Transfer of undertakings (TUPE)

01 March 2016

Updated March 2016

Gives introductory guidance on the transfer of undertakings. Explains how the regulations are derived from EU law and when they apply, how insolvency affects TUPE and that the transfer must involve a change of employer. Also defines an undertaking, describes the employers' obligation to inform and consult, and which rights and obligations transfer. Finally discusses whether employees can object to a transfer and finishes by explaining the redress for breaching the regulations.

The law relating to transfers of undertakings comes from European law and is designed to safeguard employees’ rights when businesses (or parts of businesses) are taken over. The various Directives have been transposed into Irish law by way of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 as amended.

The Regulations apply to any legal transfer or merger of any undertaking, business, or part of an undertaking or business from one employer to another. A transfer can be by way of a lease or licence, franchise or other arrangement. There does not necessarily have to be a change of ownership.

There are various types of insolvency situations. The Transfer Regulations will apply in all such situations except a compulsory liquidation where the reason for the liquidation is the indebtedness of the company.

A compulsory liquidation arises when company is wound up and a liquidator is appointed on foot of an order of the High Court under Section 569 of the Companies Act 2014. A compulsory liquidation can be initiated by a petition to the High Court by the creditors or members of a company or by the company itself. In a compulsory liquidation, the Court supervises the liquidation of the company. In such instance the Transfer Regulations will not apply.

The Transfer Regulations will apply to liquidations where the reason for liquidation is not the indebtedness of company including:

  • Members’ voluntary liquidation
  • Creditors’ voluntary liquidation
  • Receivership
  • Examinership

It is essential to establish if there has been a change of employer: this is a fundamental pre-requisite to the application of the Regulations. A change of employer may occur in a contracting out or in situation. Similarly, a change of employer can and generally does occur within the context of an inter-group transfer. A share purchase alone does not attract the Regulations as it does not necessarily involve a change of employer.

In determining whether or not there has been a change of employer the Court will not be put off by devices such as service companies or by complicated group structures which conceal the true relationship. This includes a situation where, in a company belonging to a group, employees are in the formal employ of one company but working on a permanent basis for another. In those circumstances, if the company for whom the employee works on a permanent basis is transferred, that employee also transfers.

The term 'undertaking' encompasses any entity engaged in economic activity regardless of the legal status of that entity and regardless as to whether the entity is profit or non-profit making. This definition brings all the following within the Regulations:

  • charities

  • local authorities

  • health boards

  • state and semi-state bodies

  • education establishments

  • medical establishments and foundations

  • trade associations

  • trade unions

The Regulations impose an obligation on both the transferor and the transferee to inform their respective employees’ representatives affected by the transfer of that impending transfer and, where measures are envisaged in relation to the employees, to consult with them. This information and consultation process has to be done at least 30 days before the transfer is carried out.

The information and consultation obligation is with the employees’ representatives and not just individual employees. If there are no employees’ representatives, the employer must facilitate the appointment of such representatives. It is only when this fails that the employer is able to notify the employees individually in writing.

The information and consultation obligation applies to all transfers to which the 2003 Regulations apply regardless of the number of employees involved.

For more information on informing and consulting employees, see our factsheet on the topic.

The employees’ rights and obligations arising from the contract of employment transfer to the transferee. The transferee is prevented from making changes to the employees' terms and conditions as a result of the transfer.

For more information on terms and conditions of employment, see our factsheet on employment contracts.

The new employer is obliged to comply with any collective agreement in force at the time of the transfer. The transfer of an undertaking does not break an employee's service and the employee's continuity of service is therefore preserved. The liability to the old employer for personal injury transfers to the new employer on a transfer of undertakings.

The Regulations do not apply to employees' rights to old age, invalidity or survivors' benefits under supplementary or inter-company pension schemes falling outside the Social Welfare Acts. However, the Regulations do impose an obligation on a transferee to ensure that the interests of employees, and of persons no longer employed in the transferor's business, are protected in respect of rights conferring on them immediate or prospective entitlement to old age benefits including survivors' benefits.

The transfer of the employee from transferor to transferee is automatic, irrespective of the wishes of either party. This is subject only to the right of the employee to object to a transfer of their employment relationship. EU case law says that employees are entitled to object to the transfer of their employment contract but the legal effect of this objection is a matter for each member state to determine. In the event that an employee objects to the transfer without cause, there is no entitlement to a redundancy payment from either the transferor or the transferee.

Redress is generally to the Adjudication Officer of the Workplace Relations Commission (WRC) and, on appeal, to the Labour Court.

The Adjudication Officer is empowered to award compensation not exceeding two years remuneration in the case of a breach of the Regulations. An Adjudication Officer can also grant reinstatement or reengagement. The maximum compensation that can be awarded for breach of Regulation 8 (the duty to inform and consult) is the equivalent of four weeks remuneration per employee.

If the employer fails to carry out a decision, an application can be made to the District Court to seek an order directing the employer to comply.

This factsheet was written by A&L Goodbody, Solicitors, IFSC, North Wall Quay, Dublin 1.

© A&L Goodbody Solicitors. The material is not intended to provide, and does not constitute, legal or any other advice on any particular matter, and is provided for general information purposes only.