TUPE is an acronym commonly used to refer to the EC (Protection of Employees on Transfer of Undertakings) Regulations 2003.
The TUPE Regulations aim to safeguard the rights of employees if the organisation (or part of the organisation) they work for transfers to another employer as part of a sale, lease, merger or certain other forms of acquisition.
What employers do the TUPE regulations apply to?
The TUPE Regulations apply to public and private undertakings engaged in economic activities whether or not they are operated for gain.
Therefore public sector entities, private businesses, charities and service providers are all subject to the TUPE Regulations.
What is a transfer?
Transfer means the transfer of an economic entity which retains its identity.
For the purposes of the TUPE Regulations, an economic entity means an organised grouping of resources or people that performs an economic activity whether or not the activity is for profit.
There must be a legal transfer of the economic entity to another party and the economic entity must retain its identity after the transfer.
The economic entity must therefore continue to carry out the same or similar economic activity after the transfer is complete.
What employees are covered by the TUPE Regulations?
The Regulations apply to any employee:
- working under a contract of employment, including apprenticeship
- employed through an employment agency, or
- holding office under, or in the service of, the State (including a civil servant within the meaning of the Civil Service Regulation Act, 1956), an officer or servant of a harbour authority, health board or vocational education committee, and a member of the Garda Siochana or of the Defence Forces.
In the case of agency workers, the party who is liable to pay the wages (employment agency or client company) is the employer for the purposes of these Regulations.
Employee’s terms and conditions are protected
All the rights and obligations of an employer under a contract of employment (including terms inserted by collective agreements and excluding pension rights) existing on the date of transfer, are transferred to the new employer on the transfer of the business or part thereof.
The new employer must continue to observe the terms and conditions of any collective agreement until it expires or is replaced.
An employee may not be dismissed solely by reason of the transfer. However, dismissals may take place for economic, technical or organisational reasons involving changes in the work-force.
If employment is terminated because a transfer involves a substantial deterioration in the working conditions of the employee, the employer concerned is regarded as having been responsible for the termination.
In this regard, it should be noted that an employee who is dismissed within the meaning of the Unfair Dismissals Acts 1977 to 2015 with:
- less than one year’s service may refer a case to the WRC under the TUPE Regulations;
- more than one year’s service may refer a complaint to the WRC under the TUPE Regulations or under the Unfair Dismissals Acts 1977 to 2015.
It’s important to remember that an employee may not claim double relief for their dismissal under both the TUPE Regulations and the unfair dismissals legislation.
Pension rights
Employees’ pension rights in relation to old age, invalidity or survivors benefits under supplementary company or inter-company pension schemes do not transfer to the new employer.
However, where there is a pension scheme in operation in the original employer’s business at the time of the transfer, the TUPE Regulations provide that
a) if the scheme is an occupational pension scheme within the meaning of the Pensions Act, 1990, then the protections afforded by the Pensions Act apply to any such scheme, and
b) in respect of the pension schemes which do not come within the remit of the Pensions Act, the new employer must ensure that rights conferring immediate or prospective entitlement to old age benefits, including survivor’s benefits, are protected.
It is advisable to direct employees to refer any such pension queries to the trustees of the relevant pension scheme in the first instance.
Information and Consultation
Organisations with employee representatives (i.e., trade union, staff association etc)
In a transfer situation, both the original employer and the new employer must inform the representatives of their employees affected by the transfer, of –
- the date or proposed date of the transfer;
- the reasons for the transfer;
- the legal implications of the transfer for the employees and a summary of any relevant economic and social implications of the transfer for them, and any measures envisaged in relation to the employees.
The original employer must give this information to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer and in any event, in good time before the transfer occurs.
The new employer must give the information to the employees’ representatives, where reasonably practicable, not later than 30 days before the transfer occurs and in any event, in good time before the employees are directly affected by the transfer as regards their conditions of work and employment.
If either employer envisage measures in relation to their employees, the employees’ representatives must be consulted, where reasonably practicable, not later than 30 days before the transfer occurs and, in any event in good time before the transfer about such measures, with a view to reaching agreement.
Organisations with no employee representatives
Where there are no employee representatives, the employers must arrange for the employees to choose (including by means of an election) representatives for this purpose.
However, if there are still no employee representatives in the undertaking through no fault of the employees, the employees concerned must be notified in writing, where reasonably practicable, not later than 30 days before the transfer and, in any event, in good time before the transfer, with the particulars described at (1), (2) and (3) above.
Expert assistance with TUPE
TUPE is a technical area of employment law. It is very important to seek out expert and professional guidance before transferring a business with employees.
To discuss how the TUPE Regulations could impact an upcoming business transfer, speak to one of our employment law experts now on 01 886 0350 or request a callback here.
