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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