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Emloyment protection during business transfers and takeovers

If the business, part of a business or service provider you work for is changing from one owner to another, your existing employment contract could be protected.

Transfers protected under TUPE

When all or part of a business is bought or sold, the terms and conditions of the employees who transfer in the sale can’t be changed. Your existing employment is protected under the Transfer of Undertakings (Protection of Employment) Regulations 2006 and the Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006, collectively known as ‘TUPE’.

There are two types of transfers that are protected under TUPE:
• business transfers
• service provision changes

Business transfers

This is when a business or undertaking, or part of a business or undertaking, is transferred from one employer to another. This can include mergers where two companies close and combine to form a new company.
To be protected by TUPE during a business transfer the identity of your employer must change. A transfer of company shares doesn’t qualify under TUPE because the same company would continue to be your employer.

Service provision changes

A service provision change is more common in work contracts for office cleaning, workplace catering, or security. It normally happens in one of three situations, when a:

• service previously carried out by your employer is awarded to a contractor (called ‘contracting out’ or ‘outsourcing’)
• contract is assigned to a new contractor during a re-tendering process
• contract ends with the service being performed ’in house’ by the former client (called ‘contracting in’ or ‘insourcing’)

There are two exceptions to when a service provision change will be protected by TUPE. If the contract is:

• for the supply of goods for the company’s use (for example, a restaurant changing food suppliers)
• carried out in connection with a single specific event or short-term task (for example, a catering company being used to cater a large corporate event)

You are only protected under a service provision change if you can be clearly identified as completing the service that is being transferred. For example, if you work for a courier service, but the collections and deliveries for a business could be picked up or delivered by a number of different couriers on an ad hoc basis, you would not be part of an identifiable team of employees.

However, if you were employed directly as a cleaner by a large office company and the company decides to use an outside cleaning company, your job and employment terms and conditions would be protected under TUPE.

TUPE protection

To be protected under TUPE, the business transfer or service provision change must take place from a UK-based company. It’s possible that some transfers will be a service provision change and business transfer, for example, your employer outsourcing a service. This will not make a difference to your job.

You’re protected under TUPE, regardless of the size of business you work for. It doesn’t matter if it’s a large business with thousands of employees or a very small one, like a shop, pub or garage.

If you’re involved in a transfer that qualifies for TUPE protection you should be guaranteed that your:

• job transfers over to the new company
• employment terms and conditions transfer
• continuity of employment is maintained

Contractors

If you’re employed by a contractor (for example, in catering or cleaning) who loses a contract to another contractor, you should turn up for work as normal, unless you’re told otherwise. You and your employment contract will usually transfer automatically to the successful contractor.

If you find there’s no job for you, you can consider making a claim for unfair dismissal against both employers in an Industrial Tribunal. You may also have a claim for failure to consult before a TUPE transfer.

Transfers where employees work outside the UK

If you are employed by a UK employer but you are based outside of the UK, you could still be protected by TUPE. The important part of a business transfer is that it involves a UK business and their ‘undertakings’ in the UK.

In the case of business transfers, if the company you work for has an ‘undertaking’ in the UK (for example, premises, assets, fixtures and fittings, employees) but you are part of a team that spends the majority of your working week outside the UK (for example as part of a sales team) then you should be covered under TUPE.

If the company you work for is about to take part in a service provision change, there must be an organised group of employees in the UK for it to qualify for TUPE protection. For example, if a contract to provide website maintenance comes to an end and someone else is taking over the contract.

If you are part of a team of employees that has performed the contract centrally in the UK, but one of the IT technicians works from home outside the UK, you should still be protected under TUPE.

However, if the whole team worked from home which was outside the UK then it is unlikely you would be protected by TUPE as there would be no organised group of employees.