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Tupe transfers

Overview
Watkins, Gillian - Eversheds LLP
Overview
The Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly referred to as Tupe, originate from the European acquired rights directive. The regulations were recently updated with effect from 31 January 2014. The Government has also updated its guidance regarding the application of Tupe.
 
These regulations are likely to apply in any situation where a UK business (or part of a business) is transferred to another employer (not necessarily based in the UK) or an organisation changes the way in which it delivers its services, such as by outsourcing to a contractor. The broad effect of Tupe is to preserve the continuity and terms and conditions of employment of employees who are transferred to a new employer.
 
Tupe also imposes a number of obligations on the transferring employer (the transferor) and the receiving employer (the transferee) to inform and consult with affected employees.
 
The effect of Tupe on insolvent businesses is considered separately.
 
Recent developments
HMRC changes liability for NMW penalties

HMRC penalties for underpayments of the national minimum wage (NMW) or national living wage (NLW) to staff who have transferred under the Tupe regulations were previously imposed on the old employer. This applied for all, or any part of the penalty, that applied to underpayments taking place before the employee(s) transferred to the new employer.

Since 2 July 2018, the HMRC have changed their approach in the application of penalties. From this date, the HMRC will apply the whole NMW liability, including the repayment of any underpayment and the payment of a penalty fine, to the new employer. This will apply even where all, or part, of the liability for underpayments arose before the transfer took place.

More information on NMW entitlement and enforcement can be found on our employment law page.