TUPE: How to inform and consult with affected employees

TUPE: How to inform and consult with affected employees

The UK's Transfer of Undertakings (Protection of Employment) Regulations (or “TUPE”) provide legal protections for employees who are impacted when a business changes hands or a customer decides to outsource, re-tender or bring services in-house.

Unless you are a self-confessed TUPE afficionado like me(!), it can seem a bewildering legal landscape at times. In this article, I explain some important changes to how businesses will be able to engage with affected staff regarding a TUPE transfer.

TUPE: The basics

Where TUPE applies, the employee's contract of employment (together with associated employment rights and liabilities) transfers automatically to the new employer. Save in limited circumstances, they are protected from dismissal or changes to their employment terms that are introduced because of the transfer.

However, before the transfer takes place, TUPE requires both the outgoing and new employer to:

• 
  Provide certain minimum information to representatives of its affected employees regarding, for example, when and why the transfer is taking place and the legal, social and economic implications for employees; and

• If any “measures” are proposed (which may be anything from a minor administrative issue to a proposal with a more substantial impact, such as anticipated redundancies), the employer must engage in consultation with employee representatives.

Currently, in most cases an employer is required to arrange an election of employee representatives, unless either: (a) they were a “micro business” – employing fewer than 10 employees in total; or (b) there was an existing trade union or consultation body in place whose mandate already covered TUPE issues. 

The employee rep election process is often seen by employers as an unnecessary procedural hoop - and in practice, some choose simply to inform and consult directly with employees. This is a calculated risk. Failure to comply with the strict TUPE information and consultation requirements can expose the employer to claims of up to 13 weeks’ pay per employee.

However, TUPE is changing to relax some of the requirements for smaller businesses and transfers impacting a smaller number of employees. 

Information and consultation: The new rules

For transfers taking place on or after 1 July 2024:

• Small Business Exemption: If your business has fewer than 50 employees, you may consult directly with affected employees, provided no existing employee representatives are in place.

• Small Transfer Flexibility: For businesses of any size, if a transfer involves fewer than 10 employees, you can also opt for direct employee consultation (again, assuming no existing employee representatives).

I have previously argued elsewhere that reforms to TUPE should be more radical, given the often confusing or impractical nature of the obligations it imposes on employers.  There is currently no indication that further change is on the horizon but this is, at least, a helpful start. 

Although an employer should consider whether it may, in fact, be more beneficial to elect representatives (particularly if numerous or wide-ranging “measures” are envisaged), these new exemptions provide greater flexibility. The benefits of the new regime are likely to include, for example:

• Streamlining Preparation: Direct consultation can simplify preparations for smaller businesses or smaller transfers, reducing administrative burden.

• Enhanced Communication: For some businesses, direct consultation may be a more effective way of communicating what may be unsettling change for valued employees and/or more aligned to its culture, leading to a smoother transfer process.

What next?

If your business anticipates a potential TUPE transfer in the coming months, these changes may be relevant to your planning and the proposed timescale for any transfer. 

We can support you with all aspects of the TUPE process, from engaging with affected employees to negotiating TUPE provisions in business sale agreements and services contracts. We can advise on whether TUPE is likely to apply in any given situation and provide you with strategic advice to ensure that your organisation can navigate the relevant legal and commercial considerations and achieve its objectives in any given scenario.

For my sins, I have a written an entire book on the subject – A Practical Guide to TUPE and Employee Transfers. This aims to make TUPE accessible for all those who may come across it (whether legal practitioners, HR professionals or senior managers) and explains how it works in the real world. 

Article by

Dominic Holmes - Partner

dh@kilgannonlaw.co.uk

07969 921 491

Our expert employment law solicitors all have many years’ experience advising individuals who are in your position. We will be able to guide you through the process and to help you secure the best possible outcome.

We offer a range of services, so please contact our friendly customer services team to discuss further via hello@kilgannonlaw.co.uk or 0800 915 7777.

This article is for information purposes only and is correct at the time of publication. It does not constitute legal advice 14.05.24