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Summary TUPE (LLB Notes)
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TUPE notes from the employment law module at City University
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TUPETUPE= Transfer of Undertakings (Protection of Employment) Regulations 2006
TUPE offers protection for employees who find themselves in a potential ‘redundant’ situation –
covered by TUPE and the Collective Redundancies and Transfer of Undertakings (Protection of
Employment) (Amendment) Regulations 2014 – aka the 2014 Amendment Regulations
TUPE regulations preserve employees’ terms and conditions when a business or undertaking, or
part of one, is transferred to a new employer – e.g. when company closes, employees can be
made redundant, but TUPE ensures they are transferred to the new entity
They were introduced to comply with various EC Directives concerning transfer of undertakings
At common law transfer of an undertaking by one employer to another automatically terminates
employee’s contract of employment – i.e a dismissal. In this situation a dismissal will generally be
a redundancy (as employer’s requirement for employees to do work has ceased or diminished
The 2006 TUPE regulations altered that situation in favour of employees
Applicability – TUPE 2006 has exclusions + limitations, most importantly:
There must be a transfer from one person to another, not merely ownership
oDoes not apply to share transfers or where a purchaser buys a majority shareholding in a
company not covered by TUPEE, must be a change in employer’s identity
oBrookes v CLS Care: EAT confirmed this principle –there must be a transfer of persons, not shares
A transfer which is caught by TUPE can occur alongside a share sale or after it
oMillam v The Print Factory: Milliam was dismissed, day after dismissal sold the business issue
was whether there was a transfer of an undertaking when company A acquired shares in
company B held there was TUPEE as more than a simple share sale
Allen v Amalgamated Construction: held applied to transfers between two companies belonging to
the same group or where one group sub-contracts work to another provided the transfer involves
the transfer of an ‘economic entity’. (so some companies have smaller sister companies, as long as
that sister company has economic entity, so income/profit are separate= an economic transfer)
TUPE has been found to apply to –
• Mergers – 2 companies merge together and become 1 company
• Sale of part of a going concern – e.g. Business makes clothes and you sell socks as well – and you
want to sell socks only
• Changes of franchisee
• Sale of a sole trader’s business or partnership
TUPE does NOT apply transfer of assets only –
Jackson v Smith: shares of Jackson Lloyd were purchased by Mears Ltd, a competitor, employees
were told Mear Group (not Ltd) acquired JL, there was no TUPE consultation and employees brought
claims for failure to inform + consult held no TUPE, shares were transferred to Mears Group and
TUPE applied to that transfer, not to Mears Ltd
TUPE can apply where ownership of a company is transferred to a company outside of the EU
Holis v GMB: factory in England sold part of manufacturing to another, and that other moved the
whole business to premises in Israel (outside Europe)held as TUPE applies to what happens before
the transfer, it was engaged before the transfer, it was still applicable, but enforcement an issue (as
outside the EU) so issue was if it applied, and it did
1
,Where bankruptcy or insolvency, employment contracts will not normally be transferred Reg 8+9
Regulation 4: TUPE not apply to rights under an occupation pension scheme e.g. benefits for old age
Regulation 4: not transfer liability of any person to be prosecuted, sentenced or convicted of any
criminal offence, e.g. director facing health + safety charges= not transferred to new owner
Regulation 7: dismissals due to transfer are AUTO unfair unless economic reasons apply
TUPE 2006 applies to England Wales, Scotland and Northern Ireland.
The 2014 Amendment Regulations do not apply to Northern Ireland.
Regulation 3 – Relevant Transfers (TUPEE 2006)
TUPE 2006 applies ONLY to what are known as ‘relevant transfers’, may occur in range of situations
Two broad categories being:
1. Business transfers (reg. 3(1)(a))
2. Services Provision changes (reg. 3(1)(b))
Some transfers will comprise of both business + service provision changes. The two definitions are
not mutually exclusive as long as 1 definition is satisfied= TUPE is engaged, not matter if other not
Regulation 3 applicability
a) Applies to public + private undertakings in economic activity, whether or not operating for gain
b) Can apply to a service or transfer, provided business is situated in UK. If a service change, group
of employees offering service be situated in UK immediately prior to service provision change
c) Apply to transfer of an undertaking, business or part of an undertaking or business (which may
also be a service provision change) where persons in the undertaking, business or part
transferred ordinarily work outside of the UK, provided, of course, that the undertaking itself is
situated in the UK immediately before the transfer – similar criteria to Hollis
d) It does not apply to administrative re-organisation of public administrative authorities or
transfer of administrative functions between public admin authorities.
e) A relevant transfer may be effected by a series of two or more transactions;
f) A relevant transfer may take place whether or not any property is transferred to transferee
by the transferor (situations like leasehold of building is not transferred yet)
Business Transfers
A business transfer is a (Reg.3(1)(a)
“Transfer of an undertaking, business or part of an undertaking or business situation immediately
before the transfer in the UK to another person where there is a transfer of an economic entity
Essentially to qualify as a ‘business transfer’ identity of the employer must change
(this is important for exam Q – the identity of the employer must change)
This is why the regulations to not apply to transfer by share takeovers, because when company
shares are sold to new shareholders, there is no transfer of the business or undertaking – the same
company continues to be the employer
General test to applied on if there has been a business transfer in Spijkers v Gebroeders
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, Spijkers v Gebroeders (important case): transferor owned a slaughterhouse. The business came to
an end and premises, goods and all employees except Mr Spijkers were transferred to transferee
Spijkers laid down 7 criteria a tribunal should consider (see all factual circumstances of transaction)
1) The type of undertaking or business;
2) The transfer or otherwise of tangible assets such as building, equipment and stocks;
3) The value of intangible assets at the date of transfer (ie goodwill);
4) Whether majority of staff are being taken over by the new employer;
5) The transfer or otherwise of the circle of customers;
6) The degree of similarity between activities before and after the transfer;
7) The duration of any interruption in those activities
all factors must be taken into account and ‘cannot be examined independent from each other’
(Useful so in exam need to think like a judge, look at everything and make a decision)
Following Spijkers a later ECJ decision confirmed the necessity for there to be a transfer of an
economic entity that retains its identity after the transfer is essential
Holis v GMB: EAT held TUPE 2006 applied to a transfer from the UK to a non –UK country test
being “is there an economic entity and has it been transferred?” (this is the test)
Is there an Economic Entity?
Regulation 3(2) defines “economic entity”: an organised grouping of resources which has the
objective of pursuing an economic activity, whether or not that activity is central or ancillary
Definition applies to a transfer of an undertaking and part of an undertaking
Fairhurst v Abbotes: an operation was split into two geographical units when it was re-tendered,
and it was held there were transfers to each of the two successful new contractors – so taking 1
business, split into 2, held TUPEE applied to each 1 individually
TUPEE is important e.g. want to purchase a company, and need to take over all the staff, so there
are cost implications when buying a business, do not know these employees
Cheesman v Brewer – still applies even though it is before TUPE 2006
Cheesman and his former employer appealed against a finding of the tribunal that there had not
been a transfer of an undertaking for TUPE protection following the transfer of a housing
maintenance contract. Cheesman was dismissed at the time of transfer, and transferee carried out
the contract without engaging him or any of transferor’s other employees, argued tribunal failed to
consider whether there had been an economic entity Held, appeal allowed, the tribunal had
stumbled by treating the fact that none of transferor’s employees had been engaged by transferee
as determinative of whether there had been a relevant transfertribunal required to take all facts
surrounding a transfer into account and ensure none of those facts was considered in isolation
So it was a TUPEE case as there was a transfer of an entity
Balfour Power Networks v Wilcox (COA approved Cheesman)
When looking at whether there has been an undertaking the EAT said:
a) Needs to be found an economic entity, stable + discrete, activity not limited to performing one
specific works contract, organised grouping of wage earners + assets to exercise an economic entity;
b) The entity must be sufficiently structured + autonomous but will not necessarily have significant
assets; (remember assets are not really part of TUPEE, it is the workers)
c) In certain sectors the entity can essentially be based on manpower; (so can be entirely employees)
d) The identity of entity emerges from factors like workforce, management staff, operating methods
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