Redundancy or TUPE? It’s important to get this right!

The purpose of my blog is to highlight a few of the common misconceptions about HR issues and to share case studies whenever possible.  Company names and specific details have been changed to ensure confidentiality.

A client called to request help with a redundancy situation, as they were selling a self-contained part of the business and would therefore have no alternative but to make the staff working for that part of the business redundant. We explained that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006) is likely to apply in these circumstances and not redundancy.  Not only did this action preserve the employment of the employees but we managed to save the client from making a very costly mistake.

If you dismiss an employee solely because the business has transferred to a new employer under the (TUPE) regulations, the dismissal will be automatically unfair and, the employee would be entitled to make a claim to an employment tribunal, unless of course the dismissal was as a result of an economic, technical or organisational (ETO) reason. 

You must provide employee liability information to the new employer and you must inform and consult with those employees affected by the transfer.  There are financial penalties for employers who fail to consult. Both the transferor and transferee employer will be jointly and severally liable for any protective award for failure to comply with the information and consultation obligations. 

You must consult with a trade union or an employee representative if you have them, although employers with fewer than ten employees are now able to consult directly with those affected by the TUPE transfer.

The consultation provides the opportunity to fully explain the reason for the transfer and gain employee consent.

Employees can of course refuse to transfer, which usually means they have resigned. Always keep open the lines of communication, as in rare situations, the employee may have the right to claim unfair dismissal.

Mergers and Acquisitions:  If you are buying, selling or merging a division of your business, you must check if TUPE applies before proceeding. There are two types of transfer protected by the TUPE regulations, a Business Transfer or a Service Provision Change. Employees who are assigned to that particular contract or department, would automatically transfer with it, subject to their consent.  This could and should influence your decision making, particularly during the due diligence stage. Remember, the employee retains their existing terms and conditions of employment upon transferring and you inherit any associated liabilities.

TUPE is a complex piece of legislation and we have only scratched the surface in this article.  Please consider taking advice if you think this subject is relevant to you. In the meantime, look at the following link from Acas, which is a useful guide and gives you some idea regarding the information consultation process. 

As with all HR advice, it’s straightforward if you follow the path, it’s all about policy, process and procedure.