Transfer of undertakings

From CEOpedia | Management online
Transfer of undertakings
See also

Transfer of undertakings Protection of Employment protects employees' terms and conditions of employment when a business is transferred from one owner to another. Employees of the previous owner when the business changes hands automatically become employees of the new employer on the same terms and conditions. It is as if their employment contracts had originally been made with the new employer. Their continuity of service and any other rights are all preserved. Both old and new employers are required to inform and consult employees affected directly or indirectly by the transfer.

Transfer of Undertakings Protection of Employment (TUPE) means that:

  • the employees' jobs usually transfer over to the new company- exceptions could be if they are made redundant or in some cases where the business becomes insolvent
  • their employment terms and conditions transfer
  • continuity of employment is maintained

The size of the business does not matter. TUPE is in place to protect all employees that are affected by a transfer[1].

Types of transfer of undertakings

A variety of cross-border transfer of undertakings situations can be distinguished[2][3]:

  • The undertaking to be transferred in situated in an EU Member State. By reason of the transfer this undertaking is transferred to a foreign transferee. The location of the transferred undertaking doe not change as a result of the transfer.
  • The undertaking to be transferred is situated in an EU Member State. As a result of the transferred, this undertaking is relocated to a different EU Member State, most likely the Member State of the transferee. For the purposes of this research, this type of transfer shall be referred to as an intra-European transfer.
  • The undertaking to be transferred is situated in an EU Member State. As a result of the transfer this undertaking will transfer and be relocated to a third State. This type of transfer will henceforth be referred to as an outbound transfer.
  • The undertaking to be transferred is situated in a third State. As a result of the transfer this undertaking is transferred and relocated to an EU Member State. These types of transfer situations, involving a transfer of undertaking from a third State to a Member State will, for the purposes of this research, be characterized as an inbound transfer.

Example of TUPE

The It department of a curtain-making business was transferred from a factory in Tamworth, UK (owned by a company A) to company B based in Israel. None of the affected employees wished to transfer to work in Israel and so they were made redundant.

The employees' representing union, brought a claim in the Employment Tribunal against company A for breaches of its obligations under TUPE to inform and consult employees and collective redundancy consultation laws. Fr this claim to succeed, the union needed to show that TUPE can apply to a transfer of a business outside of the UK. Company A argued that it was not bound by obligations under TUPE as it could only apply to transfers between businesses within EU[4].

Footnotes

  1. S. Dorst, M. Major-Goldsmith 2018, p.424
  2. K. Henckel 2016, p.21
  3. N.M. Selwyn 2006, p.250-254
  4. S. Hardy, W. Derbyshire 2014, p.132

References

Author: Natalia Węgrzyn