What is perhaps less well known is that during the past two years, TUPE has had a major impact in the area of contracting out of services and in industry sectors where traditionally it was not thought to apply.

In summary, TUPE gives employees a number of rights when they are being transferred from one employer to another. These include the right to be informed and consulted about the transfer, the right to protected terms and conditions, the preservation of continuity of employment and the right to not be unfairly dismissed by reason of the transfer.

For example, a business (the client) chooses to contract out its cleaning services to company A and subsequently decides for commercial reasons to change its contractor to company B. There may be a TUPE transfer of staff from company A to B if the former has an "organised grouping" of employees whose principal purpose is to carry out activities for the client. An "organised grouping" of employees can be one person!

The definition of TUPE is relatively straightforward, but applying it in practice has been less so. The first point to note is that it can affect activities that have never been done by a business in-house, including professional services such as accountancy, law, public relations and marketing.

In one case, a PR agency had an employee who spent 70% of her time working on a key client's account. That client then switched its business to another agency and the employee claimed she should transfer to the new agency under TUPE. The Employment Tribunal agreed.

It is no longer necessary for the company that wins a contract to carry out the services in the same way as the previous contractor for TUPE to apply. Staff can still transfer, even where the service is being performed differently and from another location.

Real problems arise when, following a re-tender of a contract, the service performed by one contractor is to be split and performed by a number of different companies. Whether TUPE applies is unclear and cases are now working their way through the tribunal system, often with inconsistent results.

T he key for businesses looking to reduce risks in this area is to ensure that their commercial contracts have clauses dealing specifically with TUPE on commencement and termination.

lFor further information about the TUPE regulations or for general employment law advice, contact David Poddington at Taylor&Emmet on (0114) 218 4000 or visit www.tayloremmet.co.uk