10. BUSINESS TRANSFERS AND CONTRACTING OUT

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) are intended to protect the rights of employees on the transfer of the business that employs them where that transfer results in a change in the employer’s identity. TUPE is likely to be triggered by business sales, mergers, intercompany reorganisations, outsourcing, “insourcing” (taking business back in-house) and changes in contractor.

The regulations are designed to preserve the continuity of employment and contract terms of employees of the transferring organisation. This protection extends to those who would have been employed had they not been dismissed immediately before the transfer for a reason connected to the transfer. There are special rules relating to pensions.

Changes to contract terms connected to the transfer can be agreed, as long as they are for an economic, technical or organisational reason (often referred to as an “ETO reason”) “entailing changes in the workforce”.

There is no time limit beyond which TUPE protection no longer applies. However, in practice, the more time that passes, the greater the likelihood of an employer being able to show that a change was unrelated to the transfer.