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TUPE in 2006: your legal questions answered by David Greenhalgh, a partner in London lawyers, H2O Law, specialising in employment law and reputation management.

What impact will the new Transfer of Undertakings (Protection of Employment) Regulations 2006 have on my business?

The revised Transfer of Undertakings (Protection of Employment) Regulations ("TUPE") have finally been published and are due to come into force on the 6 April 2006. Some of the key provisions of the Regulations are detailed below.


The protection of the Regulations will extend to cover service provision changes. These are changes which "involve the relationship between a company and a contractor whose services are hired" and will specifically include:

* when a service which was undertaken by a company in-house and that service is now contracted out to a contractor (outsourcing);

* on re-tendering, when a contract is awarded to a new contractor;

* when a contract ends with the service now being carried out in-house by the company (insourcing).

The new Regulations will apply where, before the changeover, a team of workers could be identified, however large or small, dedicated solely to the activities which are to transfer. Clear examples of this would be teams in labour intensive service areas such as office cleaning and catering.

The Regulations will not apply where a company enters into a one-off contract or where the contract is wholly or mainly for the supply of goods.

Changes to terms and conditions of contracts of employment

An employer will only be able to vary the employment contracts of employees who transfer under the Regulations if there is an economic, technical or organisational ("ETO") reason connected with the transfer. To be a reason connected with the transfer there must be "extenuating circumstances" beyond the transfer itself, for example the need to re-qualify staff to use different machinery.

There remains no statutory definition of what makes up an economic technical or organisational reason, but this is likely to include:

* a reason relating to the profitability or market performance of the incoming business/contract;

* a reason relating to the nature of the equipment or production processes which the incoming business operates/contract requires;

* a reason relating to the management or organisational structure of the incoming business/contract.

Harmonising the terms and conditions of the transferred employees' contracts with those of existing employees carrying out equivalent roles will definitely not constitute an ETO reason.


A dismissal due to the transfer itself which is not an ETO reason (as above) will still be automatically unfair. The burden is on the employer to show that the dismissal falls under the ETO exclusion.

There is still no clear rule stipulating how long after the transfer a reason will no longer be considered as connected to the transfer itself.


Employees who terminate their contracts, objecting to the transfer will not be able to claim unfair dismissal, unless there has been a "substantial change" for the worse in their working conditions. A "substantial change" is undefined, but is likely to include a major relocation of the workplace which makes it more difficult and expensive for an employee to transfer.

Such resignations (i.e. in response to a substantial change in working conditions) are defined as "dismissals" but will not be automatically unfair as there is no presumption that it is unreasonable for the employer to make changes.


The transferring business now has a duty to disclose to the receiving business written, accessible information regarding the transferring employees' rights and obligations. This includes information as to their identity; age; employment particulars; details of any collective agreements which apply to them; any disciplinary action against employees or grievances they have raised in the previous two years; details of any legal action taken by the employees against the transferring business and any potential legal action which the transferring has reasonable grounds for believing might occur.

The information should be given at least 2 weeks before completion of the transfer or if special circumstances exist, as soon as is reasonably practical. It may be given in instalments or via a third party. The transferring business is under an obligation to give the receiving business written notice if any of the information disclosed changes before the transfer takes place.

Employers cannot contract out of the duty to provide employee liability information. If the required information is not disclosed the receiving business can complain to a tribunal, which can award compensation if any loss if suffered by the receiving business of up to [pounds sterling]500 per employee.

If you have any queries about the new TUPE legislation or about any other employment law issues, please contact David Greenhalgh at H2O Law LLP on 020 7405 4700.

Whilst H2O Law LLP makes every attempt to ensure the accuracy and reliability of the information contained in this article the information should not be relied upon as a substitute for formal legal advice. H2O Law LLP, its employees and agents will not be responsible for any loss, howsoever arising, from the use of or reliance upon this information. [C] H2O Law LLP 2005
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Title Annotation:legal briefs
Article Type:Interview
Date:Jul 1, 2006
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