TUPE AND OUTSOURCING. Louise McCartney Charity Sector Procurement Group 15 th June 2011
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1 TUPE AND OUTSOURCING Louise McCartney Charity Sector Procurement Group 15 th June 2011 Bates Wells & Braithwaite 2009
2 Transfer of Undertakings (Protection of Employment Regulations) 2006 What is TUPE? When does it apply? What does it do? What legal obligations does it impose? Practical considerations for the procurement process.
3 What is TUPE? Came into force April 2006 Regulations available on BIS (formerly BERR) website ( Purpose of Regulations
4 Regulations provide for: Provision of prescribed information to (and possibly consultation with) appropriate representatives of affected staff Provision of Employee Liability Information by transferor to transferee Automatic transfer of employees and the liabilities and responsibilities relating to them Protection against dismissal and other detriment connected with transfer
5 When does it apply? Applies when there is a Relevant Transfer Two types of relevant transfer: Transfer of an Economic Entity Service Provision Change
6 When does it apply types of transfer Economic entity means an organised grouping of resources which has the objective of pursuing an economic activity A Service Provision Change occurs where activities which are undertaken by a person (who has an organised group of employees who are situated in the UK and whose principal purpose is the carrying out those activities) ceases to carry out these activities and they are carried out by someone else instead
7 Examples where TUPE may apply Sale of businesses Mergers Granting of leases Resident Caretakers etc Franchises, licence concessions and grants Contracting out/outsourcing/in-sourcing
8 Service provision changes include Transfer of funding Outsourcing services undertaken internally (first generation outsourcing) Changing the external contractors engaged to provide the outsourced service (second generation contracting) Taking services back in-house (in-sourcing)
9 What does TUPE do? Automatically transfers an employee s employment from one employer to another Transfers rights and liabilities relating to the employment relationship (not criminal liabilities) Transfers the whole employment relationship and on the same terms and conditions, as though the employee has always been employed by the Transferee
10 Overview of legal obligations imposed by TUPE Duty to provide prescribed information about the proposed transfer (Reg 13) Duty to consult (if proposing measures) (Reg 13) Duty to inform about measures (transferee to transferor) (Reg 13) Duty to notify Employee Liability Information (Reg 11) Duty to invite/arrange election of Appropriate Representatives? (Reg 14)
11 TUPE obligations information and consultation Obligation on employer of Affected Employees Affected employees may be wider than transferring employees Obligation therefore applies equally both to transferor and to transferee Obligation is to provide information to/consult with Appropriate Representatives
12 Information and consultation Appropriate Representatives Prescribed hierarchy/pecking order Trades Union recognised? Existing elected or appointed staff reps? Invite/arrange elections? If affected employees fail to elect within reasonable time?
13 Duty to inform (and consult) when arising? Long enough before a relevant transfer to enable the employer of any affected employees to consult with the appropriate representatives of any affected employees
14 Duty to Inform Prescribed Information The fact that the transfer is to take place The date or proposed date of the transfer The reasons for it The legal, economic and social implications The employer of affected employees must inform of any measures he envisages taking in connection with the transfer (and if none, to say so) If the employer is the transferor, the measures in connection with the transfer which he envisages the transferee will take (and if none, to say so)
15 Duty to Inform Transferee to Transferor The transferee shall give the transferor such information at such time as it will enable the transferor to perform the duty imposed on him (Reg 13(4))
16 Obligation to inform and consult Failure to comply compensation of up to 13 weeks gross uncapped pay Todd v. Strain weeks awarded Separate duties including election of representatives
17 Employee Liability Information Regulation 11 Transferor to Transferee In writing At least 14 days before transfer Identity and age of the employees S1 particulars Disciplinaries, grievances, Tribunal claims, Collective Agreements Penalty per employee just and equitable
18 Practical consequences of TUPE for the New Employer Takes on responsibility for the employee s employment Obligations and liabilities will have transferred Check Employee Liability Information before the transfer Obtain warranties/indemnities from previous employer? Employee s continuous service is preserved
19 Practical consequences - Who and what transfers? Assignment to undertaking or group how to decide whether an employee is assigned Group must have principal purpose All contractual liabilities Collective Agreements Incorporated terms Pensions?
20 Pensions Occupational pensions excluded from transferring under TUPE But some benefits may still transfer (those that are not old age, invalidity or survivor s benefits ) e.g. enhanced redundancy terms or early retirement entitlements Some protection for transferred staff under Pensions Act 2004
21 Transfer of terms and conditions If the transfer does, or would, result in a substantial change to their material detriment the employee is entitled to treat themselves as dismissed (Reg 4(9)) Humphreys v University of Oxford [2000] Tapere v Maudesley Trust [2009]
22 Practical considerations - more than one transferee Will TUPE still apply? Does the number of transferees matter?
23 Practical Considerations Activities OCS Group v. Jones 2009 Contracted out catering services Services must be essentially and fundamentally the same If not, likely TUPE will not apply
24 Service Provision Change Activities Ward Hadaway Solicitors v. Love 2010 What is transferring with the change in contractor? Anything? - WIP What are the relevant activities?
25 Dismissal Dismissal automatically unfair if the sole or principal reason for it is: The transfer itself; or A reason connected with it that is not an Economic, Technical or Organisational reason entailing a change in the workforce
26 Dismissal May be possible fairly to dismiss if the sole or principal reason for it is: Unconnected with the transfer; or For a reason that is an economic, technical or organisational reason entailing changes in the workforce Dismissal at request of Transferee?
27 Varying Terms and Conditions Purported variation is void if the sole or principal reason for it is: The transfer itself; or A reason connected with it that is not an ETO reason entailing a change in the workforce
28 Varying Terms and Conditions Variation may be effective (provided the employee consents to it) if the sole or principal reason for it is: Unconnected with the transfer; or An ETO reason that entails a change in the workforce
29 Common ETO reasons Restructuring Redundancy
30 Variation Employee protection Employee protected by Regulations? Substantial change to employee s material detriment Tapere v Maudesley Trust [2009] Interpreting terms post transfer Mobility clauses Restrictive covenants
31 Transfers from the Public Sector Cabinet Office Statement of Practice/Workforce Matters Pension Substantially the same GAD Certificate - admitted status? Two tier workforce?
32 Preparing for a TUPE Out Get Employee Liability Information together If necessary, invite affected employees to elect representatives in writing If necessary, arrange elections in accordance with Regulation 14
33 Election of Representatives Arrangements must be fair Employer determines number of representatives and term of office Candidates for election must be affected employees Election should be in secret
34 Information/Consultation Process Provide prescribed information in writing to appropriate representatives If trade union recognised, to be sent to Head Office Consultation (if applicable) in good time and with a view to reaching agreement If unrepresented employees fail to elect representatives in a reasonable time prescribed information to be provided direct to affected employees no consultation required
35 Measures Write to Transferee to obtain details of measures and ensure updates are given Provide to employee representatives in writing No obligation on transferor to consult about transferee s measures Encourage meetings with Transferee and affected staff?
36 What is a measure? Word of the widest import which includes any action, step or arrangement over and above what necessarily occurs as a consequence of the transfer itself Measures may include: Payment date Intentions to restructure Change of rotas Administrative arrangements
37 Preparation for Transfer In If necessary, invite election of appropriate representatives Staff may be affected, even though not themselves transferring
38 Transfers in Check employee liability information received carefully Consider whether measures are being proposed Information should be provided to appropriate representatives and transferor as soon as possible
39 Negotiating the transfer? Consider potential liabilities Indemnities Warranties
40 Practical Tips in Managing TUPE Avoiding the pitfalls Audit the staff coming in Understand the culture of the transferor, and transferee Obtain information on working conditions
41 Practical Tips Think ahead what working patterns would suit you best on a transfer out assignment or not? Preparing to transfer out keeping the best, transferring the worst? Restructuring to harmonise Think of management levels to test assignment
42
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