TUPE sometimes pronounced “toupee”, or to rhyme with dupe or (most commonly) loopy, the Transfer of Undertakings (Protection of Employment) Regulations govern many business sales and service provision changes. The TUPE regulations came into effect in 1981, with an update in 2006, and they do what they say on the tin they protect employment on a transfer. Affected employees’ employment transfers without breaking their continuity of service and their contractual rights and liabilities transfer with them, with TUPE forming a “statutory bridge” between old and new employers (called “transferor” and “transferee”).
Employees can opt out of the transfer and will be treated just as though they had resigned in the normal way.
Both employers will have information, and sometimes consultation, obligations, so they may have to hold elections for employee representatives if they don’t already have trade unions in place.
The transferee can’t fire staff because of the transfer, unless an economic, technical or organisational (ETO) reason entailing changes in the workforce can be shown, and it can’t just harmonise terms and conditions so that the new employees are on the same contracts as the existing workforce. And although occupational pensions don’t transfer under TUPE, some pension-related benefits (like enhanced redundancy pay) do, and there’s specific additional legislation that controls what happens to the pensions themselves.
Getting it wrong can be costly; Tribunals don’t normally penalise employers who are mistaken, but with TUPE they start on the basis of 13 weeks’ pay per employee, regardless of whether the employees have even lost out. Definitely worth getting some employment law advice on this one!