continuing series of articles which give the basics on key areas of employment
Transfer of Undertakings (Protection of Employment) Regulations 1981 – known as
Tupe – were introduced to implement the 1977 EC Acquired Rights Directive. Tupe
provides protection for staff when the business they are employed in is
transferred to a new employer.
classic situation where this applies is where a trade or business is sold to a new
owner. Share takeovers are not covered as the employer remains the same.
addition, Tupe has been held to apply when part of a business is
"contracted out" to a service provider. After the initial
outsourcing, Tupe can also apply when one contractor is replaced by another.
is, however, great uncertainty at present surrounding the application of Tupe
to the contracting out of services – especially in labour-intensive sectors.
Tupe, employees affected by a transfer are automatically entitled to continue
with their existing terms and conditions (except occupational pension rights)
and continuity of employment preserved intact.
the new employer (the "transferee") steps into the shoes of the old
employer (the "transferor") and is deemed always to have been the
employer. Any claims or obligations an employee had in relation to the
transferor switch to the transferee.
an employee is dismissed for a reason connected with a Tupe transfer, the
dismissal is automatically unfair unless the employer can show an
"economic, technical or organisational reason" entailing changes in
the workforce for the dismissal – redundancy for example.
also requires employers to inform and consult recognised trade unions or
elected employee representatives about the transfer and its implications.
DTI’s basic guide to Tupe, Employment rights on the transfer of an undertaking
(PL 699) is up-to-date and a useful starting point. Printed copies can be
ordered from publications@dti or it is available on the DTI’s website at:
For more detailed legal analysis, there are two authoritative loose-leaf
reference works on Tupe: Transfer of undertakings, edited by J Bowers, S
Jeffreys, B Napier and F Younson (Sweet & Maxwell, ISBN 0 752 00476 X) and
Business transfers and employee rights by John McMullen (Butterworths, ISBN 0
406 90155 4).
In relation to transfers within the public sector, the Cabinet Office’s
Statement of practice on staff transfers in the public sector (January 2000)
sets out a framework covering all employees transferring from government
departments, local authorities and the NHS to the private sector:
DTI published a consultation document on reform of Tupe last September
changes proposed include:
Broadening the definition of "transfer of an undertaking" so as to
clarify the application of Tupe to contracting-out exercises and
Bringing occupational pension schemes within the scope of Tupe – that is
requiring transferee empl-oyers to provide staff with pension rights
"equivalent" to those they had with the transferor
Making it easier for employers to change employees’ terms and conditions of
employment in the context of a Tupe transfer, and
Amending the application of Tupe to insolvent undertakings in order to promote
their rescue through being transferred as a going concern.
DTI is currently considering responses to the consultation. Revised Tupe
regulations are expected to be laid before Parliament in the summer, coming
into force later this year.
Cabinet papers suggest that the Government may be backtracking on its proposal
to extend TUPE to occupational pensions -The Financial Times/The Guardian, 7
Secretary of State for Transport, Local Government and the Regions, Stephen
Byers, has announced changes to the arrangements for contracting-out of local
authority services. These include legislation to give force to the Cabinet
Office statement of practice on staff transfers (see above) – DTLR press
release, 26 March 2002
Confederation of British Industry
Department of Trade and Industry
Chartered Institute of Personnel Development
Institute for Employment Studies