TUPE

Question 1

When can TUPE apply?

Answer 1

• A company is sold
• Activities are outsourced
• Activities are brought in-house
• Activities are transferred
• A contract for services is moved from one provider to another

Question 2

What does TUPE refer to?

Answer 2

Transfer of Undertakings (protection of employment) regulations

Question 3

What are the 2 situations that TUPE may apply?

Answer 3

1. Business Transfers

2. Service provision changes

Question 4

What does Business Transfer refer to?

Answer 4

This is when a part of the business moves to a new owner or merges with another business to make a brand new employer. TUPE will not apply if there are just shares, limited assets or equipment transferring to a different owner.

Question 5

What does service provision changes refer to?

Answer 5

• A contractor takes over activities from a client (outsourcing0
• A new contractor takes over activities from another contractor (re-tendering)
• A client takes over activities from a contractor (insourcing)
  TUPE will only apply if there is a supply of service.

Question 6

What must exist immediately before the transfer?

Answer 6

1. The employees need to be organised into a group ready for transfer
2. Employees should be assigned to the group who will transfer
3. The client should remain the same
4. The work shouldn’t become overly divided
5. The work should be fundamentally the same after the transfer

Question 7

What rights and obligations will transfer with employees when they TUPE?

Answer 7

• Contracts of employment/T&Cs (e.g. pay, commission, bonus, holidays, job title, sick pay). This also includes any accrued entitlements
• Continuity e.g. continuous service date
• Contractual provisions e.g. job, workplace, flexibility, restrictive covenants, restrictions outside of work.

Question 8

What are the 4 stages for the outgoing employees?

Answer 8

Stage 1 - Before Committing

• Consider whether to inform reps/employees of a potential sale/expiry
• Consider whether to bid or rebid for a contract or service (in service provision changes)

Stage 2 - Prepare for transfer

• Inform/consult about the transfer and any measures
• Identify who will transfer
• Provide ELI(Employee Liability Information) to the incoming employer at least 28 days before the transfer

Stage 3 - The transfer

• The outgoing employer loses staff and must inform/consult about the transfer with the remaining staff
• Should ensure that all remaining employees are managed and settled and clear about their duties.

Stage 4 - After the transfer

• The outgoing employee must inform/consult about potential redundancies (if any)
• Should inform/consult in general as good practice to preserve good morale.
• Should address concerns to avoid drops in performance and quality of work.

Question 9

What are the 4 stages for the incoming employer?

Answer 9

Stage 1 - Before Committing
- Incoming employer should consider information trade unions and employee reps/employees of potential bid/purchase.
- Weigh up pros and cons of committing to transfer/service provision.
Begin to construct a TUPE process plan.

Stage 2 - Prepare for transfer
- The incoming employer must inform/consult about the transfer and any measures.
- Identify who will transfer
- Request the employer liability information to find out terms and conditions of the transferring staff and provide accurate budgetary planning.
Provide the outgoing employer with information about the transfer and actions that will be taken to allow them to consult with the affected employees.
-Tell the affected staff and reps about the transfer so its understood why the transfer is taking place.
- Consider asking the outgoing employer for permission to meet new employees before the transfer.
- Draw up plans to integrate new staff, explain where the new staff will be based or how the work will be carried out.
- Plan an introduction process to held new employees.

Stage 3 - The transfer

• The incoming employer gains the transferring staff and must inform/consult about the transfer
• Should ensure that all employees/teams are settled and clear about their duties.

Stage 4 - After the transfer

• The incoming employer must inform/consult about potential redundancies (if any)
• Should inform/consult in general and ensure reasonable allowances are made whilst employees adjust and integrate
• Should review effectiveness of procedures.

Question 10

What should an employee consider before TUPE?

Answer 10

• Does TUPE apply to this transfer?
• Doe the benefits of the transfer outweigh the risks?
• Is there sufficient work for 2 sets of staff?
• Will there be a need for redundancies?
• What will the employment liability under the transfer be?
  Is there already an appropriate channel for information and consultation, or does one need to be considered?

Question 11

When preparing for the transfer, what actions should be taken by both employees?

Answer 11

• Identify who will manage the transfer. Employers will need someone to make, follow and update plans as the transfer progresses
• Engage each other about the transfer, have clear channels of communication
• Engage with trade union officials and elected reps
• arrange for the election if none are already in place. Offer training for the role, and provide facilities to enable them to carry out the role.
• Use existing communication channels to provide information directly to employees.
• Continue to communicate with reps about the transfer on a 1:1 basis.

Question 12

What is employee liability information (ELI)?

Answer 12

This is information that is requested 28 days before the transfer. The information will be:

• Age and identity of the employee
• The written particulars required to be given to the employee under s1 of the Employment Rights Act 1996 (i.e. Contract)
• Any live or active disciplinary or grievances in the past 2 years
• Any outstanding claims the transferring employees have against the outgoing employer.
• Any collective agreements which are in force

Question 13

What could the consequences be or not submitting ELI within the 28 day time limit.

Answer 13

The incoming employer could apply to the employment tribunal for compensation which can be a minimum of £500for each employee.

Question 14

What is due diligence?

Answer 14

Extra information an employer might need for a TUPE transfer. Due diligence additional information is voluntary and is only effective where there is a commercial contract between the outgoing and incoming employers. This is because the information delivered as part of a due diligence process forms the basis of warranties and indemnities in the commercial agreement concerning the TUPE transfer.

Question 15

What might you need due diligence for in a business transfer?

Answer 15

• Assess the risk
• Confirm the viability of the transfer
• Identify employment costs and inherited liabilities

With Business Transfers, the incoming employer frequently seek indemnities and warranties from the client or outgoing employer to ensure that the information supplied is correct.

Question 16

What might you need due diligence for in a service provision transfer?

Answer 16

• Assess risk
• Determine the level at which to make a bid
• Identify employment costs and inherited liabilities
• Decide if the service can be provided with the budget available.

Warranties and indemnities are less common in service provision transfers because there has to be a contract in existence between the parties in order for these to be effective.

Question 17

What is it meant by TUPE measures?

Answer 17

These refer to the plans to change employment arrangement by the incoming employers. These measures must be consulted with the impacted employees. The measure can include;

• Redundancies
• Workplace relocation
• Changes to staff pay dates
• Different working patterns
• Different pension arrangements

Measures are often interpreted widely and include non-contractual and organisational matters. If there are no measures, employers should inform employees and provide information about the transfer only, although this is likely to be infrequent.

Question 18

Employees who will be TUPE’d must be informed in writing. What things must this include?

Answer 18

• The fact the transfer stacking plan, approximately when and why
• Any social, legal or economic implications for the affected employees for example a change in location or risk of redundancy
• Any measures that employers expect to take in respect to their own employees.
• The number of agency workers employed, the departments they work in and the type of work they are doing (if agency workers are used)
• The outgoing employer must provide information about any measures which the incoming employer is considering taking in respect of affected employees.

Question 19

Who are the employee reps?

Answer 19

Either:

• Recognised trade union reps
• Formally elected employee reps
• Reps specifically elected for TUPE consultation.

Question 20

What is consultation for?

Answer 20

• Both employers should consult.
• Employers must consider views before making final decisions
• Don’t need t accept the suggestions, but should provide a business reason as to why they are not.

Question 21

How is it insured that a meaningful consultation takes place?

Answer 21

• Allow the rep access to affected workforce
• Provide training, facilities and time for consultations
• Seriously consider what the reps say.

Question 22

What should the incoming employer do about pensions?

Answer 22

The incoming employer should auto-enrol the employees into their own scheme. Occupational pensions don’t transfer under TUPE, however, if transferring employee who were members of an occupational pension scheme, the incoming employer must offer them a pension which is;

• Final salary or career average
• A scheme that provides the came benefits
• A scheme that matches the outgoing employers contributions.

Question 23

What considerations are there for TUPE and dismissal

Answer 23

• If an employee is dismissed for the sole purpose of TUPE then that is automatically unfair.
• If an employee is dismissed but not solely for TUPE , then that could be unfair if the proper dismissal and redundancy processes are not followed.
• The employee could claim constructive dismissal if T&Cs have substantially changes.

Question 24

What employment rights and liabilities transfer over in TUPE?

Answer 24

• Contracts of employment, including all terms and conditions of employment such as pay, commission and bonus entitlements, holidays, job title and function, and sick pay provisions. Terms and conditions also include any implied terms such as a lorry driver needing a valid driving licence to operate.
• The employers’ contractual provisions such as job or workplace flexibility or mobility, restrictive covenants, or restrictions on outside work where this applies
• Continuity of service
• Accrued entitlements such as where a bonus or holiday entitlement has built up over a period of time, but has yet to be taken or paid
• Liability for the outgoing employers’ acts and omissions in respect of the transferring employees are passed across under the TUPE regulations to the incoming employer.
• Restrictive covenants: providing that the covenant is still relevant and enforceable as a result of the transfer, they will transfer.
• Pensions and early retirement: pensions have special rules attached to them. Existing early retirement provisions may transfer over and should be handled by the incoming employer in a manner consistent with previous practice. The law is complicated in this area and employers should seek specialist pensions advice.

Question 25

What happens to Union Representation during TUPE?

Answer 25

Under the TUPE regulations, union recognition only transfers where the business unit keeps its identity and is not merged into the incoming employers’ wider organisation. However to maintain good employment relations, the incoming employer should discuss ongoing collective representation arrangements for the transferring employees with the appropriate trade unions, ideally ahead of the transfer.

Question 26

Are there any GDPR issues with due diligence and ELI?

Answer 26

Yes. Outgoing employers often receive requests for information either not included within the TUPE requirements or at the early stage of the bidding process. Where possible they should release the information in an anonymised form so that the individuals cannot be identified but otherwise only with the consent of individual affected employees.

Question 27

What should be considered with transferring Terms and Conditions?

Answer 27

• Have all the appropriate outgoing employer’s policies, staff handbooks etc been sent over? These often contain terms and conditions of employment which may have been incorporated into individual contracts.
• Have any recently agreed changes to terms and conditions been fully agreed, implemented and are they reflected in the employment contracts? This can help remove any confusion prior to transfer.
• Are there any terms and conditions that may have been orally agreed and/or established by custom and practice but not recorded in writing? These are just as binding as written terms and need factoring in.
• Are there any trade unions recognised for bargaining purposes amongst the transferring staff? Secure details of collective agreements, recognition agreements, agreed facility time for union representatives and information and consultation agreements.
• Have variations to standard terms and conditions been agreed for particular employees, such as flexible working arrangements?

Question 28

What is the procedure for collective agreements.

Answer 28

The incoming employer takes over any collective agreements made by or on behalf of the outgoing employer in respect of any of the transferring employees and which were in force at the point of transfer*. These will include terms and conditions of employment negotiated through collective bargaining as well as the wider employment relations arrangements. Examples include the collective disputes procedure, time off facilities, training for union representatives, negotiated redundancy procedures or job security arrangements and flexible working arrangements.
After one year, employers can seek to renegotiate terms and conditions that derive from collective agreements provided that the overall contract is no less favourable to the employee.

Question 29

Can you change people’s terms and conditions once they have transferred over?

Answer 29

Following a transfer, employers often find they have employees with different terms and conditions working alongside each other and wish to change/harmonise terms and conditions. However, TUPE protects against change/harmonisation for an indefinite period if the sole or principal reason for the change is
the transfer. Any such changes will be void.
If employers and employees agree changes/harmonisation between themselves and the changes are challenged at tribunal, they are unlikely to be binding because the rights provided by the TUPE regulations cannot be signed away. This is so even if both parties have agreed the changes.
Employers seeking to change employee terms and conditions after a transfer sometimes offer other terms that are no less favourable or better than the employee’s TUPE terms and conditions. However, case law has established that employees may accept as binding those changes which are to their benefit whilst rejecting and challenging those which are less favourable.
Sometimes change may be valid if:
●● The reason for the change is not the transfer, for example the employer has secured a new order.
●● The terms of the contract allow the employer to make the change and the changes are not because of the transfer, such as a flexibility or mobility clause.
●● The sole or principal reason for the change is an economic, technical
or organisational reason entailing 5 changes in the workforce (ETO).
However, the employee must
agree the change.
Changes for an ETO reason can only be binding:
●● IF there is an economic technical or organisational reason (ETO) for the change, for example to do with the day-to-day running of the business.
●● AND the ETO reason “entails changes in the workforce”. This means there have to be changes to the numbers in the workforce (usually a reduction) or changes to job functions. Changes in financial terms and conditions will not be regarded as entailing changes in the workforce. For this reason the ETO is of limited use in practice when an employer just wants to change terms and conditions as no change in the workforce will be required or entailed. The ETO reason will, however work in redundancy situations because it will entail a change in the number or composition of the workforce.

Question 30

Can you make employees who are being TUPE’d redundant?

Answer 30

Yes you can. You need to ensure that the correct redundancy procedure is followed.

Where the incoming employer intends making 20 or more redundancies after the transfer, collective redundancy consultation may begin before the transfer if the outgoing employer agrees but the redundancies must only be made after the transfer by the incoming employer. If the outgoing employer makes pre-transfer redundancies at the request of the incoming employer, these are likely to be unfair dismissals. This is because the law does not allow the outgoing employer to rely on the incoming employers reasons for the dismissal. The two employers should try and agree between them who pays the termination costs as part of the commercial agreement.

Question 31

Who should you consult with in a TUPE Transfer

Answer 31

• employees who may be affected by the transfer such as those who will transfer
• colleagues of those who will transfer,
• colleagues in the new organisation who will be working alongside those who transfer.

Question 32

How soon in advance should people get the information about the TUPE transfer?

Answer 32

There is no set period of time by when the information must be delivered. The TUPE regulations state “long enough before the transfer to enable consultation to take place”.

Question 33

When would you not need to elect employee reps?

Answer 33

When the TUPE is in relation to a Micro-Business (less than 10 people) who do not have recognised trade union reps. However, you would still need to consult with the individuals.

Question 34

Do the same principles apply for the public sector?

Answer 34

When contracting out public sector services, the contracting public body will usually follow the principles set out in COSOP (The Cabinet Office Statement of Practice on Staff Transfers in the Public Sector). COSOP is similar to TUPE and protects the rights of public sector staff involved in transfers and ensures continuity of employment and terms and conditions and includes:

• transfers from the public to a private or voluntary sector body
• second and subsequent generation contracting where, when the contract was first awarded, staff transferred from the public sector
• transfers within the public sector
• transfers within the civil service.