TUPE Transfers and Settlement or Compromise Agreements

T.U.P.E. – Transfer of Undertakings (Protection of Employment)

Can I be made redundant if my employer changes hands?

TUPE is the acronym for an obscure law called ‘Transfer of Undertakings (Protection of Employment) Regulations 2006’ (don’t worry if you haven’t heard about it – its not exactly dinner table conversation material). A TUPE transfer could be, for example, a purchase of one company by another company. TUPE is designed to protect employees against the buyer company making them redundant just because of the transfer.

Worn out looking businessman

Top 3 TIPS

  1. TUPE is a technical minefield
  2. New management often tries to sidestep the TUPE legislation
  3. Your new contract should be just as beneficial as the old one.

TUPE applies not only to simple takeovers, but also to more complex situations for example regarding big clients moving between companies. If a group of employees or contractors are working exclusively for the client at company A, and then that client decides to use company B instead, those contractors can insist on joining company B if they want to. If company B refuses to employ them, the contractors will have a claim for unfair dismissal and a claim under the TUPE legislation.

When a TUPE transfer takes place, the employees of the old company remain on the same contractual terms as they were on before. Even if the new company makes them sign new contracts, those new contracts are not valid in the eyes of the law, and legally, the contracts carry on as before. The new company can get round this by offering the old employees more ‘consideration’. This means that they can offer to pay everyone a sum of money in exchange for accepting the new contractual terms.

Consultation with the employees should take place where it is a fairly large company. It is possible for the new company to offer the employees alternative employment. This may be on another site far away from where you live, but of course you have grounds to refuse any such offer. Employers often use this loophole to avoid the effects of the TUPE legislation.

Another exception to TUPE protection is where there is an ‘ETO’ reason for dismissals / redundancy. ETO stands for economic, technical or organisational reason. Examples include:

  • (a) a reason relating to the profitability or market performance of the buyer’s business (i.e. an economic reason);
  • (b) a reason relating to the nature of the equipment or production processes which the buyer operates (i.e. a technical reason); or
  • (c) a reason relating to the management or organisational structure of the buyer’s business (i.e. an organisational reason).”

As you can probably appreciate, TUPE is a bit of a technical minefield, and may not be one of the things that you feel comfortable dealing with yourself.

You might want to get a rough idea of the value of your case by filling in the Settlement Agreements Calculator. Also think about getting some representation have a look at the Employee Experiences to see how others in your situation were helped on their journey.


Next steps

If you want to talk to an experienced employment solicitor about the details of your case, and find out how we could help you improve your settlement package. Get in touch on 020 7717 5259, 0800 533 5134 or apply for a free 15 minute consultation.