TUPE
'Landslide Fears' - Partners leading decision
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Many people have heard about 'TUPE' but few people know what it really means. Partners have specialist skills in this area. A quick Google search will bring up some of our successes such as- Royden -v- Barnetts Solicitors - we also advised 120 criminal legal aid firms in relation to TUPE issues and the proposed 'best value tendering' programme proposed by the Government prior to a successful outcome for our clients.
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The Royden case made front page news- 'Fears over TUPE claim 'landslide'- Law Society Gazette- and has major implications for any employer engaged in the provision of all kinds of services. Most employers are unaware of the rules even though they have been in force for around 4 years. There are very significant financial costs of getting things wrong but some sound advice is often all that is required.
You can download a copy of the full decision and read about other TUPE successes via our Press page. In that case, the new employer ran most of the available arguments to resist the transfer of the staff and so Employment Judge Reed's disposal of the case is a helpful introduction to the kind of issues which crop up.
TUPE 5 things to keep employers out of trouble
If you are pitching for service provision contracts (or have just lost one in a tender) you should read this article in the Law Society Gazette (link attached) as it could save you thousands of pounds….
If you have any TUPE issues, do give me a call- 0844 800 9239
Old style and new style transfers explained
The full title for TUPE is the Transfer of Undertakings (Protection of Employment) Regulations 2006. As the name suggests, the Regulations were brought in to protect employees on business transfers. The 'Old Style' protection covered takeovers or mergers of a business or part of a business, requiring the new employer to employ the old staff on the same terms and conditions as before.
'New Style' transfers cover employers who have a major client with a designated team of employees providing services (rather than goods) to that client. If the service provision contract moves to another provider then so do the staff. The Regulations also apply where the client wants to outsource the work or where it has done so and then brings the staff back 'in house'. This often takes place after a tendering process.
Things to look out for…
The financial penalties for getting TUPE wrong are significant: contractual notice, unfair dismissal awards (currently up to £66,000 for lost earnings and 1 ½ week's pay for each year worked) and the 'protective award' (13 weeks' gross pay) can also bite where an employer fails to consult to the necessary standard. With a block claim, the potential awards could easily cripple a business or destroy the business initiative.
Here are some basic guidelines:
· When work transfers, always take legal advice about the potential implications of TUPE before taking any major step
· Changing employees' contracts, or even broader working conditions can justify constructive dismissal claims
· There rules prevent employees from suffering 'material detriments' in relation to substantial changes to working conditions and so intelligent and fair handling of the pre-transfer consultations is absolutely key
· In pre-contract stages, one of the main areas to focus on is the 'assignment test'- that is: which employers are wholly or mainly engaged on the particular service provision contract? - Only those who are actually transfer.
· Limit communications to singular exchanges and take legal advice on the contents. A misplaced email could ruin your chances!
· A recent case, involving another firm of solicitors, has made it clear that it is only the transfer of actual work and not the expectation of it which gives rise to TUPE implications, so simply being on a Panel in the hope of being contacted, is not within the Regulations.
· Another case has warned that it is not really legal documents which define whether TUPE applies; rather it is the reality of the situation. Employers cannot create contracts which suggest that no work will transfer if, on the ground, the transferee is the main service provider.
· Sometimes there is more than 1 new provider, in which case, the employer that takes the majority of the work, which inherits the staff under TUPE.
Planning ahead
There is no question that the Regulations are tough on transferee employers and also the end client because changes to service provision strategy tends to need a new approach and fresh minds on the job. The new Government may well amend the regulations for this reason but that will take time.
Inheriting staff with 'old school' thinking is in many ways against the spirit of evolution. However, if you think ahead, you can plan how your workforce is structured to your benefit. You may in fact want to lose staff if a major contract is withdrawn and so ensuring that TUPE does apply could save you a small fortune in notice and redundancy pay at a time when margins are tight.
Contact us for solutions
Whilst the law is very complex, once the correct legal structure is in place, commonsense and psychology are as important as legal knowledge. We can guide you on each and every step of the process and how to negotiate your way safely through business change.
To make an appointment Click Here or contact us for an informal discussion Contact