TUPE Regulations 2006

On 6 April 2006, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) came into force. These apply to any size of business and protect the employment rights of employees when their employer changes as a result of the relevant transfer of a business or a part of one. They implement the EC Acquired Rights Directive.

The main changes are:

• a widening of the scope of the Regulations to cover situations where services are contracted out, contracted in or where a contract is assigned to a new contractor on subsequent re-tendering. These are described as ‘service provision changes’. The Regulations will not apply, however, where the service provision is a single specific event of task of short-term duration;
• a new duty on the transferor to supply specific information about the transferring employees to the new employer by providing what is termed ‘employee liability information’. This must be given at least two weeks before the completion of the transfer unless this is not reasonably practicable. The transferee will be able to claim for compensation in the Employment Tribunal if the transferor fails to provide the required information and will be entitled to not less than £500 from the transferor for each employee for whom information was not provided;
• special provisions making it easier for insolvent businesses to be transferred to new employers – for example, allowing the parties in such situations to agree to vary contracts of employment in an attempt to assist the economic recovery of the business;
• provisions which clarify the ability of employers and employees to agree to vary contracts of employment if, for example, the reason for doing so is an ‘economic, technical or organisational reason’ entailing changes in the workforce; and
• provisions which clarify the circumstances under which it is unfair for employers to dismiss employees for reasons connected with a relevant transfer.

The Regulations place a duty on both the transferor and the transferee employers to inform and consult representatives of their employees who may be affected by the transfer with a view to seeking their agreement to the measures. There will be joint and several liability on the transferor and transferee for a failure to inform and consult, thus ensuring that each has a clear incentive to comply with the requirement.

The Department of Trade and Industry had considered excluding professional business services from the scope of the new TUPE Regulations but no such exemption has been included.

The new Regulations apply to transfers that take place on or after 6 April 2006 with the new employee liability information applying to relevant transfers that take place on or after 20 April 2006.

Conclusion

Failure to comply with the TUPE provisions is very expensive for UK business and it makes sense to obtained legal advice from qualified and experienced advisors from the outset.