United Kingdom: Employment protection in relation to business transfers

United Kingdom
Phase: Management
Tipo:
Employment protection in relation to business transfers
Ultima modifica: 23 September, 2017
Nome originale:

Transfer of Undertakings (Protection of Employement) Regulations 2006 (TUPE); Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014

Nome in inglese:

Transfer of Undertakings (Protection of Employement) Regulations 2006 (TUPE); Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014

Articolo

Whole laws

Descrizione

The legislation applies when:

  • an economic entity retains its identity (e.g. the sale of a business), and
  • on a 'service provision change' (contracting activities out, bringing them in-house, or changing contractors)

In general, the UK has a more extended view of what amounts to a qualifying transfer than most, if not all, other EU Member States. The decision of whether a 'transfer of an economic entity' has occurred depends on the factors identified in the European Court of Justice. These are:

  • whether tangible assets have been transferred,
  • the type of business or undertaking concerned,
  • the value of intangible assets at the time of the transfer, 
  • whether the majority of employees are retained,
  • whether customers are transferred,
  • the similarity between the activities, and
  • the duration of any gap in the performance of the activities. 

These factors are taken as a whole, and the absence of any one factor does not exclude it from the legislation. Moreover, these factors do not need to be applied to an entity as a whole, and if a single unit of activity is deemed to have been transferred, the legislation will also apply. TUPE will also generally apply for government reorganisation and to the transfer of one subsidiary to another within the same corporate group. 

TUPE applies to employees, but does not normally apply to those seconded to the transferor from a different company. If a department or section of a company is transferred, TUPE applies to 'assigned' employees to the relevant grouping of resources or employees. Whether an employee is assigned depends on:

  • the proportion of time spent within the entity transferring as compared to other parts of the business,
  • the value given to each part by the employee,
  • the employee's job description, and
  • how the employer allocates the costs of the employees services.

Employees (as defined by section 230 of the Employment Relations Act 1996) are entitled to object to a transfer, but this brings employment to an end without dismissal. This means that the employee can leave the contract without any remedies for the ending of the employment relationship. Termination as a result of objection will only be treated as dismissal when:

  • the transfer involves a 'substantial change in working conditions to the material detriment of the employee', or
  • the transfer involves a major detrimental change in terms and conditions amounting to a serious breach of contract. 

The legislation provides that the transferee should 'step into the shoes' of the transferor. This means all contracts, including fixed-term contracts, should be passed over without change (except in exceptional circumstances where the employer can prove that the variation of contract is for a reason connected to the transfer, or for an economic, technical or organisational reason entailing changes in the workforce), and time served under the past employer should count as 'continuous employment' the new employer. Benefits are also expected to be transferred, although in practice bonuses, commission or profit share schemes may be difficult to realise. 

Many pension entitlements are also transferred under TUPE. However, occupational pension schemes are exempt from such rules and the transferee is not obliged to continue such a scheme. The transferee may admit employees to a pre-established pension scheme of their own. In general, a transferee should be able to pay at least 6% of the annual salary into a pension scheme, and can only expect the employee to match this 6% payment. 

If employees are covered by a collective agreement, it is automatically transferred to the transferee until its expiration date, or until a new agreement can be arranged. 

Although there are some conditions under which a transferee can dismiss an employee, if any dismissal is found to be unfair the transferee is liable for up to €90,000. 

Commenti

The TUC's view is that the amendments to TUPE introduced in 2014 represent a weakening of the legislation which will make it easier for employers to introduce inferior terms and conditions.

Cost covered by
Not applicable
Involved actors other than national government
National goverment only
Thresholds
No, applicable in all circumstances
Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Aggiungi un commento