Managing an Employee Transfer to another Employer (TUPE)

Managing an Employee Transfer to another Employer (TUPE)

TUPE stands for the Transfer of Undertakings Protection of Employment Regulations and is designed to protect employees when the business, organisation or service they work within transfers to another employer. Usually as a result of a business sale, takeover or merger.

TUPE can arise when a business or part of a business transfers to a new employer. It can also apply to certain service provision changes, including outsourcing, bringing services back in-house or changing contractors.

Where TUPE applies, employees will generally transfer to the incoming employer with their continuity of employment and existing contractual terms and conditions. Certain employment-related rights and liabilities may also transfer.

TUPE can be complex and getting it wrong can create significant employee relations and legal risks. Below are some practical areas for employers to consider.

Establish Whether TUPE Applies

Do not assume that TUPE either does or does not apply. The circumstances surrounding the transfer should be considered carefully and advice sought where necessary. Understanding this early allows both organisations to properly plan the transfer and understand their respective responsibilities.

This is particularly important where employees work across several services, contracts or parts of an organisation, or where there is a change of contractor.

Start Planning Early

One of the biggest mistakes employers can make is leaving the people element of a transfer until too late. HR should be involved as early as possible alongside those managing the commercial aspects of the transaction.

Create a clear plan covering:

·         The proposed transfer date.

·         Which employees are potentially affected.

·         Employee information and consultation.

·         Employee information and data.

·         Any proposed changes or measures.

·         Payroll, benefits and pension arrangements.

·         Communication before, during and after the transfer.

·         Responsibilities of both the outgoing and incoming employer.

The more preparation completed in advance, the smoother the transfer is likely to be.

Identify the Employees Affected

Establish which employees are likely to transfer and check the information held about them. Depending on the circumstances, this may not simply be everybody working somewhere within the relevant department or contract.

Particular care should be taken where employees work across several services or contracts. Both organisations should have a clear understanding of the proposed transferring population before communicating definitive information to employees.

Understand What Transfers

Where TUPE applies, the incoming employer generally takes over the transferring employees' existing employment contracts, continuity of service and associated employment rights and obligations. This makes due diligence particularly important.

The incoming employer should understand what it is inheriting, including areas such as:

·         Pay and contractual benefits.

·         Working hours and locations.

·         Holiday entitlement.

·         Length of service.

·         Family leave arrangements.

·         Existing grievances or disciplinary matters.

·         Current or potential employment claims.

·         Collective agreements where applicable.

·         Certain provisions that may have been acquired through custom and practice.

The outgoing employer also has responsibilities around providing employee information as part of the transfer process.

Inform and Consult

Communication is one of the most important parts of any TUPE process. Employers should identify who needs to be informed and consulted, which may include recognised trade unions, elected employee representatives or, in some circumstances, direct consultation with employees.

Consultation should be meaningful rather than simply communicating decisions which have already been made.

Employees are likely to have lots of questions:

Will my job change?

Will my pay and benefits remain the same?

Where will I work?

Who will my manager be?

What happens to my length of service?

What happens to my pension?

Anticipating these questions and agreeing consistent responses between both organisations can significantly reduce uncertainty.

Be Clear About Any Proposed Changes

Under TUPE these are commonly referred to as measures. Measures can include proposed changes that may affect transferring employees, for example changes to working arrangements, reporting structures, payroll arrangements or working practices.

Potential measures should be considered early and communicated appropriately during the process. Where possible, avoid drip-feeding information. Employees are much more likely to trust the process where information is clear, consistent and transparent.

Do Not Assume Terms Can Simply Be Harmonised

A common misconception following a TUPE transfer is that the incoming employer can simply move transferring employees onto its existing employment terms.

Changes to employment contracts connected with a transfer are restricted. There are circumstances where changes may be possible, but employers should take advice before progressing contractual changes. Avoid promising during the transfer that everybody will simply move onto the same terms once the process has finished.

Be Careful Around Redundancy and Restructuring

Sometimes a transfer forms part of a wider organisational change and the incoming organisation may identify duplication, restructuring requirements or potential redundancies.

TUPE does not prevent every redundancy following a transfer. However, additional legal considerations apply where dismissals or changes are connected with the transfer. Any potential redundancy process should therefore be carefully planned and managed.

Think About the Employee Experience

TUPE is often viewed as a legal or transactional exercise, but for the employee concerned it can be a significant change. They may have worked for the same organisation for many years and suddenly find themselves employed by a company they know very little about.

The incoming employer should therefore consider how employees are welcomed into the organisation. Providing information about the organisation, leadership team, culture, policies, systems, benefits and ways of working before the transfer can make a considerable difference.

Where possible, allowing employees to meet their new manager and colleagues before transfer can also help reduce uncertainty.

Prepare Managers

Managers on both sides of the transfer need to understand what is happening and what they can and cannot say. They will often be the first people employees approach with questions.

Provide managers with:

·         Clear briefing information.

·         Frequently asked questions.

·         Agreed communication messages.

·         Details of where more complicated questions should be directed.

An incorrect answer given informally by a manager can quickly create confusion across the wider workforce.

Keep Communicating After the Transfer

Communication should not stop on transfer day. The incoming employer should check in regularly with transferred employees during the weeks and months afterwards.

Employees may initially be reluctant to raise concerns or may only identify problems once they begin using new systems, policies and processes. Good communication following the transfer can help employees integrate more successfully and identify issues before they become more significant.

Keep Appropriate Records

Keep clear records of the process including employee information, communications, consultation records, proposed measures and decisions made. Any employee data transferred between organisations should also be handled appropriately and in accordance with data protection requirements.

Why is this important?

A well-managed TUPE transfer can:

·         Reduce uncertainty for employees.

·         Maintain trust and engagement.

·         Ensure both organisations understand their responsibilities.

·         Identify potential problems before the transfer takes place.

·         Support the integration of transferring employees.

·         Reduce employee relations and legal risk.

TUPE can be complicated and every transfer is different. Early planning, good communication and appropriate HR and legal advice can make an enormous difference to how successfully the process is managed.

At AHR we support organisations through TUPE and organisational change across the UK and Ireland. We can support businesses with planning, employee consultation, communications and the wider people aspects of a transfer.

You can contact us for support here.

Important note: Different Transfer of Undertakings legislation is applicable in jurisdictions. Although many underlying principles are similar, including the protection of employment rights and information, and consultation obligations, the applicable jurisdictional requirements need to be applied.

Below are some links with additional helpful guidance for handling TUPE in the various jurisdictions:

UK: GOV.UK - Business transfers, takeovers and TUPE

GB: ACAS - TUPE

NI: Responsibilities to employees if you buy or sell a business | nibusinessinfo.co.uk

IE: Workplace Relations Commission - Transfer of Undertakings