The Transfer of Undertakings (Protection of Employment) Regulations 2006, known as “TUPE”, are regulations aimed at protecting employees’ rights in the event of the transfer of a business or part of a business or where there is a change of service provider.
My experience of the regulations being implemented in practice over the years is that the technical aspects of TUPE are not particularly well understood but, in the main, businesses cooperate with each other with a view to implementing the broad purpose of the regulations which is to protect the employment of employees.
However, where issues tend to arise are where employers do not wish to acquire employees for various commercial reasons such as the likelihood that by acquiring employees the employer would face a potentially expensive redundancy situation, perhaps because the employee has contractual rights to an enhanced payment on redundancy. Faced with this potentially significant cost, employers will often pursue arguments (sometimes with some merit but often with very little) that TUPE would not apply. This can create a “stand-off” and, in effect, the employees are stuck in the middle with the prospect of a scenario where both their current employer, and their prospective new employer were TUPE to apply, contending that they are not or will no longer be the employee’s employer and the employee is left with no employer at all.
This “stand-off” scenario often leads to the two employers taking matters “to the wire”, boldly asserting their respective positions in the hope that the other party will back down prior to the date of the potential business transfer or service provision change and “accept” that they will continue to employ the impacted employees. This can often lead to the “wrong” party becoming or remaining the employer (by wrong I mean the party who would not be the employer were TUPE applied correctly) because the party that backs down may do so to be compassionate towards the impacted employees as opposed to because they think they are on the wrong side of the argument.
Currently, the claims an employee can pursue in the “stand-off” scenario are of limited effectiveness because by the time an employee’s case reaches a final hearing at an employment tribunal, which usually also involves significant cost to all involved, it is likely to be a year on from when they were left with no employer. Whilst in theory they could achieve an order of reinstatement or re-engagement via a successful unfair dismissal claim, in many cases employees will have effectively been forced to take up new work elsewhere in order to meet their financial commitments and so they may no longer wish to return to their former role or it may no longer be practical for a tribunal to make such an order.
So what can be done to improve the position for employees and employers?
As long ago as 2016, HHJ David Richardson sitting in the Employment Appeal Tribunal suggested either a form of “fast track“ employment tribunal, and presumably by this he meant something along the lines of the current situation whereby employees can seek interim relief in certain scenarios within the employment tribunals (such as where they allege they have been dismissed as a result of whistleblowing) or, alternatively, some form of arbitration process whereby a quick and binding determination is made as to the whether TUPE applies which the parties can then implement before it is too late for the impacted employees.
Sadly, I suspect that changes to other parts of employment law are more likely to be made in the short to medium term given the relative complexity of what a solution to this problem would look like.
Posted on October 9, 2023