There are three concepts to TUPE:
1. The automatic transfer principle: employees transfer to the buyer who inherits all rights, liabilities and obligations in relation to them
2. Protection against dismissal in connection with a TUPE transfer
3. The obligation to inform and consult with representatives of the affected employees
TUPE applies to a “relevant transfer”, which means:
A transfer of a business or part of a business where there is a transfer of an economic entity that retains its identity. This involves three elements:
1. An economic entity
2. A transfer of that economic entity; and
3 . The economic entity retaining its identity following the transfer.
TUPE also applies to a client, having engaged a contractor to do work on its behalf, reassigning that contract to another contractor or bringing the work “in-house” (this is referred to as a service provision change). This can, therefore, encompass an initial (or first generation) outsourcing, a subsequent (or second generation) outsourcing or an in-sourcing. However, the supply of goods and “one-off buying-in of services” are excluded.
TUPE does not apply to a transfer of shares.
If you are in any doubt as to whether TUPE applies you should seek specialist advice. If it does apply and you do not follow the proper process, you could be exposed to expensive litigation.
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