TUPE redundancy & what you need to know

TUPE redundancy
This article aims to explain; what TUPE is, what happens if you’re made redundant as part of a business or service transfer, and what are your rights when it comes to redundancy” Read on to find out more about TUPE redundancy and what you need to know.

Although TUPE regulations and requirements all sound very complex, they essentially aim to protect employees if the business they work for changes hands. There can be a lot of jargon to get your head around when you are given notice of redundancy, especially when Tupe is involved.

Hearing the word redundancy at work is rarely a good thing, especially if it’s completely unexpected or as a result of the company you work for changing ownership. You can rest assured though, that although the news might not be what you wanted to hear, there are lots of regulations to ensure strict protocols are followed and your rights as an employee are protected to ensure that you will be treated fairly throughout.

What Is TUPE?

First things first, when trying to understand what TUPE redundancy means, we should first cover Tupe itself. TUPE, or the Transfer of Undertakings (Protection of Employment) Regulations 2006, provides employees protection from dismissal or changes to their contract of employment.

The regulations are designed to protect your employee rights when you are transferred to a new employer. This means that with the exception of occupational pensions, employees receive certain protections around dismissal and redundancy.

The effect of TUPE is that an employee’s contract of employment automatically transfers to the new employer and stands as though the contract was originally made between the new employer and the employee that has been transferred to the new company.

When Is TUPE Used

Why might you or a colleague be transferred to a new employer” As businesses expand or consolidate they may need to sell off certain parts, or all of the business, and may even merge with another business. As part of this process, some employees may get moved to a new employer.

  • TUPE laws are likely to be activated when the organisation you work for (or part of it) is transferred to another employer as a result of growth, contraction or merging.
  • TUPE transfers are also likely to happen when a particular service is transferred to a new provider. For example when another company takes over a contract for office cleaning or catering.
You may be affected by a TUPE transfer if:

  • you’re transferring from your current employer to a new employer
  • other employees are transferring to a new employer but you stay employed with your current employer and do not transfer
  • other employees have been transferred to the organisation you work for

What Happens During TUPE?

Every Tupe transfer will be different but there will be several key stages that will always occur:

  • Both the old and new employers will identify which employees are affected by the transfer
  • Old and new employers will inform, and often consult with the employees identified for transfer
  • The old employer will pass over information to the new employer about the employees that are transferring to the new company including existing contract details, name, age, details of disciplinary action taken in the last 2 years, grievances raised against you in the last 2 years and any legal action taken in the last 2 years.
  • All affected employees will have their employment and associated contracts transferred to the new employer.
Sadly, when big business transfers like this occur, not all employees will have a role for them at the new company. For example, after the transfer, the new employee may have to close down part of the company because it’s not performing or there are too many people in the same role. When this occurs, affected employees may be offered redundancy when the transfer to the new company is complete. This is where the topic of TUPE redundancy comes in.

What Is Redundancy?

Redundancy, or ‘being made redundant’ occurs when employers need to reduce their workforce. This could be due to a whole host of factors but commonly occurs in times of financial hardship, under performance of certain areas of the business, or when the business is being transferred to new ownership. When redundancy is required following TUPE, affected employees must be selected for redundancy in a fair way and cannot be selected because of age, gender, disability, pregnancy, or because they have come from the transferring company.

What Are My Redundancy Rights Under TUPE?

Sadly, the new employer may be forced to make redundancies and if this does occur, you will be consulted directly and have the following rights:

  • You have the right to only be the subject of redundancy discussions for a genuine redundancy reason
  • You have the right to be notified if you are at risk of redundancy
  • You have the right to be consulted
  • You have the right of appeal against the decision to make you redundant
TUPE and redundancy terms state that if the reason for redundancy is primarily because of the employee originally being under the previous employer, it is unlawful.

This means that;

  • The new employer can consult about redundancies before the transfer if the old employer agrees but cannot make you redundant before the transfer is complete.
  • After you have transferred, your new employer can only make redundancies related to the transfer if there is a genuine redundancy reason and an ETO reason.
  • These ETO reasons include, if there is a need to change the workforce due to economic, technical or organisational reasons such as a change in location of work, reduction in required number of employees or having too many employees in the same role.
  • Your new employer must treat you the same way as staff who have worked at the company for longer and can’t select you for redundancy just because you have transferred under TUPE.

TUPE And Redundancy Pay

If you have transferred to a new company and are later made redundant due to economic, organisational or technical reasons then your new employer must provide you with the redundancy payments, both statutory and contractual, that were present in your original contract of employment.

The amount of redundancy pay received will likely be in line with statutory redundancy payments unless your contract states otherwise. Statutory redundancy pay is calculated based on the number of years an employee has been employed, including those with the previous employer prior to the transfer.

Will I Get Redundancy Pay If I Don’t Transfer?

If you don’t want to transfer to the new company, that is a decision you can make but you must be aware that this will forfeit your right to claim for redundancy pay or unfair dismissal. If you decide that you don’t want to transfer your employment to the new employer, you can hand in your notice to your existing employer before the transfer takes place.

Related Questions

When do TUPE regulations apply?

You will be protected under TUPE if you are legally classed as an employee of the company that is transferring, and the part of the business that’s transferring ownership is in the UK. The regulations apply to both public and private sectors and cover all sizes of business from very small offices to large organisations with thousands of employees.

When doesn’t TUPE apply?

According to HMRC, employees will not be protected under TUPE if their contract is for the supply of goods for the company’s use, for a single event or short term task, or are based outside of the UK. This means that only employees who can be clearly identified as providing the service that is being transferred to the new company are protected.

What Rights Do I Have Under TUPE Regulations?

If you have transferred under TUPE regulations, you are protected from any change to your contract of employment that occurs because of the transfer. This means that if the main reason for your subsequent dismissal is the transfer of employment then this will be an unfair dismissal.

Who Can Help If TUPE Redundancy Is Unfair?

If you have any concerns about the handling of TUPE proceedings or redundancies before or after a business transfer you can talk these through with your employee representative or a solicitor specialising in employment law.

Summary

Although TUPE redundancy regulations and requirements all sound very complex, they essentially aim to protect employees if the business they work for changes ownership.

Once a TUPE transfer is identified, both the old and new businesses must protect the rights of all employees affected and the new employer will take on the rights, responsibilities and liabilities of the old employer in relation to employees.

This means that if you experience redundancy without a valid ETO reason, are dismissed, or subjected to changes in the terms and conditions of your contract as a result of TUPE, these are unfair situations and you may be able to seek financial compensation.

In summary, if TUPE stands following a business transfer or change of service provision;

  • All employees employed immediately before the transfer are automatically transferred to the buyer.
  • Employees are protected against having their terms and conditions changed in connection with the transfer.
  • Employees can claim automatic unfair dismissal if they are dismissed or made redundant on account of the transfer.
  • The new employer and old employee both have an obligation to inform and consult affected employees.
 

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