Employment Protections in U.K. Outsourcing Transactions

Council Directive 2001/23/EC of 12 March 2001 (which replaces earlier Directives) is a European Directive which is designed to safeguard the rights of employees if the business in which they work is transferred to a new owner. The Directive applies in the United Kingdom through the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE"). TUPE must be construed to give effect to the purpose of the Directive. Contracting-out of TUPE is prohibited. The question of whether TUPE applies to specific transactions is a complex one. Practically speaking, there needs to be a continuation of a business in new hands.

Does it apply to outsourcing? This is a debate which has raged for at least 10 years and the European and English courts have not always been consistent in their decisions. What is clear, however, is that TUPE can apply to outsourcing situations. This article examines what this means. In any case, generally, the customer will want the vendor to