Can I Take Redundancy Instead of a TUPE Transfer?

As an employee of a business that is about to merge or be acquired, it is entirely understandable to feel uncertain about your job and even unsure if you wish to continue your employment with a new owner. The Transfer of Undertakings (Protection of Employment) regulations (TUPE) are designed to protect existing staff in such situations, but what if you don’t want to be transferred? In this article, we will take a look at the purpose of TUPE and whether it is possible to take redundancy instead of being transferred as an employee to a new business owner.

What is meant by the Transfer of Undertakings (Protection of Employment) regulations (TUPE)?

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) is a law that protects employees whose employer is being transferred to new ownership (e.g., merger or acquisition). TUPE imposes a legal duty on the new business owner to continue their employment under the same terms and conditions. The Government’s guidance on TUPE explains, “This means that employees employed by the previous employer (the ‘transferor’) when the transfer takes effect automatically become employees of the new employer (the ‘transferee’) on the same terms and conditions”.

What happens if an employee does not want to transfer under TUPE to the new Business Owner?

If you as an employee don’t want to transfer to the employment of the new business owner, it is important to understand the options available. While you have the right to refuse a transfer under TUPE, you do not have the right to take redundancy or claim for unfair dismissal as an alternative. This is the case because your employment would have effectively continued under a new owner, and work terms and conditions would not change, which does not provide grounds for a claim against your employer. Nor is it technically classed as redundancy; redundancy is a special form of dismissal which occurs when an employer needs to reduce their workforce because certain job roles are no longer needed. This is not the case under a TUPE transfer, as your role is still needed by the new owner.

The fact that redundancy is not an option available under TUPE does not mean that your employer or the new owner may not come to an arrangement with you. This may include:

• Offering you a new role in the new owner’s business
• Offering you redundancy after you have been transferred under TUPE; as ACAS states, “Before the transfer, your current employer cannot make you redundant if your new employer asks them to”.

Alternatively, if you cannot come to an arrangement, you may simply decide to leave your employer and not be part of the transfer process.

What are my rights to take redundancy after TUPE?

Your new employer may decide to make you redundant after your TUPE transfer, but they will only be able to do so if it is a genuine redundancy situation (i.e., there is no longer a need for your role within the company) and there is a genuine requirement to make changes to the workforce for economic, technical or organisational (ETO) reasons.

Redundancy after TUPE may occur, for example, if:

• There is a need to change the location of work
• There is a need to reduce the number of employees
• There are too many employees in the same role following the TUPE transfer.

If, however, the employer wishes to make redundancies for reasons not related to the transfer, they do not need an economic, technical or organisational (ETO) reason. As ACAS states, “If your new employer needs to make redundancies in your role or team, transferred staff must be treated in the same way as staff who’ve worked there longer. Your new employer must follow correct redundancy procedures and apply fair selection criteria”.

It is important to note that no employees can be made redundant until the completion of the TUPE transfer process.

If the new business owner makes me redundant, how will my redundancy pay be calculated?

The whole process of making you redundant will be the responsibility of the new business owner, not your old employer, after you are transferred. They will need to follow the redundancy process carefully, including consultation and putting together a redundancy package. The redundancy pay they calculate for you must be based on your ‘period of continuous employment’, which includes the time you worked for the previous owners and the new owner.

What should I do if I don’t want to be transferred?

If you have decided you don’t want to be transferred to the new business owner at all, you will need to write to your existing employer explaining that you will be resigning from your role. Your existing employer will then let the new business owner know that you will be resigning and hence not transferring to their employment.

They may choose to offer you a new role with part of their business that is not transferring to new ownership. On this, ACAS states, “Your current employer may decide to offer you an alternative job. If they do, and you accept, your length of service (‘period of continuous employment’) will continue if the new role starts before the date of the transfer. Your employer will tell the new employer you will no longer be transferring”.

If you are not offered another role, or you are, but you don’t accept, then your employment will effectively end on the date of the TUPE transfer. If you have a notice period to work out, you will not be expected to work past the transfer date, but you will not be paid for the remainder of your notice period.

Final words

While you may not have a right to take redundancy during the TUPE transfer process, with a pragmatic and carefully considered approach, it may be possible to reach an agreement with your existing employer or the new business owners. By making a reasonable offer in writing, you may be able to negotiate an outcome that is favourable to both parties.