Last month’s Resource included TUPE or Not TUPE? Part 1, in which we gave an overview as to what TUPE is and the obligations for the employer whose staff are transferring.

This month it’s Part 2, where we turn our attention to the incoming employer in a TUPE transfer and their obligations.

There’s a lot of overlap between the obligations for the incoming employer and those for the outgoing employer. Regardless of which side of a transfer you’re on, it’s important to be aware of both parties’ obligations.

TUPE is a complex and challenging area of employment law. If you’re going through or anticipate going through a TUPE process, then it’s really important to obtain expert guidance, as minor things that could be overlooked could have major implications in terms of time, money and day to day logistics.

Previously on TUPE or Not TUPE?...

Last month we considered in some depth what TUPE is and the impact it has for the employer whose staff are transferring.

By way of background, TUPE is legislation that aims to ensure that employees are not adversely affected by a change in ownership of the business in which they work. It applies, for example, if a company sells its business to another company.

For a more detailed explanation, please take a look at Part 1.

Obligations on the incoming employer

The incoming employer is the individual or organisation acquiring the business in which the employees work.

It is to the incoming employer that the employment of those employees will automatically transfer to, when the transfer of the business takes place.

Measures

Previously we discussed the requirement on the outgoing employer to supply employee liability information.

This is information which has to be supplied to the incoming employer in advance of the transfer and which provides details about the transferring employees.

Once the incoming employer has received this information, this will help them decide what (if any) changes they wish to make regarding the transferring employees.

The incoming employer may have plans to make changes to employment arrangements after the transfer and under the TUPE Regulations these are called “measures”. Measures can include:

• redundancies;
• workplace relocation;
• changes to staff pay dates;
• different working patterns;
• different pension arrangements.

When considering what measures should be made, it’s important to note that the TUPE Regulations are very strict about the limits on what can be done.

The circumstances in which changes can safely and validly be made to the terms of the employees’ contracts of employment, for example, are very limited.

Once the measures have been decided, the outgoing employer has an obligation to inform trade union or elected staff representatives about the measures the incoming employer is likely to make Therefore the incoming employer must provide the outgoing employer with information about any measures it envisages taking in relation to the transferring employees.

All proposals, however trivial should be notified to the outgoing employer and, through them, to the transferring employees’ representatives and if there are to be no changes, then that too must be notified.

There is no timescale for providing this information, but there needs to be sufficient time given to allow the outgoing employer properly to consult with the staff representatives.

Duty to inform and consult

Under the TUPE Regulations, the obligation on an employer to consult is only in respect of that employer’s own employees.

Further details about the obligation to inform and consult are considered in Part 1, and the incoming employer should follow a similar procedure.

The incoming employer also has an obligation to inform trade union or elected representatives of its own affected staff about the transfer. This enables those members of staff to understand what is happening and why, including any changes that the incoming employer envisages making.

If the incoming employer is proposing to take any measures which will affect its own employees, then it also has an obligation to consult with those employees’ representatives about those measures.

However, the incoming employer is under no obligation to consult the transferring employees or their representatives prior to the transfer.

Failure to comply

At the point of transfer, the incoming employer effectively steps into the outgoing employer’s shoes with regard to the transferring employees.

This means that all rights, powers, duties and liabilities pass to the new employer and any acts or omissions carried out by the outgoing employer before the transfer are treated as having been done by the incoming employer. Therefore it’s important for the incoming employer to consider carefully the employee liability information supplied prior to the transfer, as failure to do so could lead to unwanted liability and cost.

If an employer fails to comply with the obligations to inform and consult, then the Employment Tribunal can award each affected employee compensation equivalent to up to 13 weeks’ uncapped pay. It’s also important to note that liability for this award is ‘joint and several’. This means that if the outgoing employer fails to comply with its obligations to inform and consult and a Tribunal award is made, both the incoming and the outgoing employer would be responsible for paying that award.

Unfair dismissal

The incoming employer also needs to be aware that if an employee is dismissed by them and the reason for that dismissal is the fact that their employment has transferred, then (apart from in very limited circumstances) if that employee has two years or more employment, their dismissal will be automatically unfair and the employee will be able to bring an Employment Tribunal claim against the incoming employer.

With regard to length of employment, it’s important also to remember that the period of employment with the outgoing employer counts as employment with the new employer.

For further information

For further information and advice about TUPE (and any other employment or HR matter), please get in touch with our Employment law and HR Team.