What is TUPE?
In the UK, when a business of any size has a change in ownership and the identity of the employer changes, employees are likely to be protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
Where TUPE applies, it means that employees’ terms and conditions of employment and continuity of service remain the same when they start the new employment. In other words, where there is a change in ownership of a business, the new employer cannot unilaterally change the terms of employees’ employment - the new employer becomes responsible for the employment on the same terms.
There is no such equivalent concept to TUPE in the US and so US practitioners may be surprised by the frequent and significant impacts of TUPE on employment and immigration laws in the UK.
What’s the relevance for UK immigration law?
Whilst TUPE is primarily a UK employment law concept, it very much plays a part in UK immigration law as well. As you would expect, given the law requires that employees can transfer to the new employer on the same terms, immigration rules need to reflect that and not have onerous visa requirements.
Common examples of where TUPE crops up in immigration law include where a company is involved in a merger or acquisition or where there is an internal intra-group restructure such that the identity of the employer changes.
In particular, Tier 2 of the UK’s Points Based System includes specific TUPE related rules. Tier 2 is the UK’s work permit scheme where non-European nationals are sponsored by a UK employer to fill a specific skilled role on a compliant salary.
Where a Tier 2 worker is included in a pool of employees transferring to a new employer via TUPE, so long as the role/salary at the new employer will remain the same, a new visa application does not need to be submitted. Rather, within 20 working days of the date of transfer, the old and new employers need to submit online notifications to confirm that the Tier 2 worker has transferred as a result of TUPE.
So what’s the problem?
Well, there are quite a few! Some of the main problems include:
1.) The new employer/sponsor, will only be able to submit the online notification referred to above if it already has a Tier 2 Sponsor Licence, which is issued by the UK Visa & Immigration (UKVI) authorities. If it does not, the rules state the new employer must apply for a Tier 2 Sponsor Licence within 20 working days of the date of transfer. Where a change in ownership of a business happens quickly and without warning, this can be a huge undertaking for the new employer. To get around this, if the new employing entity is a group company, it can be added to the existing Tier 2 Sponsor Licence as a ‘branch’ which is capable of employing the Tier 2 workers.
2.) There are some difficult to fathom quirks to the Tier 2 rules on change in ownership. Where there is a change in the identity of the owner of a Tier 2 Sponsor Licence holding company which is at least one removed in the chain of ownership (such as where the ultimate owner in the group changes), a mere online notification is required. However, where the immediate/direct owner of a Tier 2 Sponsor Licence holding company changes, it must apply for a fresh Tier 2 Sponsor Licence, even though there is most likely no change to the constitution of the company or its employees! The UK immigration authority is yet to explain why that is the case! A further challenge is that a new sponsor licence application typically takes 6-8 weeks before the UKVI provides approval, which can mean the employees are left in limbo.
3.) Deciphering exactly when TUPE applies can be very difficult and technical for employers. Helpfully, the Tier 2 guidance includes that where a Tier 2 employer is transferring by way of “similar protection” to TUPE, they can also be afforded the same immigration protections.
However, much less helpful is the fact that there is a complete lack of clarity on how “similar protection” is defined. The guidance merely states “such as the Cabinet Office Staff Transfers in the Public Sector Statement of Practice and section 23 of the Public Bodies Act 2011. It does not include ad hoc arrangements.” That reference relates to public sector roles and does not go nearly far enough in reflecting the complex commercial reality in which UK employers find themselves and “ad hoc” is not defined. For example, we see it in our law firm client base where partners (not employees) are transferring to the new entity. TUPE does not apply, as they are not employees, but they are (or most definitely should be!) afforded “similar protection” to TUPE for UK immigration purposes. From bitter experience, we are aware that (no doubt themselves hindered by the same lack of guidance on this point), caseworkers make costly errors in these situations where employers need to transfer staff quickly and free of visa restrictions. We are currently trying to change the UK authority’s relevant policy and guidance on this point.
4.) Not only is the guidance itself incomplete in terms of the relevant definitions and examples, there is also a complete absence of indications of which documents need to be submitted in support of a TUPE or “similar protection” case.
5.) As will be the case in the US, in the UK employers need to strictly adhere to obtaining the necessary ‘right to work’ documents before any employment commences. Otherwise, they can be on the receiving end of a civil penalty or even criminal prosecution. But that can be particularly difficult where there are a million and one things to do around a significant TUPE situation and often at very short notice. New employers often find themselves paying scant care in the due diligence process in relation to the immigration status of employees transferring across to them. Even more so in terms of the complex immigration rules applying to TUPE scenarios and Tier 2 workers. Where TUPE applies (on a strict interpretation of the guidance not where there is “similar protection”), the rules do helpfully allow the new employer to take the benefit of any right to work checks correctly carried out by the old employer. Plus, where TUPE applies, new employers have a 60 day ‘grace period’ to complete any right to work checks, but that won’t help an employer which for example overlooks the fact it needs to apply for a Tier 2 Sponsor Licence within 20 working days of the date of transfer.
Questions, questions (and Brexit)
As you can see, whilst TUPE is a great concept for UK employees to rely on, it is causing headaches for UK employers and immigration practitioners. Plus with the UK seemingly on a road to leaving the EU, potentially without an agreed deal, whilst unlikely it is possible that employment laws such as TUPE could be restricted or abolished in the event of Brexit.
Kingsley Napley’s immigration and employment teams continue to represent employers of all sizes and provide comprehensive joined up advice. If the issues raised in this article trigger any questions for you or your clients, please do not hesitate to get in touch with Marcia Longdon. Marcia is a member of the ABA Labor & Employment Law - Immigration & Human Rights Committee