Member Article

TUPE - What?s it all about?

The concept of TUPE within Employment Law may appear complex and uncertain. However, achieving a basic understanding, which is increasingly important for employers in the modern workplace, need not be as daunting as it first seems.

TUPE, or rather the Transfer of Undertakings (Protection of Employment) Regulations 1981, introduced the automatic transfer principle into domestic Employment Law.

The automatic transfer principle safeguards employees’ rights on the transfer of a business, so that certain of these rights transfer from the former owner of the business to the new owner.

The 1981 TUPE Regulations also introduced protection for employees against dismissal in connection with a relevant transfer, and an obligation on employers to inform and consult with employee representatives prior to a relevant transfer.

So what is a relevant transfer?

A business transfer is a transfer of an economic entity that retains its identity. This may sound a bit doublespeak, however, the key question is whether there is an organised grouping of resources (persons and assets with a specific objective) which continues to exist after a transaction? The courts will determine whether there has been a transfer by looking at the substance of what has happened. Influencing factors include:

• Whether the new business (“the transferee”) is carrying out the same, or similar, activities as the old business (“the transferor”);

• Whether there been a transfer of tangible assets such as building and moveable property;

• Whether some or any employees have been taken over by the transferee;

• Whether any customers of the transferor have transferred to the new business;

• The value of the transferor’s intangible assets is at the time of the transfer;

• Whether there been a temporary cessation of business activities, and if so, for how long.

As a result of the Transfer of Undertakings (Protection of Employment) Regulations 2006, relevant transfers now include circumstances where there has been a service provision change. Here, there must be an organised grouping of employees with the principal purpose of carrying out activities on behalf of a client, where either:

a) the activities cease to be carried out by the client and are instead carried out another organisation (a contractor) on the client’s behalf; or

b) the activities cease to be carried out by another organisation (a contractor) on the client’s behalf and are instead carried out a different organisation on the client’s behalf (a subcontractor); or

c) the activities cease to be carried out by an organisation on the client’s behalf (a contractor or a subcontractor) and are instead carried out by the client.

The three situations therefore cover circumstances where a client engages a contractor to do work on its behalf, reassigns work to a different contractor, or brings work assigned to a contractor back “in-house”.

A raft of decisions by the courts and tribunals have explored the above situations and the effect of TUPE transfers on various aspects of employment including dismissal, continuous service, pensions and more besides. Meanwhile, with increasing numbers of businesses merging, fragmenting and diversifying, the influence of TUPE on business and workforce planning expands all the time.

With this in mind, Short Richardson & Forth LLP will shortly be teaming up with Neon Legal for their latest Breakfast Seminar ’ Transfer of Undertakings and Pension Issues’. The seminar will look at the issues that the courts have thrown up on TUPE in 2012, including, what constitutes an organised grouping of employee? Can the assignment of a lease alone give rise to a TUPE transfer? How long after the date of a transfer will a dismissal still be connected with that transfer? What provisions transfer in terms of contractual benefits? Can common law rights ever trump TUPE rights?

Pension provision and TUPE transfers don’t always mix well and pension rights sometimes cause a headache for both sellers and purchasers alike. Recent case law has answered some questions but raised new ones. Meanwhile, the new Auto Enrolment requirements introduce another layer of complexity for employers to navigate. The seminar will therefore also provide a straightforward overview of the issues involved and a practical guide to minimising pension risks under TUPE.

The seminar will take place on Tuesday 11 December 2012 at The Northern Counties Club, Newcastle upon Tyne, and on Wednesday 12 December 2012 at The Leeds Club, Leeds. Registration on both days will be from 8.30am, followed by breakfast and coffee, with the seminar commencing at 9.00am.

For further information or to book your place at a seminar please contact Short Richardson & Forth LLP on 0191 232 0283 or by e-mail to amd@srflegal.co.uk, or via the website www.srflegal.co.uk, Twitter or Linked In.

This was posted in Bdaily's Members' News section by Paul Clark .