TUPE refers to the Transfer of Undertakings (Protection of Employment) Regulations 2006, which apply the Acquired Rights Directive 2001 and automatically transfer employees and associated liabilities from a seller or outgoing contractor to a buyer or incoming contractor. TUPE applies to business transfers where an economic entity retains its identity, and to service provision changes involving contracting in or out of services. It can apply at various points for entities involved in a commercial lease, such as when entering or assigning a lease, or ending a lease through expiry, surrender or forfeiture. TUPE protects transferred employees from dismissal unless there is an economic, technical or organizational reason involving changes to the workforce. Entities must inform and consult employees in a timely manner, and

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TUPE
When does it apply and why
does it matter?
18116719.1
TLT Annual Commercial Leases Seminar 2015

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What is TUPE?
Transfer of Undertakings (Protection of Employment)
Regulations 2006
• applies Acquired Rights Directive 2001
• intervenes to transfer employees (and associated
liabilities) from seller / outgoing contractor to buyer /
incoming contractor
• automatic – no agreement required

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TLT LLP
When does TUPE apply?
• Business transfer – transfer of an economic entity which
retains its identify
• Service provision change – contracting in/out and
subcontracting

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TLT LLP
Points at which TUPE could apply
• Entering into a lease
• Contracting services under the lease while tenant
• Providing/contracting services as landlord
• End of the lease
• end of term
• surrender
• forfeiture
• Assignment of lease
• Sale of freehold reversion

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Business Transfer
• TUPE may apply:
1. Is there a economic entity?
2. Will the undertaking retain its identity?
3. Who are the employees employed by?
4. Are the employees assigned to the transferring
business?

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TLT LLP
TUPE Test
• Could TUPE apply in these situations where you are
acquiring the lease of a local pub:
• You intend to change the business and operate the site
as a restaurant.
• You will operate as a pub, but only after significant
renovations which will take 6 weeks.
• The site is currently vacant with only a security guard
supplied by a contractor.

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Service Provision Change
• Contracting of services under a lease or the operator
bringing the services back 'in house'
TUPE may apply

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TLT LLP
Service Provision Change Example
Operator of 10 local
pubs
TUPE: takes service back
in house
TUPE: Changes
provider to Sparkle
and Shine Limited
TUPE: Outsources cleaning
services to Clean Bees
Limited

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TLT LLP
Service Provision Change
• Immediately before the transfer there
must be:
• An organised grouping of
employees
• Whose principal purpose is the
carrying out of the activities on
behalf of the client
• Exceptions:
• Single event/ task of short term
duration
• Contract for the supply of goods

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What transfers…?
• Contractual rights – T&Cs
• Acts and omissions before the
transfer
• Accrued liabilities
• Collective agreements

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Protection Against Dismissal
• You take over a lease of a restaurant employing 20 staff. The
business model is to increase profit by reducing staff by 50%.
Does TUPE prevent you doing this?
• Employees protected against dismissal unless ETO reason:
• Economic/technical/organisational reason entailing
changes in the workforce
• You would prefer the outgoing employer to terminate the staff.
Are there any risks?

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TLT LLP
Informing and Consulting – Managing the Process
• "In good time"
• What information has to be
given?
• Fact of transfer/ date and
reasons for it
• Legal/ economic and
social implications
• Measures
• Info on agency workers

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Failure to Inform and Consult
• A tenant of a pub employs 10 employees. The tenant
cannot pay its rent so the landlord forfeits the lease.
Landlord starts to run the pub itself whilst looking for a
new tenant.
• What are the TUPE implications?

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Disclosure of Employee Liability Information
• ELI must be given at least 28 days before the transfer
date
• Can't contract out of the obligation
• Minimum compensation of £500 per employee

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Any questions?