Settlement Agreements and TUPE

TUPE is a commonly used abbreviation for the Transfer of Undertakings (Protection of Employment) Regulations 2006. The purpose of the legislation to protect employees and the legislation fetters an employer’s ability to replace or dismiss staff in certain situations.

TUPE applies when there is a relevant transfer. A relevant transfer occurs when an economic entity (normally a “business”) which retains its identity transfers, or where there is a service provision change.

When a TUPE transfer occurs the new employer is prevented from altering the terms of employment of the transferred employees, or dismissing employees unless it is for an Economic, Technical or Organisational reason (an “ETO”). Any dismissal because of the TUPE transfer will be automatically unfair.

In addition, both the old business (“transferor”) and the new business (“transferee”) have an obligation to inform and consult with recognised trade unions, the elected employee representatives in relation to any affected employees. Affected employees can include not only the transferring employees but the employees of the old and new business whose job may be put at risk.

Businesses who fail to inform and consult with the affected employers will be liable to pay the employees up to 13 weeks gross pay! Both the old and new employer will be liable for the fine.

TUPE considerations were triggered in a recent case where contractors from Kinetic were impacted by a TUPE transfer when the local housing association terminated their contract. The new employer was a new company recently set up by the housing association to provide the services which were previously provided by Kinetic but was yet to become fully operational. They planned to reengage the staff of the old employer as a result of a TUPE transfer.

Many employees balk at TUPE procedures as they wrongly appear shrouded in mystery. We encourage employees not enter into any settlement agreements around TUPE transfers until they have sought full legal advice.

Please do not hesitate to get in contact with a member of the Team if you have any queries about the TUPE process.

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