The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) (as amended) provide that anyone “employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer” will automatically become employees of the transferee. In other words, the Regulations protect the employment of employees when their employer is taken over or where the contract they work on is awarded to another provider.
In many cases it will be obvious whether or not there is a relevant transfer and the Regulations will operate smoothly. However, in some cases there may be a dispute between the transferor and the transferee.
Some of the arguments that the transferee (or incoming service provider in the case of a service provision change) may put forward include :
If a transferee refuses to accept that they are now or will become the new employer of a particular group of employees, whether on one of the grounds above, or on any other basis, this can leave the transferor (and the transferee) in a particularly difficult position. In the case of a share sale, arguments will often be resolved relatively quickly as part of the wider commercial terms. In relation to service provision changes, there is not normally a contractual relationship between the old and new employers; however, it should be noted that it may be difficult to persuade a tribunal that a transfer has not taken place.
Given that the operation of TUPE is automatic, it is not necessarily the case that there will be a dismissal where there is a dispute over the operation of the Regulations. If employees do find themselves in ‘No-man’s Land’ they can apply to a tribunal for a declaration as to their rightful employer. If neither party is willing to take on the employees it may also be necessary to consider the unfair dismissal claims of the individuals and attribute liability according to the relevant employer. If there has been a transfer, any costs and liabilities will normally pass to the transferee (or incoming service provider).
It is therefore important as a transferor to establish contact with a transferee early on in order to ensure that all relevant information can be passed on to support the assertion that a relevant transfer will occur and to allow the transferor to consider any representations put forward by the transferee and brief any employees accordingly.
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