Tag Archives: civil service

TUPE or not TUPE

. . . or The slings and arrows of outrageous fortune

In Eddie Stobart v Moreman the Employment Appeal Tribunal (EAT) decided that, for there to be a TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) “service provision change” the group of employees had to be deliberately organised to service the particular  client. The EAT decided that, in the Stobart case, the fact all the employees happened to work on a shift that provided services to that client was not enough. The TUPE regulations define a service provision change transfer as applying when there is an:

“organised grouping of employees”, which has
“as its principal purpose the carrying out of the activities … on behalf of the client.”

The EAT decided where a combination of circumstances (largely shift patterns and working practices) meant that a group of employees were as a matter of simple fact working mostly on tasks which benefitted a particular client did not meet this test.

The EAT pointed out that TUPE does not say merely that employees should in their day-to-day work in fact principally carry out activities for the client in question – TUPE requires that the activities are the principal purpose of the organised grouping of employees to which the individual belongs.

Whether an individual employee works 50% or more for a particular client is not any part of the test under TUPE 2006. It was part of the test under the 1981 version of TUPE, but that wording did not continue into the current 2006 version of the Regulations.

There are still a number of grey areas left in TUPE – as it seems there have always been. For example – could an “organised grouping” have more than one “principal purpose”? It might be that the “time proportion” test is relevant here – applying to the whole grouping. Or perhaps “principal purpose” is to be judged by the priority of the work?

The world of work streams and dotted line reports has yet to be fully explored in the context of TUPE. Does work streaming mean no group has a principal purpose? Or should we be tempted to say that work streaming means no-one is part of an organised grouping of employees?

What difference does it make in real terms if a transfer is, or is not, covered by TUPE?

A)     If there is no TUPE transfer, then any workers who were working on the project/task/service will not go through to the new contractor as the new contractor’s employees.

  • It is the current employer’s job to find them alternative work, reassign them, or if necessary make them redundant.
  • Any liability for back pay or benefits remains with the current employer.
  • All unfair dismissal, discrimination, equal pay risks remain with current employer.
  • All contractual liabilities remain with current employer.

B)     If there is a TUPE transfer, then the same workers will (as a matter of law) become the new contractor’s employees (with their full service and contractual entitlements – save for pensions – intact).

  • It is the new employer’s job to find alternative work, reassign or if necessary make them redundant.
  • All the other liabilities under A) transfer to the new employer

Where an argument breaks out between the employers about whether TUPE applies, individual employees may feel lost in the no-man’s land of litigation between two employers who are having some kind of custody battle where no-one wants the kids.
HR on both sides can do a lot to make sure that the original tender documents (where they exist), pitches for business,  take on board the statutory TUPE obligations. HR can go beyond that, if allowed into the negotiating process early enough, and can help shape a contract for services that incorporates thinking about employees and service levels from the start.

Don’t forget the TUPE regulations are a set of minimums not a set of maximums.

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060
You can follow Annabel on Twitter
www.irenicon.co.uk
www.koffeeklatch.co.uk
www.balancingthebump.com

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Filed under employment law, TUPE

TUPE or not TUPE

. . . or The pangs of despised Love, the Law’s delay

For the last year or so I have been talking about TUPE on a regular basis, both in teleseminars and in person. So far, no employee engagement, talent management or onboarding specialist has turned up.

Is TUPE seen as a completely unrelated discipline or as a simple compliance exercise? This may be why so many of the questions I deal with are around “What do we have to do?” instead of “This is what we need to achieve…”

Consultation

The consultation elements of TUPE are key to success or failure. There are two employers – the current employer (transferor) and the future employer (transferee). The law treats the two for most purposes as if they are one employer, but not at this moment. The transferor has to give elected employee reps information about the transfer, and to state what measures it is proposing to take (sometimes known as a “measures statement”), and the ‘measures’ it expects the transferee to take. The transferor is required to consult the employee reps about its ‘measures’ – with a view to seeking employee agreement to them.

Misconceptions

Often that the transferor fails to organise TUPE reps, believing that there is a ’20 person’ threshold to this requirement. That threshold is a redundancy one – it does not apply to TUPE. There is no statutory timetable for TUPE consultation unless more than 20 employees are at risk of redundancy and the redundancy thresholds are triggered. It can be tricky to do a good consultation exercise in no time at all whatever the law says. Many HR departments think they have to consult only on proposed changes to contracts (most of which would be difficult under TUPE anyway) whereas the ‘measures statement’ should cover changes to the contractual terms (such as pension schemes so far as TUPE permits) but also to non contractual arrangements (e.g. discretionary sick pay and bonus schemes).

Measures

The transferee is required by TUPE to provide their ‘measures statement’ to the transferor in good time so that the transferor can pass it on to the employee reps. Sometimes the transferor will even allow the transferee access to staff to begin their own consultation process. But there is no requirement for the transferor to allow personal contact or meetings with staff prior to the transfer date. If the two parties are rival contractors (rather than a situation of client outsourcing), there can be little practical motivation for the outgoing employer to invest a lot of time in the consultation process for outgoing employees. Some employers simply make an announcement and say “your new employers will tell you everything when you turn up to work for them”.

Compliance is not much of a goal

The real problem for the transferee is not legal compliance, which can be fairly easily achieved in most circumstances. Difficulties arise because the incoming employees are bringing with them the whole psychological contract they had with their existing employer, along with their own personal set of misunderstandings about their contractual and legal entitlements, their expectations of how they should be treated, and their memories of how they were. They will be adding to that psychological contract how they are treated during this process – by the transferee and by their soon to be ex-employer, the transferor It’s a potent mix that can result in three way tribunal claims, disaffected employees and a lot of wasted time and effort.

If the transferee is “allowed in” prior to the transfer, the consultation process can be a wonderful way to start to understand these issues, and to arrange to bring those individuals into their new employment relationship with a better basis for working together. At any point consultation can also be the time when a mini ‘skills audit’ is done to see what training is needed to properly induct the new team members. It can be a ‘getting to know you’ process and a ‘checking we understand the data’ process. Alternatively, you can make this process into: ‘This is where we tell you what we want you to know, and you just listen and obey’.

The spirit of consultation is often overlooked in the rush to compliance, and many highly motivated and resourceful individuals start working for their new employer confused, angry and resentful. It is an extremely hard thing for some people to be sent to work for someone they have never met, never applied to work for or indeed wanted to work for. We need to recognise that, and build our processes accordingly. This is the first opportunity you have to show them how your ’employer brand’ really works – are you going to fail?

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.

Tel: 08452 303050 Fax: 08452 303060
You can follow Annabel on Twitter
www.irenicon.co.uk
www.koffeeklatch.co.uk
www.balancingthebump.com

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Filed under employment law, TUPE

TUPE and the Big Society

Charities who are tendering to provide services that are currently provided by local authority, civil service or quangos find themselves caught in the Transfer of Undertakings (Protection of Employment)  Regulations –  TUPE  which may apply where a change of service provider is taking place.

TUPE has the effect of putting the new employer in the legal situation they would have been in if they had employed the transferring staff from the day they started with their original employer (the transferor).  Outstanding liabilities under the contract will transfer through to the new employer – anything from accrued holiday, to back pay, equal pay claims as well as unfair dismissals relating to the transfer.

Government itself has created an extra problem for charities by agreeing with unions a set of protocols that go beyond the basic legal provisions of TUPE.   For example, under TUPE there is no obligation on an employer to create a final salary pension scheme, or to honour discretionary termination payments.  But the Cabinet Office Statement of Practice concerning Staff Transfers in the Public Sector sets out “there should be appropriate arrangements to protect occupational pensions, redundancy and severance terms of staff in all these types of transfer”.  Whilst this guidance has been revoked for local authorities, it has not been revoked for all of the public sector.

There is a significant difference between the redundancy entitlements of ordinary employees and civil servants.   An ordinary worker is entitled to statutory redundancy pay at a maximum allowable weekly pay of £430 whereas the civil service redundancy scheme has no limit and even has a minimum.  Statutory redundancy is calculated on age related multipliers of a week (or a week and a half, or half week depending on the age of the worker) whereas the Civil service scheme is calculated with multipliers of months at full pay.

Whilst charities do not always pay their existing employees at the statutory basics when it comes to contractual benefits, few charities are well enough funded to have staff on the same terms as civil servants.

For example:

Statutory entitlement Typical local government/civil service
Holiday 5.6 weeks including bank holiday 6.6 weeks including bank holiday
Sick pay SSP only 6 months full pay, 6 months half pay
Redundancy Statutory only maximum allowable weekly pay £430Years of service multiplied by weeks (or 1.5 weeks or 0.5 weeks, age dependant) No maximum weekly pay (minimums apply)Years of service multiplied by months
Pensions Stakeholder/NEST Final salary

Charities who are receiving staff via TUPE transfers find themselves paying higher benefits than they normally pay, with much higher termination payments if they cannot afford to keep the staff on.  Charitable funding is often  quite short term, often project by project, or year by year at best.  Such higher benefits and termination payments can risk the viability of the Charity itself if they are not foreseen and budgeted for.

Charities who intend the service to be provided by volunteers may be able to work around the TUPE problem if their existing delivery model is long standing and pre dates the transfer.  The situation is changing, but it is still a high risk scenario for many Charities to simply ‘pitch’ to provide services that are currently provided by salaried staff.

My experience of working with social enterprises and charities and helping them plan TUPE transfers is that much of the advice they are given encourages them to take on obligations beyond the ones they are obliged to in law (or even by the government’s own standards) and leaves them very vulnerable if there are changes in funding at a later stage.   A well planned tender to outsource work needs to properly evaluate the TUPE situation and prepare for it.

See our previous blog

To be continued

Christopher Head is qualified as a barrister.  He edited Harvey on Industrial Relations and Employment Law and  a director of Irenicon Ltd a specialist employment law team.  To join the conversation about TUPE you can join our free KoffeeKlatch teleseminar on TUPE by registering via http://koffeeklatch.co.uk/category/tupe/

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Filed under contract, employment law, free stuff, redundancy, TUPE