TUPE 2006
Outcomes:
1. Identify whether TUPE applies to a business transfer
2. Explain the implications of Regulation 4 of TUPE to clients with claims arising before a TUPE
transfer
3. Explain the implications of Regulation 4 of TUPE for dismissal prior to or after a TUPE
Transfer
4. Advise an employer on the implications of varying employees’ contracts following a business
transfer to which TUPE applies.
5. PAGE 335 FLOWCHART
Overview
• At common law, the transfer of an undertaking by one employer to another automatically
terminates the employee’s contracts of employment, therefore dismissal arises. The reasons
will usually be redundancy as the employer’s requirement for the employees to do work of a
particular kind has ceased or diminished.
• However, the Transfer of Undertakings (Protection of Employment) Regulations 2006,
(TUPE) has altered the legal position by providing that where there is a ‘relevant transfer’
there will not be any automatic termination of the employee’s employment contracts, simply
because there was a transfer of an undertaking by one owner to another. They will remain
employed under their original contract.
• If there are any dismissal (actual or constructive) before or after the transfer which relate to
the transfer, they will automatically be classed as unfair dismissals, unless there is a genuine
redundancy situation. Or ETO (economic, technical or organisational reasons)
, Dismissal before transfer
• Looks at liability- regulation 4 transfer- before could be transferor
• If after transfer- transferee always liable
STEP 1: Has there been a relevant transfer under regulation 3?
• If the question says assume regulation 3 applies- LEAVE THIS
Reg 3(1)(a) business transfer? • 2 limb test
• Is there an economic entity?
• Has that entity transferred and retained its identity?
Þ Transfer of a business, undertaking or part of an undertaking or business, situated immediately before the transfer in
the UK, to another person where there is a transfer of an economic entity, which retains its identity post-transfer
Þ There must be a change of identity of the employer and therefore, sale of shares will not constitute a transfer
of an undertaking (Brookers and Others v Borough Care Services)
Test 1:
Þ Regulation 3(2) defines economic entity as- ‘an organised grouping of resources which has the objective of pursuing
an economic activity, whether that economic activity is central or ancillary’ after the transfer, the entity must retain its
identity
Þ Cheesman:
o The economic entity must be stable and discrete and whose activities are not limited to performing one
specific works contract.
o There will be an organised group of wage earners and assets that enables the entity to operate with a degree
of autonomy
o Cheesman has confirmed that where an economic entity can function without assets, the lack of assets
transferred does not preclude a transfer, it is about the operations of that entity and whether there is a
sufficient degree of autonomy and operation.
Test 2: retained identity post-transfer
Þ The identity of the employer must change but the operations of the economic entity must retain its identity post
transfer for the TUPE 2006 regulations to apply.
Þ Spijkers- 7 factors that the tribunal should consider when assessing whether the entity in question has
retained its identity- to establish TUPE transfer where the economic entity has retained its identity after
the transfer
1. The type of undertaking or business- whether they are similar
2. The transfer or otherwise of tangible assets such as buildings, equipment or stock
3. The value of the intangible assets at the date of the transfer (goodwill)
4. Whether the majority of staff in number or skill are being retained and taken over by the new employer
5. The transfer or otherwise of the circle of customers
6. The degree of similarity in activities before and after the transfer
7. The duration of any interruption in those activities.
All factors must be viewed collectively and not in isolation. If all of several of the above factors have been
applicable, it is safe to assume that there has been a transfer of a stable economic entity.
Second option transfer- service Externalise service functions such as cleaning, catering, maintenance etc. where the
provision changes (regulation business focuses upon its expertise and then leaving ancillary services to be carried
3(1)(b) out by different external businesses by contracting out.
• Retention of identity- the EAT concentrated on the nature of the activity as
opposed to the nature of the business. Therefore, making contracting out more
difficult to avoid the application of the TUPE regulation, as those activities will
be resumed by the contractor.
Outcomes:
1. Identify whether TUPE applies to a business transfer
2. Explain the implications of Regulation 4 of TUPE to clients with claims arising before a TUPE
transfer
3. Explain the implications of Regulation 4 of TUPE for dismissal prior to or after a TUPE
Transfer
4. Advise an employer on the implications of varying employees’ contracts following a business
transfer to which TUPE applies.
5. PAGE 335 FLOWCHART
Overview
• At common law, the transfer of an undertaking by one employer to another automatically
terminates the employee’s contracts of employment, therefore dismissal arises. The reasons
will usually be redundancy as the employer’s requirement for the employees to do work of a
particular kind has ceased or diminished.
• However, the Transfer of Undertakings (Protection of Employment) Regulations 2006,
(TUPE) has altered the legal position by providing that where there is a ‘relevant transfer’
there will not be any automatic termination of the employee’s employment contracts, simply
because there was a transfer of an undertaking by one owner to another. They will remain
employed under their original contract.
• If there are any dismissal (actual or constructive) before or after the transfer which relate to
the transfer, they will automatically be classed as unfair dismissals, unless there is a genuine
redundancy situation. Or ETO (economic, technical or organisational reasons)
, Dismissal before transfer
• Looks at liability- regulation 4 transfer- before could be transferor
• If after transfer- transferee always liable
STEP 1: Has there been a relevant transfer under regulation 3?
• If the question says assume regulation 3 applies- LEAVE THIS
Reg 3(1)(a) business transfer? • 2 limb test
• Is there an economic entity?
• Has that entity transferred and retained its identity?
Þ Transfer of a business, undertaking or part of an undertaking or business, situated immediately before the transfer in
the UK, to another person where there is a transfer of an economic entity, which retains its identity post-transfer
Þ There must be a change of identity of the employer and therefore, sale of shares will not constitute a transfer
of an undertaking (Brookers and Others v Borough Care Services)
Test 1:
Þ Regulation 3(2) defines economic entity as- ‘an organised grouping of resources which has the objective of pursuing
an economic activity, whether that economic activity is central or ancillary’ after the transfer, the entity must retain its
identity
Þ Cheesman:
o The economic entity must be stable and discrete and whose activities are not limited to performing one
specific works contract.
o There will be an organised group of wage earners and assets that enables the entity to operate with a degree
of autonomy
o Cheesman has confirmed that where an economic entity can function without assets, the lack of assets
transferred does not preclude a transfer, it is about the operations of that entity and whether there is a
sufficient degree of autonomy and operation.
Test 2: retained identity post-transfer
Þ The identity of the employer must change but the operations of the economic entity must retain its identity post
transfer for the TUPE 2006 regulations to apply.
Þ Spijkers- 7 factors that the tribunal should consider when assessing whether the entity in question has
retained its identity- to establish TUPE transfer where the economic entity has retained its identity after
the transfer
1. The type of undertaking or business- whether they are similar
2. The transfer or otherwise of tangible assets such as buildings, equipment or stock
3. The value of the intangible assets at the date of the transfer (goodwill)
4. Whether the majority of staff in number or skill are being retained and taken over by the new employer
5. The transfer or otherwise of the circle of customers
6. The degree of similarity in activities before and after the transfer
7. The duration of any interruption in those activities.
All factors must be viewed collectively and not in isolation. If all of several of the above factors have been
applicable, it is safe to assume that there has been a transfer of a stable economic entity.
Second option transfer- service Externalise service functions such as cleaning, catering, maintenance etc. where the
provision changes (regulation business focuses upon its expertise and then leaving ancillary services to be carried
3(1)(b) out by different external businesses by contracting out.
• Retention of identity- the EAT concentrated on the nature of the activity as
opposed to the nature of the business. Therefore, making contracting out more
difficult to avoid the application of the TUPE regulation, as those activities will
be resumed by the contractor.
