Transfer of Undertakings (TUPE) – A Guide for Employers in Ireland

TUPE is an acronym which stands for Transfer of Undertakings (Protection of Employment) Regulations. TUPEis a legal framework that safeguards employees’ rights in the event of a business transfer or change in service provision. 

The precise legislation governing this complex area is known as the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003.

Below, we breakdown each of the letters in the acronym in a bit more detail:

• T – Transfer: refers to the buying, selling, acquiring, outsourcing, leasing or merging of a business
• U – Undertaking: refers to the entity being transferred  i.e. an organisation, business, charity or service
• P – Protection: refers to the protection of employment rights during the transfer
• E – Employees: refers to the employees associated with the transferring organisation or service

What is the Purpose of TUPE?

Okay so we’ve covered the acronym and definition of TUPE – but what does it mean for employers here in Ireland? 

Well, the purpose of TUPE is to safeguard employees’ rights in the event of a transfer of an undertaking to another employer e.g. business sale, reorganisation, merger, outsourcing as well as many other kinds of business arrangements. 

Before TUPE regulations were introduced in Ireland in 2003, employees could feasibly have been made redundant or cherry-picked in a business transfer situation. 

The principle aims of the legislation are:

• Protection of terms and conditions of employment and contracts of employment of individual employees involved in a transfer.
• Under limited circumstances, making provisions for the protection of employment in a transfer.
• Ordinarily prohibiting the dismissal of an employee by reason of a transfer of undertakings.
• Requiring the transferor/transferee to inform the representatives of the employees affected by the transfer of the legal, social and economic implications of the transfer and consult with them regarding any proposed measures.
• Ensuring that the primary responsibilities for an employee’s employment rights are passed from transferor to transferee. 
• Ensuring that any collective agreement that was in place before the transfer is honoured. 
• Protecting continuity of representative rights.

Compliance with TUPE regulations is crucial for employers involved in business transfers or changes in service provision in Ireland, as failure to adhere to these regulations can result in legal consequences, including claims for unfair dismissal or breach of employment rights. 

When is TUPE likely to apply?

TUPE applies when the organisation transferred:

• retains its identity after the transfer – it must continue to be organised, managed, and operated in a similar manner, as it was prior to the transfer; and
• pursues the same economic activity as that pursued prior to the transfer.

TUPE applies to both public and private organisations, profit making businesses, and charities.

What qualifies as a transfer of undertakings?

There are no hard and fast rules governing what is, or is not, a transfer of undertakings. To determine whether the legislation applies, the facts of each individual situation must be considered. 

It is also generally accepted that the following conditions must be met:

• There must be a change in the entity (either an individual or a company) responsible for managing the business.
• The new employer must continue the previous economic activities of the business.
• The business must be transferred as a “going concern“.

Case law has given some indications as to what must be considered. For example, the Suzen case in the ECJ placed huge importance on identifying the key assets of the business. If significant operational assets are included in the transfer, it indicates that the legislation will apply. These assets can be people or equipment.

It is important to establish whether a transfer has taken place, as employees will retain their rights and the employer gains certain responsibilities.

What does not count as a transfer of undertakings?

Compulsory Liquidation

Where a business is subject to compulsory or involuntary liquidation (e.g., closure mandated by the courts), it does not constitute a transfer of undertakings under TUPE regulations. In such cases, the business is considered to cease trading rather than being transferred.

Service Changes

A mere change in service contractors does not typically qualify as a transfer of undertakings. For example, if a new contractor takes over a service previously provided by your employer, TUPE may not apply, and you may not automatically have the right to transfer to the new contractor.

Employer Obligations under TUPE Regulations

Under TUPE, employers (both the current employer, or “transferor,” and the new employer, or “transferee”) have specific obligations designed to protect employees during the transfer process. 

Below is an overview of the key obligations of each of those parties:

TUPE Information and Consultation Obligations

The legislation provides that all employees must be informed of, through their representative, the following information pertaining to the transfer:

• the date or proposed date of the transfer;
• the reasons for the transfer;
• the legal, social and economic implications for the employees;
• the scale of the transfer

Employee representatives must also be provided with the above information. An employee representative can mean a trade union, staff association or other body the employer has conducted collective bargaining with in the past. Where there are no employee representatives in place, the employer must arrange for employees to choose a representative. 

If, through no fault of the employer, there are still no representatives in place, the employees concerned must be informed in writing, where practicable, of the transfer. This notice should include the reasons as outlined above and should be done wit at least  30 days notice. 

Failure to Inform or Consult

Both the transferor and transferee are jointly liable if there are failures in meeting the consultation requirements. If an employer (transferor or transferee) fails to meet their obligations to inform or consult employees or their representatives, they risk one or more of the following outcomes:

• Employee Complaints: Affected employees or their representatives can file a complaint with the Workplace Relations Commission (WRC) in Ireland.
• Penalties for Non-Compliance: If the WRC finds that the employer failed to meet their obligations, it can order the employer to pay compensation. Compensation for failure to inform and consult is capped at four weeks’ remuneration per employee affected by the breach
• Reputation and Employee Relations: Failure to follow consultation and information requirements can damage trust between the employer and employees, affecting workplace morale and productivity.

What Employee rights are protected by TUPE?

• Continuity of Employment: Employees retain their jobs and are automatically transferred to the new employer without the need for re-application. Their accrued service with the original employer is carried over.
• Payment Protection & Terms and Conditions of Employment: Employees are entitled to the same terms and conditions they had with the previous employer, which cannot be less favorable.
• Protection from Dismissal: Employees cannot be dismissed solely because of the transfer. Dismissals are only allowed if there are valid economic, technical, or organisational reasons.
• Collective Agreements: Any collective agreements in place before the transfer must be honoured by the new employer.

Impact of TUPE on pensions

The TUPE legislation does not cover any occupational pension schemes that may have been provided for in the old employer’s business. The new employer is under no legal obligation to provide a new or similar benefit to the transferred employee.  However, the new employer does have the responsibility of ensuring that any scheme in place prior to the transfer is properly maintained in order to protect any accrued entitlement.

The Right to Object to a Transfer

An employee cannot insist on continuing to work with the old employer if the entirety of the business is transferred, or the part of the business in which he/she has been employed transfers.

However, it is important to note that an employee cannot be forced to work for the new transferee. Where an employee refuses to transfer, no liability ensues for the new employer (save where the employee sues for constructive dismissal). Their P45 should be issued by their old employer. 

The regulations in Ireland are silent on the consequences for an employee who refuses to transfer. However, in a judgment in Symantec Ltd versus Leddy and Lyons (2009) IEHC 256, the High Court ruled that refusal to transfer is in fact a resignation by the employee and the employee is not entitled to a redundancy payment. 

How does TUPE define an “employee”?

Employees are considered to be those working under a contract of employment (including apprentices and contracts with an agency worker who is paid by the transferor) and certain public servants (e.g. state, government and health board employees).

Does TUPE apply to outsourcing arrangements?

TUPE may apply when a business decides to contract out a part of its operations, such as payroll, cleaning, or catering, to an external provider.

For TUPE to apply, the part of the business being outsourced must be a distinct economic entity capable of continuing as a standalone operation (e.g. transfer of employees, assets, or business processes)​.

The application of TUPE in outsourcing arrangements often depends on whether the transferred service includes substantial assets, employees, or identifiable operations. E.g.:

• In labour-intensive activities (e.g., catering or cleaning), TUPE may apply if the majority of employees are retained.
• Where there are no tangible assets transferred (e.g., security services), TUPE may not apply

Preparing for TUPE transfers in Ireland

The parties involved in a transfer under TUPE can never afford to “just do it” and sort out the people or employment issues afterwards. 

Employees of a business being transferred move to the new employer with their accrued years of service, existing terms and conditions of employment and collective agreements to which they may already be subject (excluding occupational pensions). The new employer then takes on all liability.

The new employer must continue to observe the terms and conditions of employment of the transferred employees (contractual, implied and by way of custom and practice) and of any collective agreement in place until it expires or is replaced by agreement.

Prior to the transfer of a workforce, the new employer should have the opportunity to review the records and documentation of the old employer to assess its workforce and conduct a due diligence or audit of its human resources including detailed examination of the terms and conditions of employment of its transferring workforce, collective agreements, union recognition and engagement, its culture, etc. 

It’s advisable for employers to seek expert legal advice to ensure compliance with TUPE requirements. If your organisation requires support with TUPE, The HR Suite is here to help. We can assist you in navigating the complex legal and practical challenges associated with business transfers and changes in service provision while ensuring compliance with employment law and protecting the rights of employees.