TUPE
'Landslide Fears' - Partners leading decision
 |
Many people have heard about 'TUPE' but few people know what it really means. Partners have specialist skills in this area. A quick Google of a recent case of ours- Royden -v- Barnetts Solicitors brings up around 50 legal reports on its implications. The Royden case is the first example of the application of the recently introduced 'service provision' transfer rules. These rules were introduced in 2006 and are often called 'new style' transfers. |
The Royden case made front page news- 'Fears over TUPE claim 'landslide'- Law Society Gazette- 19 03 09 and has major implications for any employer engaged in the provision of all kinds of services. Most employers are unaware of the rules and the significant financial costs of getting things wrong.
You can download a copy of the full decision from our Press page.
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 back in 1981 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 servicing that client. If the service provision contract moves to another provider then so do the staff. The Regulations also apply where the client outsources the work or where it has done so and then brings the staff back 'in house'.
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 cripple a business.
Here are some basic guidelines:
- When work transfers, always take legal advice about the implications of TUPE before taking any major step
- Changing contracts, or even broader working conditions can justify constructive dismissal claims
- There is a new rule preventing employees from 'material detriments' 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!
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. 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.
To make an appointment Click Here or contact us for an informal discussion Contact