Pothecary Witham Weld Solicitors

On 6^th April 2006 the new Transfer of Undertakings (Protection of Employment) Regulations 2006 came into force. They replaced the Regulations which had been in use since 1981 but their aim remains the same, namely to ensure that employment rights of all employees of a business being transferred, bind the new owner of a business in the same way as the previous owner was bound.

The 2006 Regulations require the old employer to give the new employer, employee liability information including employees’ ages and identities, salient employment terms; disciplinary, grievance, court or tribunal procedures involving staff during the previous two years together with information about prospective grievances or complaints and details of any collective agreement. Such information should be given not less than fourteen days before the business transfers and in default may be enforced by the transferee referring to an Employment Tribunal. The ET can then make an award of compensation to the new employer of some £500 per employee unless a smaller sum is regarded by the Tribunal as apt.

The 2006 Regulations make plain that they apply to all outsourcing situations as well as more clear cut transfers of businesses or parts.

The volume of case law on TUPE disputes since 1981 is large so a cautious view will be that if there is any doubt about whether TUPE 2006 applies to a particular set of circumstances, the assumption should be that it does.

If the transferring employer does not inform and consult with the employees who are transferring as the Regulations require, it will be liable with the new employer, to compensate affected staff even though the obligation to inform and consult with employees automatically passes to the new employer. In other words under TUPE 2006, the transferor employer will remain liable for the financial consequences along with the new transferee employer.

Dismissals and changes to employment terms remain unlawful under the 2006 Regulations, if connected with the transfer itself unless the employer can show that the reason is; “an economic, technical or organisational reason entailing changes in the workforce”; but a desire to standardise employment terms of new staff taken on as a result of TUPE with those of the transferee’s existing employees does not count as an economic technical or organisational reason.

The 2006 Regulations provide greater flexibility where potentially insolvent businesses are concerned but this aspect of TUPE has been criticised for vagueness.