In this series, we delve into the XpertHR reference manual to find essential information relating to current hot topics. This month...
- When the whole or part of an employer's business or undertaking is sold or transferred as a going concern to another employer, a TUPE transfer is said to occur
- When there is a relevant transfer, the purchaser of the former employer's business or undertaking (the transferee) inherits the contracts of employment of the people employed by the seller (the transferor) immediately before the transfer took place. The transferee also inherits the transferor's rights, power and duties and most, but not all, of the transferor's liabilities in respect of those employees
- An employee who is dismissed wholly or partly because of a relevant transfer (either before or after the transfer takes place) is treated in law as having been unfairly dismissed and will be awarded appropriate compensation. However, that rule does not apply to an employee dismissed for an 'economic, technical or organisational reason entailing changes in the workforce' (an ETO reason) unrelated to the transfer in question
- Employers contemplating the sale or transfer of the whole or any part of their business or undertaking (or the acquisition or purchase of another employer's business or undertaking) must first consult with 'appropriate' employee representatives. Failure to do so will inevitably lead to a protective award (up to 13 weeks' pay for each affected employee).
On 29 June 1998, the European Council adopted Directive 98/50/EC amending Directive 77/187/EEC. New Article 1(b) states that "there is a transfer within the meaning of this directive where there is a transfer of an economic activity which retains its identity, meaning an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary".
Member states had until 29 June 2001 to implement the new directive in their separate territories. However, to date, there is no clear indication as to when the directive will be implemented in the UK.
TUPE regulations 1981
The Transfer of Undertakings (Protection of Employment) Regulations 1981 came into force in the UK on 1 May 1982. They apply to the transfer of a UK-based undertaking (or part o