SPDS Conference 2011/ Alternative Business Models: What to look out for/ November 2011
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1 SPDS Conference 2011/ Alternative Business Models: What to look out for/ November 2011
2 Some examples of when TUPE does not apply: Transfers between public administrations (although this is limited by s.52 guidance and Cabinet Office Statement of Practice which states that the principles of TUPE should be applied in any event). Transfers of assets where there is no transfer of the business as a going concern. Where there is no organised grouping of employees situated in Great Britain immediately before the change whose principal purpose is carrying on the relevant activities on behalf of the client. Supply of goods for the client's use. A one-off buying in of services of short-duration. Where services are split up on a re-tendering exercise and are too fragmented to determine a service provision change. Where the undertaking to be transferred is situated outside the UK.
3 Who transfers? The assigned to test The TUPE 2006 Regulations provide that employees who are assigned to the organised grouping of resources or employees that is subject to the relevant transfer and who have not objected to the transfer. The question of whether employees are assigned to the organised grouping has not been defined in the 2006 Regulations and is ultimately a question of fact. There is therefore little guidance on this but case law has produced some indicators: Establish which part of the undertaking to which the employee is assigned. If that undertaking/service is transferring that will be sufficient to argue that the employee transfers. Other factors which can be taken into consideration include: - Percentage of time spent - The value given to each part of the business by the employee - The terms of the employment contract showing what the employee could do - The allocation of the cost of the employee s time to different parts of the business - Whether it is a temporary assignment Although a commonly applied rule of thumb is the 50% rule, the case law in this area indicates that there is no specific percentage of time which an employee must devote to a particular function before being considered assigned to it. For example a PA most of whose work related to a contract which transferred did not transfer as she was the PA of a manager who had little or no connection with contract transferred. (see CPL Distribution Ltd v Todd [2003] IRLR 28).
4 Top Tips on Outsourcing Agreements Below is brief list of some factors to consider when entering into an outsourcing agreement and ensuring they are appropriately reflected in the agreement: Consider what warranties you are required to give under the agreement and whether they are reasonable i.e. warranting the existing terms of employment or employee liability information. Data protection issues the provision of employee liability information pre-transfer raises data protection issues as the information will include employees personal data. Care should be taken to ensure information is anonymised or the employees consent should be sought to the processing of their information. Consider how pay and benefits are being apportioned and whether the pricing of the service includes an indemnity that you are effectively picking up the liability for any TUPE dismissals? Consider who will be covering the cost of pre transfer liabilities, liabilities during the agreement and after termination. Do you need or require control over hiring, firing and transfer of employees? Do you want to impose a moratorium on change to terms and conditions post transfer to maintain employee relations? Termination provisions be careful of contractors seeking indemnities if 2 nd generation transfer employer does not match existing terms and conditions. For local authorities remember your obligations under the s.52 statutory guidance and consider clauses which must be included in your contract with any third party as a result. Ensure that appropriate pension provision is being made for transferring employees. Instruct the administering authority to obtain an actuarial assessment of the employer s contribution rate. Consider the apportionment of pension liabilities and whether this requires to be reflected in the agreement.
5 What do you as the transferee need to think about? The tips below are intended to provide a brief guide on the issues which you should consider when employees are transferring to you. This may occur for example when you as a local authority decide to bring services back in-house or if you are an ALO or shared services vehicle which has been created to deliver services previously delivered by a local authority. Employee locations and whether these will require to change as a result of the transfer. Check the employment contract will this involve a change to the employees terms and conditions? Does a statement of change of particulars employment require to be issued in terms of s.4 Employment Rights Act 1996? Collective agreements any agreements relating to transferring employees transfer including any terms in a contract incorporated by collective agreement. The question of whether a transferee will be bound by subsequent collective agreements made (e.g JNC pay awards) post-transfer is currently before the ECJ. Union recognition this may transfer if, after the transfer, the employees/undertaking maintain a distinct identity. If on the other hand they are immediately absorbed into a larger workforce, it may not. Equal pay issues the current case law provides that for the purposes of equal pay an employee who has transferred to a new employer can use an employee who has remained with the original employer as a comparator on the basis that the equality clause bit prior to transfer (Gutridge and others v Sodexo Ltd and North Tees and Hartlepool NHS Foundation Trust). Changing terms and conditions must be unconnected with the transfer. Harmonisation alone is generally not accepted as a permitted change. There must be some change in the numbers of function of the workforce to necessitate contractual changes. These can be difficult to implement. New joiners avoidance of a two tier workforce.
6 Secondment agreements: the issues Secondment agreements on a mass scale are sometimes used as a means of seeking to keep the employees from changing employers. This raises issues about whether such arrangements can effectively thwart TUPE s operation. However leaving that aside - if this is the preferred option, care should be taken to ensure that a true secondment arrangement is reflected. Below are some tips on what should be considered before entering into a secondment agreement: Ensure that there is an agreement in place between you and the host organization. Consider whether a variation to the employee s current terms and conditions is sufficient or whether a new agreement is required? The length of the secondment will this be of finite duration for a particular project? When will the parties be able to terminate the agreement? Can the secondee be replaced by another employee? What will the secondee be doing during the secondment? Is this covered by their current contract? Is further variation required? Responsibility of the secondee who will be responsible for day to day management? Payroll? Payment of secondee s holidays? Who will be liable for the secondee s behaviour? i.e. third party harassment issues. What happens when the secondment ends? Does the secondee return to their original position? What about pay and benefits awarded in their absence? Useful links (s.52 guidance) (ACAS guidance on TUPE) Contact Lesley Murphy Partner, Employment Harper Macleod LLP lesley.murphy@harpermacleod.co.uk 4 November 2011
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