditions within four weeks of the transfer, if comparable terms are not provided the employee may have a claim for unfair dismissal. This also applies to trade union recognition, which can be inherited in a transfer, employers should ensure that they have done adequate due diligence and are aware of the responsibilities that they will become liable for.

A concern often raised by employers is the tiered workforce that can be produced by a TUPE transfer, where different sets of employees are answering to different terms and conditions and enjoy different benefits which can be very difficult to administer.  Employers are not without options, a unilateral change could be pushed through, however this is a very high risk approach and could invite constructive unfair dismissal claims and bad PR.

Providing an incentive for employees to sign up to new terms and conditions is an option, the risk here however is that the employee can take any extra benefits offered and incentives and may not be tied by any reductions to benefits. It would therefore be prudent to offer beneficial changes subject to the on-going acceptance of any detrimental terms.

Are you in need of help with TUPE related issues? Call 0161 726 5037 or email HR@lawhound.co.uk