Overview of the Transfer of Undertakings (Protection of Employment) Regulations 2006

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1 TUPE Overview of the Transfer of Undertakings (Protection of Employment) Regulations Service Provision Changes... 1 Employer Liability Information... 2 Liability for Failure to Inform and Consult Representatives...4 Sample Standard Contract Condition TUPE COMPLIANCE ON TERMINATION Handover on termination Indemnities Sub-contractors... 5 DEFINITIONS... 5 Overview of the Transfer of Undertakings (Protection of Employment) Regulations ) The 2006 regulations revised and replaced the 1981 TUPE regulations. There were three significant changes and these related to service provision change, employer liability information, and liability for failure to inform or consult. 2) Appendix A is a revised TUPE clause for use in contracts for services where TUPE may be applicable. Please obtain legal and procurement advice if you are uncertain as to whether TUPE will apply, but particularly if current or former County Council staff may be involved in a transfer. Service Provision Changes 3) What is a relevant transfer has been extended under the new regulations to include a service provision change. This will mean that TUPE applies more widely and encompasses more labour intensive activities such as catering, office cleaning and security, although it applies to many services already. 4) A service provision change can take three principle forms: eastsussex.gov.uk 1

2 Where a service previously undertaken by the County Council is awarded to a contractor (a process known as contracting out or outsourcing ); or Where contracts are assigned to a new contractor on subsequent re-tendering; or Where a contract ends with the service being performed in house by the County Council ( contracting in or insourcing ). 5) The regulations apply only to those changes in service provision which involve an organised grouping of employees, which has as its principle purpose the carrying out of the activities concerned on behalf of the School / County Council. This is intended to confine TUPE coverage to cases where the old service provider (i.e. the transferor) has in place a team of employees to carry out the service activities, and that team is essentially dedicated to carrying out the activities that are to transfer (though they do not need to work exclusively on those activities). So, if a contractor was engaged by the School / County Council to provide, say, a courier service, but the collections and deliveries were carried out each day by different couriers on an ad hoc basis, rather than by an identifiable team of employees, there would be no service provision change and TUPE would not apply. However, please note that an organised group of employees can be just one person. 6) A service provision change will often cover situations where an existing service contract is re-tendered by the School / County Council and awarded to a new contractor. It would also potentially cover situations where just some of those activities in the original service contract are re-tendered and awarded to a new contractor, or where the original service contract is split into two or more components, each of which is assigned to a different contractor. In each of these cases, the key test is whether an organised grouping has as its principle purpose the carrying out of the activities that are transferred. 7)There are exceptions; A contract which wholly or mainly relates to the supply of goods; Where services are brought from the contractor in connection with a single specific event or task of short term duration. For instance, an organised group of security staff are hired for one event then this exception would apply, but if a group of security staff are hired for several years then TUPE would apply; A local government reorganisation. 8) I attach, as an appendix, the recommended clause for use in School / County Council contracts, which has been extracted from the Code of Practice on Work Force Matters in Local Authority Service Contracts: Contract Clauses, a copy of which can be obtained at These clauses were developed by the 4ps, IDeA and the Employers Organisation to assist authorities in drafting contracts and as such this can be used to justify the acceptability of the clauses to our contractors. Employer Liability Information 9) The proposed transferor employer must provide to the transferee employer (i.e. new contractor or the School / County Council if the service is coming back in-house) with certain information regarding the transferring employees in writing or in a readily accessible form. This information includes the identity and age of the transferring employees etc. The information must be provided not less than 14 days before the relevant transfer. If the transferor employer fails to provide the information in accordance with these requirements, there will be a minimum potential fine of 500 per employee in the event of breach. 2

3 10) Schools / the County Council should still continue to insert in contracts clauses requiring our contractor to provide us with employee information. This is because under the new TUPE regulations, the obligation only applies 14 days before the date of transfer, and only applies between the old and the new employers. If the School / County Council is tendering the service, then it needs the TUPE employee information well before the end of the contract, so that this can be provided with the invitation to tender, and bidders have this when they price their bids. 3

4 Liability for Failure to Inform and Consult Representatives 11) Under the old TUPE regulations, if there was a failure by the old or new employers to consult with any recognised trade union, or employee representatives, then the liability to pay statutory compensation passed to the new employer. Under the new regulations, there is a joint liability. As such, if you are involved in an outsourcing of staff by the County Council, it is important that you take legal advice (and advice from personnel) as to the appropriate indemnities to be included in the contract so that we can protect ourselves against liability for something which might not be our fault. Sample Standard Contract Condition 1. TUPE COMPLIANCE ON TERMINATION 1.1 Handover on termination During the 12 months preceding the expiry of this Agreement or after the Authority has given notice to terminate this Agreement or at any other time as directed by the Authority, and within 15 working days of being so requested by the Authority, the Contractor shall fully and accurately disclose to the Authority any and all information in relation to all personnel engaged in providing the Services including all Relevant Employees who are to transfer as a consequence of a Relevant Transfer as the Authority may request, in particular but not necessarily restricted to any of the following: (a) (b) (c) (d) a list of employees employed by the Contractor; a list of agency workers, agents and independent contractors engaged by the Contractor ; the total payroll bill (i.e. total taxable pay and allowances including employer s contributions to pension schemes) of those personnel; the terms and conditions of employment of the Relevant Employees, their age, salary, date continuous employment commenced and (if different) the commencement date, enhancement rates, any other factors affecting their redundancy entitlement and any outstanding claims arising from employment The Contractor shall warrant the accuracy of all the information provided to the Council pursuant to clause and authorises the Authority to use any and all the information as it may consider necessary for the purposes of its business or for informing any tenderer for any services which are substantially the same as the Services (or any part thereof) During the 12 months preceding the expiry of this Agreement or where notice to terminate this Agreement for whatever reason has been given, the Contractor shall allow the Authority or such other persons as may be authorised by the Authority to communicate with and meet the Relevant Employees and their trade union or employee representatives as the Authority may reasonably request. 4

5 1.1.4 During the 12 months preceding the expiry of this Agreement or where notice to terminate this Agreement for whatever reason has been given, the Contractor shall not without the prior written consent of the Authority unless bona fide in the ordinary course of business: (a) (b) (c) vary or purport or promise to vary the terms and conditions of employment of any employee employed in connection with the Services; [materially] increase or decrease the number of employees employed in connection with the Services; or assign or redeploy any employee employed in connection with the Services to other duties unconnected with the Services. 1.2 Indemnities The Contractor shall indemnify the Authority and any new contractor appointed by the Authority and keep the Authority and any new contractor appointed by the Authority indemnified in full from and against all direct, indirect or consequential liability, loss, damages, injury, claims, costs and expenses (including legal expenses) which the Authority and any new contractor appointed by the Authority shall take all reasonable steps to mitigate, awarded against or incurred or paid by the Authority or any new contractor appointed by the Authority as a result of or in connection with the employment or termination of employment of any employee of the Contractor during any period prior to the date of expiry or termination of this Agreement. 1.3 Sub-contractors In the event that the Contractor enters into any sub-contract in connection with this Agreement, it shall impose obligations on its Sub-Contractor in the same terms as those imposed on it pursuant to this clause 1 and shall procure that the Sub-Contractor complies with such terms. The Contractor shall indemnify the Authority and keep the Authority indemnified in full from and against all direct, indirect or consequential liability, loss, damages, injury, claims, costs and expenses (including legal expenses) awarded against or incurred or paid by the Authority as a result of or in connection with any failure on the part of the Sub-Contractor to comply with such terms. DEFINITIONS Regulations "Relevant Employees" Relevant Transfer means the Transfer of Undertakings (Protection of Employment) Regulations 2006 as amended or modified from time to time; means the employees who are the subject of a Relevant Transfer; means a relevant transfer for the purposes of the Regulations; Services means [the whole of the services or any of them to be provided by the contractor pursuant to this agreement or such of them as may from time to time remain the subject of this Agreement]; 5

6 Sub-Contractor means a person to whom the contractor sub-contracts any of its obligations under this Agreement This information was originally produced by ESCC Legal Services and was amended for schools and uploaded onto Czone by the Children s Services Contracts & Purchasing Unit in June Please contact Jane Carter, Head of CS Contracts & Purchasing on or via at if you have any queries. 6

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