Redundancy - Getting it Right

by Kate Russell

Redundancy and the TUPE regulations

If a business transfers to another organisation, employees’ terms and conditions are protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE), as amended by The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014. The protection given by TUPE means that the existing terms and conditions of employees’ contracts of employment transfer automatically to the new employer.

TUPE makes both the transferring business (the transferor) and the business to which it is transferred (the transferee) liable for any failure to inform and consult with the transferring employees.

The new employer can’t make employees redundant just because they were transferred from another employer. There needs to be a proper consultation and selection process.

Subject to a two-year qualifying period, a dismissal will be automatically unfair for a reason connected with the transfer unless it is for an ‘economic, technical or organisational’ (ETO) reason. This includes redundancy. However, the 2014 regulations mean that dismissals are not automatically unfair because of a change in workplace location. A change in location is now covered by an ETO reason, but such a dismissal may still be unfair depending on other circumstances.

The 2014 TUPE regulations allows collective redundancy consultation to take place before the transfer. Where the transferee employer intends to make 20 or more redundancies after the transfer, collective redundancy consultation may begin before the transfer if the outgoing employer agrees. In this way, both employers can agree to pre-transfer redundancy consultation and begin consultation at an early stage with elected representatives and employees about the transfer and redundancies at the same time.

Note that if a transferring employee refuses to work for the new employer, the refusal will be treated as a resignation and he will have no right to claim unfair dismissal or to a redundancy payment.