What do the changes in TUPE transfer regulations mean for you?

What do the changes in TUPE transfer regulations mean for you?

The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 comes into effect on 1 July 2024. The UK’s Transfer of Undertakings (Protection of Employment) Regulations (or “TUPE”) provide legal protections for employees who are impacted when a business changes hands or a customer decides to outsource, re-tender or bring services in-house.  Many find TUPE regulations complicated and time-consuming, however, it is crucial to get them right and stay legally compliant.

Here’s a summary of some important changes to how businesses will be able to engage with affected staff regarding a TUPE transfer.

TUPE: The basics

Where TUPE applies, the employee’s contract of employment (together with associated employment rights and liabilities) transfers automatically to the new employer. Save in limited circumstances, they are protected from dismissal or changes to their employment terms that are introduced because of the transfer.

However, before the transfer takes place, TUPE requires both the outgoing and new employer to:

  • Provide certain minimum information to representatives of its affected employees regarding, for example, when and why the transfer is taking place and the legal, social and economic implications for employees; and
  • If any “measures” are proposed (which may be anything from a minor administrative issue to a proposal with a more substantial impact, such as anticipated redundancies), the employer must engage in consultation with employee representatives.

Currently, in most cases an employer must arrange an election of employee representatives, unless either: they were a “micro business” – employing fewer than 10 employees, or there was an existing trade union or consultation body in place whose mandate already covered TUPE issues. The employee rep election process is often seen by employers as an unnecessary procedural hoop – and in practice, some choose simply to inform and consult directly with employees. This is a calculated risk. Failure to comply with the strict TUPE information and consultation requirements can expose the employer to claims of up to 13 weeks’ pay per employee.

However, TUPE is changing to relax some of the requirements for smaller businesses and transfers impacting a smaller number of employees.

Information and consultation: The new TUPE rules

For transfers taking place on or after 1 July 2024:

  • Small Business Exemption: If your business has fewer than 50 employees, you may consult directly with affected employees, provided no existing employee representatives are in place.
  • Small Transfer Flexibility: For businesses of any size, if a transfer involves fewer than 10 employees, you can also opt for direct employee consultation (again, assuming no existing employee representatives).

We’ve previously advised clients that a responsible employer must go beyond the minimum requirements of the TUPE legislation, to consider many practical and legal issues which can arise during a transfer of staff. There is currently no indication that further change is on the horizon but this is, at least, a helpful start. Although an employer should consider whether it may, in fact, be more beneficial to elect representatives (particularly if numerous or wide-ranging “measures” are envisaged), these new exemptions provide greater flexibility. The benefits of the new regime are likely to include, for example:

  • Streamlining Preparation: Direct consultation can simplify preparations for smaller businesses or smaller transfers, reducing administrative burden.
  • Enhanced Communication: For some businesses, direct consultation may be a more effective way of communicating what may be unsettling change for valued employees and/or more aligned to its culture, leading to a smoother transfer process.

What’s next for a business considering a TUPE transfer?

If your business anticipates a potential TUPE transfer in the coming months, these changes may be relevant to your planning and the proposed timescale for any transfer.

We can support you with all aspects of the TUPE process, from engaging with affected employees to negotiating TUPE provisions in business sale agreements and services contracts. We can advise on whether TUPE is likely to apply in any given situation and provide you with strategic advice to ensure that your organisation can navigate the relevant legal and commercial considerations and achieve its objectives in any given scenario.

If you don’t have HR Resource to support such a transfer, we can also assist you with a temporary HR Consultant from our HR Plus team.

If you would like any more information or support regarding a TUPE transfer, please get in touch with Musab Hemsi.

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