HR Conference 2014 TUPE Tuesday 20 May 2014 Jane Klauber and Chris Mansi
When will you encounter TUPE? Business transfer. Change of service provision (outsourcing, insourcing, re-contracting). Not mutually exclusive.
Business Transfer Transfer of an economic entity that retains its identity. Economic entity = organised grouping of resources with the objective of pursuing an economic activity.
Service Provision Change (1) An organised grouping of employees situated in GB whose principal purpose is to carry out the activities concerned on behalf of the client. The client must intend that after transfer the activities will be carried out by the Transferee. The activities must not be the supply of goods for the client s use.
Service Provision Change (2) The activities before and after must be fundamentally the same. They must not be so split up that they are not fundamentally the same i.e. it must be possible to identify the destination of the activities. There must be an organised grouping of employees working for the client, put together for that purpose. Employees permanently working within the grouping will be assigned and will transfer. Directors of the organisation, not carrying out the services may not be assigned even if they spend a significant amount of their time on the contract if their roles are largely strategic..
In practice: Service Provision Change (3) Identify the activities Will they be fundamentally the same (fact and degree) Enterprise Management Services v Connect-Up Ltd. EAT held that 15% reduction in work and fragmentation of services excluded TUPE Johnson Controls Ltd v Campbell. Largest client (80%) stopped using taxi administrator and used own secretaries to book cabs. TUPE excluded. Whether immediately before transfer there is a dedicated group of employees whose principal purpose is carrying out the activities.
Service Provision Change (4) TUPE may not apply where:- Employees are working for a number of clients. There is no dedicated group of employees.
Service Provision Change (5) Issues If services transferred to more than one contractor (fragmentation) usually the contractor who has inherited the majority of services will be Transferee. If services have been sub-contracted, sub-contractors employees will transfer. Important that sub-contracts mirror the head contract and include appropriate exit provisions.
Employment Implications of TUPE Automatic transfer. Unless employee objects. All contractual rights and liabilities transfer except occupational pensions current terms and conditions; collective agreement if incorporated; recognition agreement if transferring employees remain distinct; redundancy pay; holiday pay, sick pay, arrears of pay; working time, minimum wage claims; unfair dismissal, discrimination, breach of contract.
Pensions While benefits relating to old age, invalidity or survivors under an occupational scheme do not transfer, rights relating to redundancy and early retirement are not excluded. Where Transferor offers an occupational scheme Transferee must offer a reasonable alternative and make a matching contribution up to 6% of basic salary. Where no occupational scheme contractual contributions transfer. Where a Transferee has reached staging date, must auto enrol transferring staff.
The TUPE Process Information and Consultation (1) Transferor must provide to Transferee:- ID of transferring employees. Ages. Any collective agreements. Statements of particulars. Any grievances/disciplinaries/court proceedings in previous 2 years or potential legal action. At least 28 days before transfer (formerly 14). No substitute for Due Diligence.
The TUPE Process Information and Consultation (2) Transferor and Transferee must provide information to representatives of staff who will be affected by the transfer or measures taken in connection with transfer. The fact of transfer, reason and approximate date. Legal, economic and social implications. Whether the employer envisages taking any measures. Transferor must disclose whether Transferee envisages taking any measures. NB. Consultation of 60 days for pension changes (50 or more). Measures not defined but interpreted broadly. Consultation is required if any measures to be taken. Transferee must notify Transferor of any Measures. If pre-transfer consultation or collective redundancy transferee and transferor representatives will need to be consulted. From 31 st July microbusinesses (10 or fewer) can inform and consult employees directly.
Varying Terms and Conditions Pre January 2014 variations by reason of and connected with transfer were void unless ETO reason. Post January 2014 reasons connected with transfer are not automatically void. If the variation is the transfer the changes are void even if the employee agrees. Changes can be agreed if the contract permits changes are favourable to employee the variation is not connected to transfer in some insolvency situations (with agreement of employee representatives) For an ETO reason if employee agrees. Harmonisation is not permitted. An employee can still resign if faced with substantial change to their material detriment. Since January changes to employment contracts incorporated from collective agreements Transferee is not party to can be amended as long as no less favourable overall.
ETO Reasons Economic, technical or organisational reason necessitating a change in the workforce. No statutory definition. Must entail a change in the numbers or functions of staff 2014 change relocation can be an ETO reason. Still need to consult to obtain agreement.
Dismissal Normal unfair dismissal law applies, TUPE provides additional protection. Dismissal by reason of transfer is automatically unfair. Unless an ETO reason. Under 2014 rules dismissal connected to the transfer is not automatically unfair but query the distinction. A Transferor cannot rely on Transferee s ETO reason. Therefore if the Transferee needs to make redundancies, he has to dismiss post transfer. Employees faced with a substantial change to their detriment can resign as constructively dismissed.
Redundancy Potentially an ETO reason. 2014 changes allow Transferee to elect to consult pre transfer with Transferor s agreement where 20 or more redundancies. Liability for failure to comply with collective redundancy regulations lies with Transferee. Possible to have separate representatives for TUPE and redundancy and consultations will be concurrent. If (which is the norm) no pre transfer consultation, consultation commences post transfer.
Questions?
Contact Details Jane Klauber Partner Russell-Cooke 020 8394 6483 Jane.Klauber@russell-cooke.co.uk Chris Mansi Chief Executive Officer Community Options 0208 290 3878 Chris.Mansi@community-options.org.uk