when do TUPE regulations apply?
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TUPE applies when there is a relevant transfer: this may either be the transfer of a business or undertaking or a service provision change.
For TUPE to apply, the relevant transfer must be a legal one. If the transfer or undertaking is for an unlawful purpose, such as money laundering or drug dealing, then TUPE cannot apply.
However, case law has proven that not all of the activities of the undertaking need to be unlawful for TUPE to apply. The Employment Appeal Tribunal found in the case of Ejiofor (t/a Mitchell & Co Solicitors) v Sullivan and others that employees should not lose their employment status and protection under the regulations because their employers were operating illegally.
Can TUPE Apply To Part Of An Undertaking Or Business?
Yes, TUPE can apply to the transfer of part of an undertaking or business. Case law has demonstrated that the relevant part to be transferred must be a self-contained unit, which is capable of being economically independent. Furthermore, the assets of the part must be sufficiently grouped to constitute an economic entity in their own right.
Public Sector Transfers
The TUPE regulations specifically exclude transfers between public administrative authorities. However, there is no statutory definition of what constitutes a public administrative authority, but case law has provided that it is:
“A public body whose functions involve the exercise of public authority.”
Interestingly, the courts have also determined that the body does not necessarily need to be a public sector organisation, a private sector organisation can also be classed a public administration.
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What About The Sale Of Shares?
TUPE does not apply to the sale of shares, as in this case, there would be no change in the identity of the employer (the Company). The employees’ contracts of employment are continued and remain with the Company after the share sale.
There has been much discussion about whether or not TUPE applies to international transfers. Generally, TUPE applies when:
- There is a business transfer where the undertaking is situated in the UK immediately before the transfer;
- The service provision change takes place when the organised grouping of employees are in Great Britain immediately before the service provision change;
- The transfer or service provision change is governed or affected by the law of a country or territory outside the UK;
- The employees’ employment is governed by the law of a country or territory outside the UK.
- It is important to note that TUPE cannot apply to transfers to the UK from abroad.
When Does TUPE Not Apply?
TUPE does not apply to:
- The sale or transfer of shares;
- The transfer of public administrations;
- When there is no organised grouping of employees in Great Britain immediately before the change whose main purpose is carrying on the relevant activities on behalf of the client;
- Supply of goods for client use;
- The one off buying of goods for the client’s use;
- When the transferee is situated outside the UK.
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Deciphering when TUPE does and does not apply, is not something that can be done by a simple test. All the circumstances of the transfer need to be taken into consideration to conclude whether or not the regulations apply. TUPE is a very complex area of law, and specialist advice should always be sought before a transfer occurs.
About the author
James is on the Business Development & Account Management team at Neathouse Partners and regularly posts articles surrounding issues in HR & Employment Law, including case law & legislation updates. If you have a particular issue you would like addressed, feel free to drop James an email, and he will be happy to offer his assistance.
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