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TUPE
TUPE is an extensive body of legislation, the main purpose of which is to preserve the rights of employees when:
- all or part of a business changes ownership from one party to another;
- a contract to provide services to a client is reassigned from one contractor to another or the client brings the work back in-house.
TUPE applies to a “relevant transfer”. A relevant transfer will take place when a “stable economic entity” (staff and assets) is transferred from one business to another and following the transfer, this economic entity manages to retain its identity in that it subsists as an economic entity.
The automatic transfer principle
Where there is a TUPE transfer, those employees who are subject to the transfer, namely those employed in the economic entity being transferred, will transfer to the new owner under their existing terms of employment and with their continuity of employment unbroken. This means that all their contractual rights and benefits, such as holiday pay, medical and permanent health insurance, company car, bonus or commission schemes, profit share schemes, maternity schemes and redundancy schemes, will all be preserved.