TUPE – What is all about? – Part 1

In our first blog in the series, we thought it would be useful to start with the “basics” in respect of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (“the Regulations”) or “TUPE” as they are more commonly known.The Regulations came into operation on 11th April 2013 and revoke and replace previous regulations in this area namely S.I. 306 of 1980 and S.I. 487 of 2000.Who do the Regulations apply to?In essence the Regulations apply to both public and private undertakings engaged in economic activity and whether or not operated for gain. An administrative re-organisation of public administrative authorities or the transfer of administrative functions between public administrative authorities however is not a transfer for the purposes of the Regulations.The Regulations apply to any transfer of an undertaking, business or part of a business from one employer to another employer as a result of a legal transfer (including the assignment or forfeiture of a lease) or merger.What is meant by a “Transfer” under the Regulations?A “transfer” is defined under Regulation 3 as the transfer of an economic entity which retains it’s identity. “Economic entity” means an organised grouping of resources, which has the objective of pursuing an economic activity, whether or not that activity is for profit or whether it is central or ancillary to another economic or administrative entityWho do the Regulations apply to?The Regulations apply to any person working under a contract of employment (including apprenticeship), employed through an employment agency or holding office under, or in the service of, the State (including a civil servant within the meaning of the Civil Service Regulation Act, 1956), an officer or servant of a harbour authority, health board or vocational education committee, and a member of the Garda Siochana or of the Defence Forces. In the case of agency workers, the party who is liable to pay the wages (employment agency or client company) is the employer for the purposes of the Regulations.Protection of EmploymentRegulation 4 deals with the rights and obligations of both the Transferor (old employer) and the Transferee (new employer). The rights and obligations of an employer under a contract of employment, other than pension rights existing on the date of transfer, are transferred to the new employer on the transfer of the business or part thereof. This also includes terms inserted by collective agreements. Following the transfer the new employer must continue to observe the terms and conditions agreed in any collective agreement until the date of termination or expiry of the collective agreement or the entry into force of another collective agreement.Dismissals and Termination of EmploymentRegulation 5 deals with dismissals and termination of employment. In essence the transfer of an undertaking, business or part of an undertaking or business cannot in itself constitute grounds for dismissal by the transferor or the transferee. A dismissal, the grounds for which are such a transfer, by a transferor or transferee are prohibited. However dismissals can taken place for economic, technical or organisational reasons involving changes in the workforce. This is known as the “ETO defence”. If a contract is terminated because the transfer involves a substantial change in working conditions to the detriment of the employee concerned, the employer concerned may be regarded as being responsible for the termination of the contract of employment.An employee who is dismissed within the meaning of the Unfair Dismissal Act 1977 (as amended) with less than one year’s service, may refer the case to a Rights Commissioner under the Regulations. An employee with more than one year’s service may refer a complaint to a Rights Commissioner under the Regulations or under the Unfair Dismissal Act 1977 (as amended).Bankruptcy and InsolvencyRegulation 6 is new as an express provision of the Regulations. The Regulations do not apply to the transfer of an undertaking or business where the original employer is the subject of bankruptcy proceedings or insolvency proceedings. For the purposes of the Regulations, bankruptcy or insolvency proceedings means the following:(a) Proceedings whereby the transferor may be adjudicated bankrupt under section 14 or 15 of the Act of 1988 (as amended);(b) Proceedings whereby the estate of a deceased transferor may be administered in bankruptcy under Section 115 of the Act of 1988 (as amended);(c) Where the transferor is a partnership, proceedings whereby all the members of the partnership may be adjudicated bankrupt under section 106 of the Act of 1988 (as amended);(d) Proceedings whereby the transferor may become the subject of a protection order under section 87 of the Act of 1988 where all or part of the property of the transferor vests (under section 93 of that Act) in the official Assignee for realisation and distribution;(e) Proceedings where the transferor may be wound up under section 213(e) of the Act of 1963 (as amended).However if the sole or main reason for the institution of bankruptcy or insolvency proceedings is the evasion of an employer’s legal obligations under the Regulations, then the Regulations apply to a transfer effected by that employer.In tomorrow’s post we will look at the issue of pensions and whether they transfer to a new employer, what obligations and responsibilities an employer has in respect of consulting with employees and how complaints under the Regulations are dealt with. We will then look at some of the seminal cases in this challenging area.Feel free to comment or ask any questions that may be troubling you!