What Is TUPE and When Does It Apply?
Transfer of Undertakings (Protection of Employment) Regulations protects employees if the business that they work at changes employers or owners.
What is TUPE?
TUPE regulations in Italy include both a unions’ information procedure – which must be triggered in advance by both the transferor and the transferee at least 25 days before the transfer agreement or any binding agreement between the transferor and the transferee is executed (this, upon the unions’ written request hereof, may lead to a joint examination)-, as well as several protections which the transferor’s employees are entitled to, as specified below.
Firstly, the employment relationships of the transferor’s employees automatically continue – by operation of law – with the transferee and they are also entitled to maintain any rights arising from such employment relationships. In particular, the transferee has to grant the transferor’s employees with any entitlements set forth by the collective bargaining agreements which apply to their employment relationships as at the transfer date, until their expiry, unless such agreements are replaced by those which apply to the employment agreements of the transferee’s employees.
Moreover, the transferor and the transferee are jointly liable with respect to those sums owed to the transferor’s employees as at the transfer date and these – if their working conditions are significantly changed within a 3-month term running as from the transfer date – are entitled to resign with immediate effect, thus being entitled to the payment of the indemnity in lieu of notice which would apply in case of dismissal not for cause.
Lastly, those dismissals relying on the transfer qualify as null and void, so that employees are entitled to have their employment relationships continuing with the transferee as well as to be paid with those salaries which would have been accrued as from the dismissal date (a minimum cap amounting to five months of salary is provided for).
Employees’ protections outlined above apply in any case of transfer, except for those at companies which are facing a crisis (to be duly attested by public bodies) or are subject to an insolvency procedure, to the extent that an agreement hereof with the unions is reached
When does the regulation apply for businesses?
Those protections outlined above also apply in case of transfer of business, while there is the legal requirement to trigger the above unions’ information procedure only where the transferor is staffed with more than 15 employees, regardless the number of employees actually employed at the business which is planned to be transferred.
When are transfers not covered by the regulation?
Unless otherwise provided for by collective bargaining agreements, the transferor and the transferee are charged with no information obligations towards the unions whenever the transferor does not meet the above size requirements.
Employees’ protections outlined above apply in any case of transfer, except for those at companies which are facing a crisis (to be duly attested by public bodies) or are subject to an insolvency procedure, to the extent that an agreement hereof with the unions is reached. In particular, the above protections may be partially (in case of a company’s crisis, as well as special administration procedures or restructuring agreements, where these insolvency procedures are not leading to the shutdown of the business) or fully (in case of bankruptcy, restructuring agreements, compulsory administrative winding-up or special administration procedures, where these insolvency procedures are leading to the shutdown of the business) departed from.
In case of transfers triggered by a share deal, neither the unions’ information procedure nor the employees’ protections under the TUPE regulations apply (as there is no change in the employer).
Can employers still make employees redundant during transfer?
Even if – as said above – dismissals relying on the transfer qualify as null and void, this does not prevent the transferor (until the transfer date) or the transferee (once the transfer takes place) from dismissing employees according to general rules governing such a matter, whereby employees may be lawfully dismissed for individual redundancy.
What should businesses and employers be aware of, in order to not fall short on compliance?
Businesses and employers must consider that the union’s information procedure is time-triggered, as the failure to start this procedure qualifies as anti-union conduct and, according to certain case-law precedents, may lead to a judicial order providing for the invalidity of the entire transfer agreement.
It is worth mentioning that such a procedure is often untimely in the practice as this, mainly for confidentiality reasons, is generally started 25 days before the closing date, while this should be enforced 25 days before the signing date.
Grimaldi Studio Legale
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Angelo Zambelli is the Co-Managing Partner, Member of the Executive Committee and Head of the Employment and Industrial Relations Department of Grimaldi Studio Legale.