How does TUPE Work?


Despite the new Prime Minister, Liz Truss announcing a freeze on energy bills, many businesses will still be struggling this autumn. There are uncertain times ahead, and many smaller businesses may still have to sell because of the cost of living. TUPE applies to employees transferred across to a new employer, but how does TUPE work?

TUPE stands for Transfer of Undertakings, Protection of Employment. It protects employees’ rights when a business is being bought or sold. Many business owners looking to buy a company might not have the necessary knowledge of TUPE and the potential risks. When you are considering a business transfer, it is important to understand employee rights.

Businesses facing sale

BBC News recently told the story of one café owner whose energy bills were expected to rise from £10,000 a year to £55,000. For many businesses, this leap in annual costs just isn’t sustainable. While some companies will be facing closure over the coming months, others may be acquired by another company. When employees need to transfer to a new employer, there are employee rights to consider, and this is when a TUPE transfer would occur.

TUPE explained

If you are legally employed and the part of the organisation being transferred is in the UK, there are certain TUPE regulations. Whether you are a small business or a large organisation, the TUPE transfer may differ, but your employees still have rights.

There is a specific process to follow as below:

  • Both parties (new and old employers) must identify each person affected by the transfer.
  • Both parties must inform and consult everyone affected via elected representatives (unless less than 10 employees).
  • Employee liability information must be provided by the old employer to the new one; this includes personal data.
  • Employees transfer to the new employer with their employment contracts and length of service.

How does TUPE work – employee rights and contracts

Employee contracts must be honoured after a TUPE transfer. Contractual changes are generally permissible when:

  • There are changes to the workforce due to an economic, technical or organisational reason (ETO), for example, a company restructure or a change in location.

Any changes to an employment contract will require consultation with the employee, and depending on the company, a trade union representative may need to be present.

Employers need to be aware that TUPE regulations will be in force for an indefinite period. In some instances, you may be able to renegotiate a collective agreement after one year. It is important, however, that you follow the correct procedures to stay legally compliant.

Buying or selling a business

Can you confidently answer the question, how does TUPE work? TUPE is a highly complex area of employment law. Whether you are looking to buy or sell a business that employs people, understanding TUPE will be a crucial factor in your purchasing decision. You will need to consider pension rights and legal compliance. You will need to follow the right steps in the right order, including all the necessary paperwork.

It’s natural for employees to feel worried, especially if they believe they are at risk of redundancy, due to a potential restructure by the new employer. So it’s important to ensure that employees are kept informed and understand the purpose behind the business transfer. For more insights, please read our case study, Business Transfer (TUPE) Case Study.

Do you need TUPE advice?

Jude Read-HR provides expert advice on TUPE and a range of complex employee matters through HR consultancy. You will be supported throughout the TUPE transfer process, and we will be on hand to answer your questions, issue the relevant letters and forms. As your HR advisor, we can meet with your employees, senior managers and trade unions.

Do you need TUPE advice or support with a complex HR matter? Please get in touch for a friendly, no-obligation chat to find out how we can support

Business Planning, Energy Crisis

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