Tuesday, 7 March 2023

Transfer of Undertakings (Protection of Employment) Regulations


 

The Transfers of Undertakings Directive 2001/23/EC is a European Union law that protects the contracts of employment of people working in businesses that are transferred between owners It replaced and updated the law previously known as the Acquired Rights Directive 77/187/EC

The Directive stipulates that any employee's contract of employment will be transferred automatically on the same terms as before in the event of a transfer of the undertaking. This means that if an employer changes control of the business, the new employer cannot reduce the employees' terms and conditions, unless the Directive's exception criteria are met. This is that there must be a good economic, technical, or organizational reason for the change.

Now the employees of the old company have the following options.

01.  Resign from the old organization. 

02.  Join the new organization and then resign.

03.  Join the new organization with old company terms.

04.  Join the new organization with new company terms.

In situation 2, 3 & 4, TUPE is applicable to the new organization who is taking over the business of the old organization. Accordingly, all the employee-related liabilities including social security & pensions were transferred to the new organization.

Given below few important key points towards TUPE:

01.  TUPE is not applicable when the old organization is insolvent.

02.  The old & new organization must mutually & contractually agree to divide up the liabilities between them in a different way. This ought to be done by means of contractual indemnities.

03.  Old organization must provide all necessary details of moving employees along with details of their pension & other liabilities to the new organization.

04.  New organization requires to inform & consult to the moving employees about the new organization, their role etc.  

05.  New organization is restricted to make any change to the terms and conditions of moving employees employment terms. But a few amendments may be allowed if agreed by the moving employees.

 

 

 

 

 

 

 

 

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