12. Business transfers and contracting out — TUPE 


Business transfers and outsourcing, and their effect on the employment relationship, are regulated by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). TUPE is intended to protect the rights of employees when the business in which they are employed is transferred, and to prevent a “race to the bottom” for terms and conditions. It does this by requiring the new employer to honour the wages and other terms of transferring employees. TUPE was originally enacted in 1981 to comply with a European Directive known as the Acquired Rights Directive. 


The last (majority conservative coalition) government was hostile to TUPE, regarding the regulations as a barrier to competitiveness, especially in the light of their plans to greatly expand the outsourcing of public services to the private sector.


These concerns led to new regulations, known as the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (the 2014 Regulations), in force since 31 January 2014. These new regulations reduce the protection provided to employees by TUPE, by watering down regulatory barriers and making it easier to change terms and conditions after a transfer. Collectively bargained terms (especially terms reached through national or sector-level bargaining) were a particular target of the new regulations. In this, the government was aided by a ruling from the European Court of Justice, Alemo-Herron v Parkwood Leisure Limited [2013] EUECJ C-426/11, discussed on page 442.


Government guidance on TUPE, A guide to the 2006 TUPE Regulations (as amended by the Collective Redundancies and Transfer of Undertaking (Protection of Employment) (Amendment) Regulations 2014), can be downloaded from the website of the Department for Business, Information and Skills (BIS). The guidance is non-statutory, meaning that tribunals are not required to follow it. Acas has also produced guidance for employers: Handling TUPE transfers. Unions have also published their own guidance for reps on the new regulations.