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 TUPE was originally enacted in 1981 to comply with a European Union (EU) Directive known as the Acquired Rights Directive.


Since TUPE is based on an EU Directive, some of its key protections are vulnerable to change as a result of the vote to leave the EU, depending on the terms of exit and any subsequent trade deals entered into by the UK. See the box on pages 18-21, Chapter 1. 




TUPE is intended to safeguard the jobs and rights of employees when the identity of their employer changes as a result of a transfer such as a business sale or merger, or the retendering of a service contract. TUPE is also supposed to help prevent the “race to the bottom” for terms and conditions that would take place if competing businesses were free to cut costs following a transfer by sacking staff or cutting their wages.




In brief, where it applies, TUPE operates automatically. It means that the new employer automatically takes on transferring employees and must honour their wages and other contract terms.




TUPE law was modified most recently in January 2014 by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (CRTUPEAR). Their purpose was to make transfers easier and quicker for employers and to reduce the protection of affected employees, especially anyone whose terms were agreed through collective bargaining with a union. The changes laid the groundwork for a further planned expansion in public service outsourcing. The new amendment regulations only apply in England, Scotland and Wales, not Northern Ireland, where the law remains as it was in the rest of the UK before 31 January 2014.




Government guidance, 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, Energy and Industrial Strategy (BEIS). The guidance is non-statutory, meaning that tribunals do not have to follow it. Acas has also produced guidance for employers: Handling TUPE transfers. Unions have also published their own updated guidance for reps on TUPE.