Managing redundancies related to a TUPE transfer requires a strategic and sensitive approach to ensure compliance with legal obligations and minimize the impact on affected employees.
When a business transfer results in redundancies, it is crucial to follow proper consultation processes, providing transparent information to affected employees about the reasons for the redundancies and any proposed measures.
This includes considering alternative employment options, offering retraining or redeployment opportunities, and providing appropriate redundancy payments as required by law.
Effective communication, empathy, and support are essential during this transitional period to maintain positive employee relations and mitigate the emotional and practical challenges that redundancies may bring.
By managing redundancies in a fair and compassionate manner, employers can navigate the complexities of TUPE-related workforce changes while prioritizing the well-being and rights of their employees
When to start a redundancy process
Your employees maintain their usual rights to a fair redundancy process throughout a TUPE transfer, thanks to the protective measures offered by TUPE regulations. These regulations, short for Transfer of Undertakings (Protection of Employment), ensure that employees are safeguarded when transitioning to a new employer.
When contemplating a redundancy process, it is essential to explore all available options to minimize or potentially eliminate the need for redundancies. This includes considering alternative measures such as redeployment, retraining, or restructuring roles within the organization. By thoroughly assessing these alternatives, employers can prioritize the well-being of their employees and strive to mitigate the impact of redundancies during the TUPE transfer.
Before a TUPE transfer
To ensure fairness and protect employees’ rights during a TUPE transfer, both the new employer and the old employer are prohibited from making redundancies if the reasons are directly linked to the transfer. The old employer cannot reduce the workforce in an attempt to make the organization or service more cost-effective or attract potential buyers. Likewise, the new employer cannot request the old employer to carry out redundancies before the transfer, as this would be deemed an unfair dismissal.
However, if the new employer plans to make 20 or more redundancies at the same establishment within a 90-day period after the transfer, they may initiate a collective consultation with the affected staff before the transfer takes place, provided the old employer grants permission. The consultation process must commence at least 30 days prior to any employees being made redundant.
It is important to note that redundancies unrelated to the transfer can still be made before a TUPE transfer, following the usual redundancy process. These redundancies should adhere to the established procedures and regulations governing redundancy situations.
After the transfer
Following the completion of staff transfer, both employers can only proceed with redundancies associated with the transfer under two conditions: (1) the redundancies are driven by an ‘economic, technical, or organisational’ (ETO) reason involving a workforce change, and (2) a genuine redundancy situation exists.
A genuine redundancy situation may arise if a part or all of the organization is closing down, altering the types or number of roles required for specific work, or undergoing a change in location. A change in the workforce could entail redundancies, significant restructuring, or relocation of the workplace.
ETO reasons encompass essential cost-saving requirements (economic reasons), the implementation of new processes or equipment (technical reasons), and making structural changes within the organization (organisational reasons).
When making redundancies within specific roles or teams, it is essential to treat transferred staff equitably in comparison to employees with longer tenure. Fair selection processes should be employed to avoid disadvantaging transferred staff, ensuring a level playing field. Comprehensive consultation with employees or their representatives should also take place, allowing for meaningful discussions regarding the proposed selection methods and criteria.
Read more: What happens with TUPE if my employer is insolvent
Frequently asked questions
TUPE affects redundancy by who is responsible for paying the sums due on redundancy. This will usually be notice pay, accrued holiday pay and statutory redundancy (due if you have more than two years' service). So, if you're made redundant after a TUPE transfer, the new employer will be responsible for redundancy payments.
Redundancy pay in TUPE is paid by the new employer if they make any employees redundant, they'll be responsible for their redundancy pay. The new employer may have included these redundancy costs in the commercial agreement to buy the business or service. How does TUPE affect redundancy?
Who pays redundancy in TUPE?
Making redundancies unrelated to the transfer
In circumstances where redundancies are unrelated to the transfer, it is permissible to initiate the redundancy process following the standard procedures. There is no requirement for an ‘economic, technical, or organisational’ (ETO) reason involving a change in the workforce.
This flexibility allows employers to address redundancy situations that are independent of the transfer without being constrained by specific ETO criteria. By following the established redundancy process, employers can navigate these situations while ensuring fairness and compliance with applicable regulations.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.