TUPE, or not TUPE?
This is an age old question and, from an employment lawyer’s view, it is one of the first questions to be asked with any commercial transaction: is it a TUPE transfer or not? But for those clients new to TUPE, their first question is often “What is TUPE?”
TUPE stands for Transfer of Undertaking (Protection of Employment) Regulations 1981, which were amended in 2014.
The aim behind the TUPE regulations is to protect employee’s rights on the transfer of a business.
The TUPE Regulations protect employees in the following ways:
- The principle of automatic transfer of the employees from the transferor to the transferee. The word ‘transferor’ is used to refer to the party which currently employs the relevant employees, whilst ‘transferee’ refers to the party receiving the employees under TUPE.
- Protection against dismissal for a reason in connection with the TUPE transfer.
- Obligation to inform and consult with representatives of the affected employees.
TUPE will apply when there is a transfer of a business and this could be:
- a transfer of a business or part of a business; or
- a Service Provision Change (SPC). This is where, for example, a business outsources part of its services or brings some services back in-house, or re-tenders for the provision of services.
A potential SPC was recently looked at in the case of CT Plus (Yorkshire) CIC v Black & Others in the Employment Appeal Tribunal (EAT).
In this case, a Council cancelled a contract with CT Plus (CTP) for a subsidised Park-and-Ride bus service and then a separate company, Stagecoach, began to run a bus service for its own commercial benefit from the same site.
CTP argued that when Stagecoach began operating the service one day after their contract terminated, CTP employees transferred under TUPE to Stagecoach.
At the employment tribunal, the judge found that there was no SPC. It was found that Stagecoach was not carrying out the service ‘on the client’s behalf’, as required under Regulation 3 (see below).
“(ii) activities cease to be carried out by a contractor on a client’s behalf (whether or not those activities had previously been carried out by the client on his own behalf) and are carried out instead by another person (“a subsequent contractor”) on the client’s behalf;”
The tribunal found that the Council had relinquished control and were, in the judge’s words, “no more than an interested bystander”. This was different to the subsidised Park-and-Ride bus service provided by CTP. CTP appealed to the EAT and their appeal was dismissed.
Assessing whether TUPE applies to different commercial transactions can be complex and does depend on the facts of each case, but it is necessary to assess this at an early stage as ignoring TUPE can prove costly to both transferor and transferee.
We regularly assist with commercial transactions, providing employment advice alongside our corporate colleagues. Therefore, if you have any queries about TUPE, please do contact us on 01730 268211 or at .