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Transfer of Undertakings An Overview Thompsons ERU Justin Madders.

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Presentation on theme: "Transfer of Undertakings An Overview Thompsons ERU Justin Madders."— Presentation transcript:

1 Transfer of Undertakings An Overview Thompsons ERU Justin Madders

2 Introduction Amended Acquired Rights Directive (EC/2001/23). Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). Apply to transfers that took place after 6 th April 2006. Overhaul of 1981 TUPE Regulations was required in order to achieve clarity in a number of areas. Original & amended Acquired Rights Directives were codified on 12/03/2001. See Directive 2001/23/EC. March 2007 DTI Guidance: “Employee’s Rights on TUPE”.

3 Relevant Transfer TUPE 1981 definition: Regulation 3 (1). “Undertaking” ~ Includes any trade or business. “Transfer” ~ No definition. ARD definition. March 2005 Government stated: “Ideally, everyone should know where they stand…so that employers can plan effectively in a climate of fair competition and affected employees are protected as a matter of course”.

4 Scope of Regulations A relevant transfer can occur when: a)A business, undertaking or part of one is transferred from one employer to another (a business transfer); or b)A client engages a contractor to do work on its behalf or reassigns such a contract, including brining the work back in house (a service provision). Regulation 3 (5) ~ Public sector reorganisations.

5 When does TUPE Apply? Business Transfer Regulation 3 (1) (a) Service Provision Change Regulation 3 (1) (b)

6 Business Transfers Regulation 3 (1) (a): “A Transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the UK where there is a transfer of an economic entity which retains its identity”. Regulation 3 (2) ~ Economic entity means: “An organised grouping of resources which has an objective of pursuing an economic activity, whether or not that activity is central or ancillary”.

7 Case Law Economic entity must be stable ~ Rygaard A “one off” works contract of short duration may not amount to a transfer-Rygaard Can employ just one person- Schmidt Not necessary to be a commercial venture ~ Dr Sophie Redmond-Stichting v Bartol A transfer outside the UK/EU can be covered Hollis Metal Industries v GMB TUPE transfer must in law take place on a specific date ~ Celtec v Astley.

8 Business Transfers What type of business is it? Transfer of tangible assets? Majority of staff taken over? Transfer of customers? Degree of similarity between activities of outgoing and incoming business? Duration of interruption? Criteria to help decide if there is a relevant transfer.

9 Service Provision Change x 3 principal forms: i.Where activities are outsourced “contracting out”; ii.Reassignment of a contract to a new contractor; and iii.Insourcing (bringing contracted out services back in-house). Regulation 3 (3) (a) (i) “Activities” “Organised grouping of employees” AND Not an exception.

10 Exceptions Specific event/task of short term duration Supply of goods Regulation 3 (3) (a) (ii)Regulation 3 (3) (b)

11 The Effect of Transfer (i) Employees Regulation 4 (3) ~ Confirms the following transfer their contracts of employment to the transferees: a)Employed by the transferor immediately prior to the transfer; and b)Assigned to the relevant group of employees (other than on a temporary basis). Employees who object to being employed by the Transferee under Regulation 4 (7) will not transfer. Transfer will operate to terminate their employment.

12 (ii) Transferee Rights, duties, powers… Liabilities… Anything done (or not done) before the transfer… Personal injury claims transfer But not criminal liability or liability for occupational pension schemes Transferee and Transferor are jointly and severally liable for Transferor’s failure to inform and consult.

13 Varying Terms & Conditions Regulation 4 (4) ~ Any purported variation of the contract VOID. No “safe time” to make alterations to terms and conditions. Regulation 4 (5) CAN agree a variation if it is for an ETO reason, or is a reason unconnected with transfer.

14 ETO Reason Economic, technical or organisational reason (“ETO”). Must be a change in the structure, number or composition of the workforce for the ETO reason to entail a change in the workforce. Economic reason - a reason relating to profitability of Transferee’s business; Technical reason – a reason relating to the equipment which the Transferee’s business operates; Organisational Reason – a reason relating to the management/organisational structure of Transferee’s business.

15 Unfair Dismissal Regulation 7 (1): Any employee shall be treated as unfairly dismissed if the principal reason is: 1.The transfer itself; or 2.A reason connected with the transfer which is not an ETO reason entailing changes in the workforce. Redundancy or “ Some other substantial reason”.

16 Information & Consultation Regulation 13 (2): Inform TU representatives of information: –Fact of transfer, proposed date and reason for the transfer; –Legal, economic and social implications of transfer for affected employees; –Measures Transferor intends to take; and –Measures Transferee intends to take. Employer has a duty to consider any representations made by appropriate representatives – stating reasons for his/her rejections. Consult only if measures envisaged.

17 Employee Liability Information "readily accessible form" 14 days before The identity and age of the employees statutory statements of employment particulars Certain disciplinary or grievance procedures legal claims brought by an employee against the transferor within the previous two years Details of any collective agreement applying

18 Contact details 0161 819 3500 23 Princess St,Manchester, M2 4ER.

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