TUPE in Ireland: your rights when the business transfers

"Tupe ireland" comes up when a business is sold, when a contract for cleaning, security or catering moves to a new provider, when a public service is outsourced, or when a company is merged. In each case the question is the same: what happens to the people who do the work? The Regulations that answer it are the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003, S.I. No. 131/2003, known as TUPE. This guide covers when they apply, what transfers with you, the consultation rights, and how dismissal and redundancy are handled around a transfer.

When TUPE applies

The Regulations apply where there is a transfer of an undertaking, business, or part of one, to another employer as a result of a legal transfer or merger. The test is whether an economic entity has transferred and has kept its identity: a group of people and assets organised to carry on an activity, which continues to be carried on under the new owner.

The clearest cases are the sale of a business as a going concern and the merger of two companies. Beyond those:

• Outsourcing. When a business hands an activity it did in-house to a contractor, and the contractor takes over the activity with the staff or the assets needed to run it, TUPE can apply.
• Change of contractor. When a cleaning, security, catering or facilities contract moves from one provider to another, TUPE can apply if the activity continues and either significant assets or the major part of the workforce (in a labour-intensive sector) pass to the new provider. The contract cleaning and security pages cover how this works in those sectors in practice.
• Insourcing. When an activity returns from a contractor to the client, the same test applies.

TUPE does not apply to a share sale, because the employer stays the same company; only its owners change. It does not apply to a transfer of assets alone with no continuing activity, and it does not apply where the undertaking is being wound up in insolvency proceedings aimed at liquidating the assets.

Whether a particular situation is a transfer is often disputed, and it is the first question the WRC decides in any TUPE complaint.

What transfers with you

On the date of the transfer, your contract of employment transfers to the new employer automatically. Neither your consent nor a new contract is needed. The new employer takes over:

• Your terms and conditions, as they stood: pay, hours, place of work, leave, sick pay scheme, notice, bonus and commission arrangements, and everything else in the contract. The contract checker shows what a written statement must contain, which is useful for listing what should carry across.
• Your continuous service, for notice, redundancy, unfair dismissal and every other service-based right. Your start date does not change.
• Collective agreements, which the new employer must observe on the same terms until they expire or are replaced.
• Liabilities, including arrears of wages, accrued leave and any claims arising before the transfer, which pass to the new employer.

The new employer cannot change your terms because of the transfer, even with your agreement, if the transfer is the reason for the change. Changes for reasons unrelated to the transfer are treated like any other change to terms: they need your agreement or a contractual basis. Harmonising the transferred staff's terms with the new employer's own staff is a change because of the transfer, and the WRC has treated it as such. See contract of employment: what must be in writing for how changes to terms work in general.

Pensions

Occupational pensions are the main exception. Rights to old-age, invalidity and survivors' benefits under an occupational pension scheme do not transfer automatically. Your accrued rights in the old employer's scheme are protected under the Pensions Acts and the scheme's own rules, and the new employer is not required to offer an equivalent scheme. In practice the new employer often does, and the Pensions Authority publishes guidance on what happens to benefits on a transfer.

Two points soften the exception. A contractual right to an employer pension contribution (as distinct from membership of a particular scheme) has been treated as a term of employment that may transfer. And auto-enrolment into My Future Fund applies to the new employer in the same way as the old; see auto-enrolment pensions.

Information and consultation

Both the old and the new employer must inform their employees' representatives about the transfer. The information must be given at least 30 days before the transfer takes effect, or in any case in good time before it, and must cover:

• the date or proposed date of the transfer
• the reasons for it
• the legal, economic and social implications for the employees
• any measures envisaged in relation to the employees

Where either employer envisages measures affecting employees (redundancies, changes to location, changes to working patterns), it must consult the representatives with a view to reaching agreement, again at least 30 days before. Where there are no representatives, the employees must be informed directly in writing. Information and consultation is a duty owed through representatives, so a union, or an elected employee representative, is the channel.

A failure to inform and consult is a complaint to the WRC under the Regulations, within 6 months of the contravention, and the WRC can award compensation. The WRC awards register shows what has been awarded in published TUPE decisions.

Dismissal and the transfer

The Regulations say that a transfer does not in itself constitute grounds for dismissal. A dismissal by the old or the new employer because of the transfer, or for a reason connected with it, may be unfair under the Unfair Dismissals Acts 1977 to 2015.

The exception is a dismissal for economic, technical or organisational reasons entailing changes in the workforce, known as an ETO reason. A genuine reduction in the number of staff needed after the businesses are combined is the usual example. Even then, the dismissal has to be a fair dismissal in the ordinary sense: a genuine redundancy, fair selection, consultation and consideration of alternatives, with the procedure the WRC Code of Practice expects.

The practical consequences:

• A dismissal by the old employer shortly before the transfer, so that the new employer takes fewer staff, is treated as a dismissal because of the transfer unless an ETO reason applies, and liability can pass to the new employer.
• A dismissal by the new employer soon after the transfer, without an ETO reason, carries the same risk.
• The usual 12 months' service applies, but your service with the old employer counts.

The full rules on fairness are in unfair dismissal in Ireland, and the unfair dismissal checker works through the service and reasons tests.

A substantial worsening of your terms because of the transfer, for example a move to a distant site or a large pay cut imposed by the new employer, which leads you to resign, may be treated as a dismissal by the employer; the burden of showing that resigning was reasonable sits with you, as in any constructive dismissal.

Refusing to transfer

Nobody can be made to work for an employer they do not want to work for, but the Regulations do not give a right to a redundancy payment, or a dismissal claim, to an employee who simply objects to the transfer. In most cases an objection ends the employment with the old employer on the transfer date, with no redundancy payment, because the job has not disappeared: it has moved.

The position may be different where the objection is based on a substantial change to working conditions to your detriment, which the Regulations treat as a termination by the employer. That turns on the facts and on how far the new terms differ, and it is an area where taking advice before objecting, rather than after, is the course most people are glad they took.

Redundancy after a transfer

A transfer does not trigger redundancy. Your job continues with the new employer. If the new employer later makes you redundant:

• the redundancy must be genuine, with fair selection and consultation
• your service with both employers counts for the statutory payment: 2 weeks' pay per year of service plus a bonus week, with weekly pay capped at €600, after 104 weeks' continuous service
• your notice is calculated on the combined service, from 1 week under 2 years to 8 weeks at 15 years or more
• the statutory payment is tax-free

The redundancy calculator works it out on your full service, and redundancy in Ireland covers the process. If the redundancy is part of a collective round, the 30-day collective consultation in the Protection of Employment Act 1977 runs alongside the TUPE consultation, and the thresholds for a collective redundancy are in that guide.

Where the old employer offered an enhanced redundancy package in the past, whether the new employer is bound by it depends on whether it had become a contractual term through custom and practice, which is argued case by case.

What to ask for when a transfer is announced

Most people in a transfer want these things in writing from the employer, and the letter builder has a "confirm in writing" format for asking:

1. confirmation that the Regulations apply and the transfer date
2. confirmation that your terms, service and leave balance transfer unchanged
3. what will happen to your pension scheme membership
4. what measures, if any, the new employer envisages
5. who your representatives are for the consultation and when it begins

Keep your written statement, your most recent payslips and a note of your leave balance from before the transfer date. If terms are changed afterwards, those documents are the evidence of what should have carried across.

Where this leaves you

If the business you work in is being sold, outsourced or moved to a new contractor and the activity carries on, your contract, service and terms go with it, your representatives must be informed and consulted at least 30 days ahead, and a dismissal because of the transfer may be unfair unless an ETO reason applies. Use the contract checker to list the terms your written statement contains, so you can check them against what the new employer gives you. If terms are cut, consultation is skipped or a dismissal follows the transfer, the WRC route is open within 6 months and the WRC overview explains it. Acronyms used here, including TUPE and ETO, are in the glossary.