TUPE Employer Obligations: Old vs New Employer Duties

TUPE creates specific obligations for both old and new employers. Understanding who is responsible for what helps ensure compliance and avoid costly claims.

Old Employer Obligations (Transferor)

Before Transfer

1. Identify TUPE Applies

• Assess if TUPE applies to transaction
• Identify which employees transfer
• Determine assignment
• Early identification crucial

2. Appoint/Elect Representatives

• Ensure employee representatives in place
• Facilitate election if needed
• Give reps time and facilities
• Protect reps from detriment

3. Inform Representatives

• About fact of transfer
• Timing and reasons
• Legal, economic, social implications
• Measures by either employer
• In writing, long enough before

4. Consult Representatives

• Genuine two-way process
• Consider representations
• Seek to reach agreement
• Respond to concerns
• Document throughout

5. Provide Employee Liability Information

• To new employer
• Minimum 28 days before transfer (or ASAP)
• Full details about transferring employees
• Written format
• Update if changes

6. Continue Employment

• Pay wages as normal
• Provide benefits
• Honor terms
• No detriment due to transfer
• Employment continues until transfer date

What Old Employer Cannot Do

• Dismiss because of transfer (automatically unfair)
• Worsen terms due to transfer (void changes)
• Fail to inform and consult (protective award)
• Withhold employee liability information (penalty)
• Discriminate based on protected characteristics

On Transfer Date

• Release employees (they transfer)
• Cease to be employer
• Final payments for period up to transfer
• Handover arrangements
• Cooperation with new employer

After Transfer

• No ongoing obligations to transferred employees
• But may remain liable for:
  • Pre-transfer issues
  • Protective awards
  • Joint liability with new employer

New Employer Obligations (Transferee)

Before Transfer

1. Inform Old Employer of Measures

• Any changes envisaged
• In time for consultation
• Clear and specific
• All changes affecting employees

2. Due Diligence

• Investigate liabilities
• Review employee liability information
• Assess risks
• Plan for integration

3. Prepare to Take On

• Systems for new employees
• Payroll arrangements
• Benefits provision
• Management structure
• Integration plans

On Transfer Date

1. Automatic Transfer Occurs

• All assigned employees transfer
• Become your employees automatically
• On their existing terms
• With continuous employment

2. Inherit All Liabilities

• Outstanding wages
• Accrued holiday
• Tribunal claims (even if not yet lodged)
• Contractual obligations
• Collective agreements
• Pre-transfer issues

After Transfer

1. Honor All Terms

• Pay wages correctly
• Provide contracted benefits
• Respect working hours
• Maintain terms and conditions
• Cannot worsen due to transfer

2. Continue Employment

• As if always employed you
• Same terms
• Continuous service
• All rights preserved

3. Cannot Make Transfer-Related Changes

• Changes void if connected to transfer
• Need ETO or unconnected reason
• Cannot harmonize immediately
• Proper process if changes needed

4. Ongoing Obligations

• Normal employer duties
• Health and safety
• Discrimination protection
• All employment law compliance

Employee Liability Information

What Must Be Provided

Information	Details
Identity	Names, ages, dates of birth
Particulars	Terms from written statement
Disciplinary/grievance	Last 2 years
Legal claims	Actual or potential claims
Collective agreements	That will apply

Old Employer's Duty

• Provide in writing
• Minimum 28 days before transfer
• Or as soon as reasonably practicable
• Update if circumstances change
• Accurate and complete

Consequences of Failure

If old employer fails:

• New employer can claim compensation
• Minimum £500 per employee
• In employment tribunal
• May be more if greater loss
• Joint liability possible

New Employer's Use

Information allows:

• Assessment of liabilities
• Planning for integration
• Understanding workforce
• Risk evaluation
• Preparation for transfer

Information and Consultation

Old Employer's Role

Primary duty to:

• Inform employee representatives
• About transfer and implications
• Long enough before transfer
• Consult about measures
• Pass on info from new employer

New Employer's Role

Must:

• Inform old employer of measures
• In time for consultation
• Cooperate with process
• May need to meet reps directly

Failure Consequences

Both employers can be liable:

• Protective award up to 13 weeks' pay
• Each affected employee
• Joint and several liability
• Expensive failure

Joint and Several Liability

What It Means

Both employers can be pursued for same claim:

• Employee can sue either or both
• Can enforce judgment against either
• Full amount recoverable from either
• Employers can then sort out between themselves

Applies To

• Information and consultation failures (protective awards)
• Pre-transfer issues
• Dismissals connected to transfer
• Some discrimination claims

In Practice

Employee often claims against both:

• Increases chance of recovery
• If one employer insolvent
• Tribunal decides which liable
• Or both jointly

Liabilities That Transfer

What New Employer Inherits

Everything including:

1. Contractual Liabilities

• Outstanding wages
• Accrued holiday pay
• Benefits due
• Bonuses owed
• Contractual obligations

2. Tribunal Claims

• Even if not yet lodged
• For pre-transfer events
• Discrimination claims
• Breach of contract
• Whistleblowing claims

3. Tortious Liability

• Personal injury claims
• Negligence claims
• Related to employment

4. Collective Agreements

• Recognition agreements
• Terms incorporated in contracts
• Union obligations

Exceptions

What doesn't transfer:

• Occupational pension schemes (special rules)
• Criminal liabilities
• Some share schemes
• Employer's indemnity insurance (old employer keeps)

Indemnities and Warranties

Commercial Arrangements

In business sale:

• Often indemnities for unknown liabilities
• Warranties about employee information
• Price adjustments
• Between old and new employer
• Don't affect employee rights

Employee Still Protected

Regardless of commercial deal:

• Employees' rights unchanged
• Can still claim from new employer
• New employer then seeks indemnity
• Employee not affected by indemnity

Pre-Transfer Dismissals

Old Employer Liability

If dismisses before transfer:

• Primarily old employer's liability
• Unless connected to transfer
• Then may transfer to new employer
• Or joint liability

New Employer Caution

May inherit liability for:

• Dismissals to facilitate transfer
• Connected dismissals
• Automatically unfair dismissals
• Protective awards

Due diligence crucial.

Employer Cooperation

Must Work Together

Both employers should:

• Share information openly
• Facilitate information/consultation
• Coordinate on timing
• Communicate clearly
• Resolve issues jointly

Common Issues

When employers don't cooperate:

• Information delays
• Consultation failures
• Employee uncertainty
• Process breakdowns
• Increased liability risk

Practical Obligations Summary

Old Employer Checklist

• Confirm TUPE applies
• Identify transferring employees
• Appoint/elect representatives
• Inform representatives (in writing, timely)
• Consult genuinely
• Provide employee liability information (28 days)
• Continue employment normally
• Facilitate handover
• Document everything

New Employer Checklist

• Inform old employer of measures
• Conduct due diligence
• Review employee liability information
• Prepare systems and processes
• Take on all assigned employees
• Honor all existing terms
• Pay wages correctly
• Provide benefits
• Plan integration
• Document everything

Consequences of Failures

For Old Employer

Failing obligations creates:

• Protective awards (information/consultation)
• Unfair dismissal claims (if dismisses)
• ELI penalties (£500+ per employee)
• Continuing liability post-transfer
• Reputational damage

For New Employer

Failing obligations creates:

• Protective awards (joint liability)
• Unfair dismissal claims (if dismisses)
• Breach of contract claims
• Discrimination claims
• Inherits all pre-transfer liabilities

Cannot Avoid

Getting process wrong:

• Doesn't prevent transfer
• Employees still protected
• Adds claims to liabilities
• Makes situation worse

Summary

Old Employer Must

• Identify and inform
• Consult genuinely
• Provide employee liability information
• Continue employment
• Not dismiss for transfer
• Cooperate with new employer

New Employer Must

• Inform of measures
• Take on all employees
• Honor existing terms
• Inherit liabilities
• Not dismiss for transfer
• Cannot change terms immediately

Joint Responsibilities

• Information and consultation
• Avoiding dismissals
• Protecting employee rights
• Compliance with TUPE
• Documentation

Key Liabilities

• Protective awards (info/consultation failures)
• Unfair dismissal (transfer-related dismissals)
• ELI penalties (information failures)
• Breach of contract (worsening terms)
• Joint and several liability possible

For Both Employers

• Start early
• Get legal advice
• Document everything
• Communicate clearly
• Follow process carefully
• Expect scrutiny if claims arise

TUPE creates complex, interlocking obligations for both employers. Neither can avoid responsibility by blaming the other. Careful compliance protects both employers and ensures employee rights are respected.