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TUPE or not to TUPE

When a business transfers its undertaking from one organisation to another such as selling one business to another, insourcing or outsourcing a business activity, change in provider of a service then the Transfer of Undertakings (Protection of Employment) Regulations 2006 may apply.
These Regulations provide that any employees assigned to the undertaking should transfer from the organisation losing the work (the transferor) to the organisation gaining the work (the transferee) with their terms and conditions of employment intact and with full continuity of employment.
There are a number of reasons why an employer may want to dismiss employees within the context of a transfer. For example, the business owner may want to reduce costs to make a business look more attractive to a buyer, or because of the disposal of part of its business may not require as many employees. Perhaps the transferee has more efficient and effective systems and therefore does not require as many staff.
However under TUPE employees are protected from dismissals in connection with the transfer; so if a transferor attempted to reduce costs to make the business look more attractive to a buyer this could result in a claim to an employment tribunal and the dismissal being ruled as automatically unfair.
If you are thinking about selling your business, insourcing or outsourcing you need to consider all the people issues involved in that transfer. This would include the following:-

  1. Providing the transferee with all the details of transferring staff prior to the intended transfer date. This should be relevant information to maintain the employment relationship and continuity of employment.
  2. The transferee should advise the transferor whether or not it envisages taking any measures in connection with the transfer. For example, any changes to working arrangements or dismissals.
  3. Consultation to employee representatives or in the case of small employers’ individual consultation with those employees affected
  4. Consultation and communication with employees who may have an interest in the impact of the transfer but are not directly affected.

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