Transfers - the law

Basic legal rules

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) are intended to protect the rights of employees on the transfer of the business that employs them where that transfer results in a change in the employer’s identity. TUPE is likely to be triggered by business sales, mergers, inter-company reorganisations, outsourcing, “insourcing” (taking business back in-house) and changes in contractor.

• The regulations are designed to preserve the continuity of employment and contract terms of employees of the transferring organisation. This protection extends to those who would have been employed had they not been dismissed immediately before the transfer for a reason connected to the transfer. There are special rules relating to pensions.

• Important changes are due to be made to TUPE in early 2014. These changes, once they become law, will reduce the protection TUPE provides to employees and make it easier and quicker for transferees to change terms and carry out dismissals for transfer-related reasons.

key developments

• A person can be assigned to an organised grouping for the purposes of a service provision change even if that “organised grouping” is made up of just that one person (Case 4).

• An administrator can have an economic, technical or organisational reason for dismissals entailing changes in the workforce where it makes dismissals to cut costs and keep a business going, even if its ultimate objective is necessarily to sell the business (Case 5).