Defend a TUPE Claim

Defending a Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) Claim

When defending a Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) claim made against your business (the respondent), our approach focuses on scrutinising four key areas:

• the applicability of TUPE itself,

• the automatic transfer principle,

• the protection against dismissal, and

• compliance with information and consultation obligations.

Determining if TUPE Applies

The first line of defence is to challenge whether a "relevant transfer" actually occurred, as TUPE only applies in such circumstances.

• Business Transfer vs. Service Provision Change (SPC)

  We must determine whether the event constitutes a business transfer (the transfer of an economic entity that retains its identity) or a change in service provision.

  Arguments can be built around the specific elements required: for a business transfer, this includes proving whether the economic entity retained its identity following the transfer; for an SPC, we must establish that the activities carried on after the change were not "fundamentally or essentially the same" as those carried on before it, or if the activities were excluded (such as the supply of goods or a "one-off buying-in of services"). Checklists are available to help assess these issues.

• Share Sales

  If the transaction involved a transfer of shares, TUPE does not automatically apply, although it could apply to an asset transfer carried out as a precursor to the share sale.

Challenging the Automatic Transfer Principle

If a relevant transfer did occur, the next area of defence is challenging whether the employees bringing the claim were actually covered by the automatic transfer principle (Regulation 4 of TUPE).

• Assignment to the Organised Grouping

  The contract of employment only transfers if the employee was employed by the transferor and "assigned to the organised grouping of resources or employees that is subject to the relevant transfer". Since there is no clear definition of "assigned," the defence relies on challenging the claimant's assignment status, which is a question of fact.

  • We can investigate the percentage of time the employee spent working on the grouping being transferred, as time spent is only one factor to consider.

  • We can argue that the assignment was temporary and therefore excluded from transfer.

  • We can argue that managers or directors were not directly involved in delivering the services subject to the change and therefore were not part of the required organised grouping.

• Employee Objection

  If the employee formally objected to being employed by your business (the transferee), their contract was terminated by operation of law on the transfer date, and it was deemed that there was no dismissal. If the claimant objected, they are not your employee, and the claim should fail. We can confirm the timing and form of any objection, noting that it need not be in a particular way but must be an actual refusal communicated before the transfer date (although exceptions apply if the recipient was not informed of the transfer date or the transferee's identity).

Defending Against Unfair Dismissal Claims

If the claimant transferred and was subsequently dismissed by your business, the dismissal is automatically unfair if the sole or principal reason for it was the transfer itself (Regulation 7). The crucial defence here is establishing an Economic, Technical, or Organisational (ETO) reason entailing changes in the workforce.

• Establishing an ETO Reason

  The ETO reason must pertain to the day-to-day operation of the business. We must show that the reason relates to:

  • Economic reason

    The profitability or market performance of the business.

  • Technical reason

    The nature of the equipment or production processes used.

  • Organisational reason

    The management or organisational structure of the business.

• Entailing Changes in the Workforce

  The ETO reason must also entail changes in the workforce, such as a change in the location, the number of employees (genuine redundancies), or the functions performed by employees. Note that changes to the financial aspects of a contract (e.g., salary reduction for cost-saving) are unlikely to qualify as entailing changes in the workforce.

• Procedural Fairness

  If an ETO reason is established, the dismissal is only potentially fair, and we must then demonstrate that your business acted reasonably in the circumstances, which includes following a fair procedure (like a fair redundancy procedure).

• Deemed Dismissals (Resignation)

  If the employee resigned and claims constructive dismissal (Regulation 4(11)) or resignation due to a substantial change to working conditions to their material detriment (Regulation 4(9)), we defend this by arguing either that the transfer was not the reason for the dismissal or that the transfer involved an ETO reason. In a Regulation 4(9) claim, we can challenge whether the change was substantial and whether it resulted in the employee's material detriment.

Addressing Information and Consultation Failures

If the claim involves a failure to inform and consult appropriate employee representatives (Regulation 13), both the transferor and your business (the transferee) may be held jointly and severally liable for compensation equivalent to up to 13 weeks' uncapped pay.

• Challenging the Duty to Consult

  While there is always a duty to inform, the duty to consult only arises if an employer intends to take measures affecting the employees. We can defend by arguing that no measures were envisaged.

• Micro-business Dispensation

  We can assess if your business qualifies for the micro-business dispensation, which, for transfers taking place on or after 1 July 2024, applies to businesses with fewer than 50 employees or businesses of any size involved in a transfer of fewer than ten employees, allowing direct consultation with affected employees.

I am happy to engage with your business to resolve any issue that has arisen under TUPE.