There are various steps that need to take place when TUPE applies to a business, seeking legal advice as early as possible is recommended in order to identify risks and look after the business.
All those employed by the organisation that is transferring will be eligible to carry on working for the new organisation with their existing terms and conditions of employment. Furthermore, their continuity of service is also preserved. The transferee takes over various responsibilities such as statutory rights, claims and liabilities such as unfair dismissal claims. If an employee is dismissed because of TUPE then this is classed as unfair dismissal, unless the employer can show an economic, technical or organisational (ETO) reason for the change in the workforce. Examples of ETO reasons include a drastic reduction in output which makes the current set-up unsustainable, new technology which causes less staff to be needed.
It is crucial that employers consult and notify employees of the transfer, in a reasonable time frame. Employers who fail to consult with their employees can be required to pay members of staff up to 13 weeks’ pay as compensation – the liability falls with both the transferor and the transferee. Micro businesses who have under 10 employees can consult with employees directly if there is no trade union, however businesses with over 10 employees must elect representatives or use a trade union for the purposes of consultation. Pensions need to be provided, if they previously were, to eligible employees.
The specifics of what employees are entitled to entirely depends on the type of pension scheme that was offered by the original employer. Strictly speaking certain pension rights do not transfer under TUPE. However, other legislation means that some provisions equivalent to TUPE do apply to types of pension. Where pension arrangements are in place, employers should assess the nature of the scheme and take advice to identify any pension benefits that may transfer.