TUPE update – changes to rules from 1 July 2024
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TUPE update – changes to rules from 1 July 2024
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (better known as ‘TUPE’) aims to protect employees’ rights where there is a transfer of a business or upon the change of a service.
TUPE legal changes
As an overview, both the transferor (often referred to as “the seller”) and the transferee (often referred to as “the buyer”) have obligations under TUPE legislation. The obligations are to inform and (if appropriate) consult with appropriate representatives in respect of any employees that are affected by the transfer, alongside any measures that may be taken in connection with it.
Previously, micro-businesses with fewer than ten employees were able to inform and consult affected employees directly, provided there were no existing representatives, and the employer had not invited the affected employees to elect representatives already. This has now changed.
What are the legal changes regarding TUPE being made?
For transfers taking place on or after 1 July 2024, the above circumstances have been extended to apply to:
- Businesses with fewer than 50 employees; or
- Businesses of any size involved in a transfer of fewer than ten employees.
What does this mean for employers?
The above changes are likely to be well received by employers. This enables employers to streamline the TUPE process in the above circumstances, thereby creating a more efficient process.
However, employers should ensure that they fully understand their TUPE obligations to inform and consult, alongside when the above circumstances apply. A failure to comply with their legal obligations could subject the parties to claims equivalent to up to 13 weeks of uncapped pay for each affected employee. As such, these can be very significant claims.
Other potential TUPE changes on the horizon
On 16 May 2024, the Government announcement a consultation on potential reforms to TUPE. This includes consideration of the definition of an “employee” within the meaning of TUPE, as this can be an area of confusion for employers. The Government is also proposing to remove the obligation to split employees’ contracts between multiple employers where a business is transferred to more than one new business. The consultation closed on 11 July 2024.
If you need any advice or support in relation to any TUPE matters, or more generally regarding employment law, please contact a member of the Employment team who would be happy to assist.
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