Q What transfers are covered by TUPE 2006?
A TUPE 2006 widens the scope of a “relevant transfer” to specifically include contracting out, contracting in and re-tendering. For there to be a relevant transfer, there must be “an organised grouping of employees which has, as its principle purpose, the carrying out of activities concerned on behalf of the client”. In other words, doing the work that is being transferred.
Q Are there any exceptions?
A Single specific events, short-term services and activities concerned wholly or mainly with the supply of goods are not covered, but it is not yet clear how this will be interpreted. The definition also fails to deal with situations where services are split between more than one service provider.
Q When can amendments be made to the terms and conditions of transferring staff?
A Only where the principle reason for the variation is an economic, technical or organisational (ETO) reason entailing changes in the workforce, or in some insolvency situations where variations are agreed with appropriate representatives.
It is still not possible to justify a change for the purposes of harmonising terms with those of existing employees. In this situation, an employer would need to terminate the employment of the transferring employees, and then immediately offer to re-engage them on the new terms and conditions. However, this gives rise to the risk of unfair dismissal claims.
Q Are transfer-related dismissals lawful?
A A dismissal will be automatically unfair if it is because of the transfer or for a reason connected with it, unless there is an ETO reason for changes in the workforce. However, staff must still have one year’s service to bring a claim unless they can argue unfair dismissal for asserting their statutory rights under TUPE.
If there is to be a change to working conditions as a result of the transfer that is a “material detriment”, employees will be able to resign and claim unfair dismissal. This is not as strict a test as a fundamental breach of contract for the purposes of a constructive dismissal claim, and there is no entitlement to notice pay or to the statutory dismissal procedures.
Q Are there any additional obligations for transferors/transferees?
A TUPE 2006 imposes a duty on the transferor to provide certain information to the transferee about employees who are transferring, including:
- the identity and age of employees
- their statements of terms and conditions of employment
- any disciplinary proceedings or grievances (under statutory procedures) issued in the preceding two years (irrespective of Acas guidance and data protection obligations)
- any court or tribunal cases brought in the preceding two years, or which the transferor has reasonable grounds for believing an employee might bring
- any collective agreement which will have effect after the transfer.
Information must be no more than two weeks old and any changes must also be notified. It is not possible to contract out of this obligation. The tribunal can award the transferee compensation starting at a minimum of 500 per employee for whom the information was not provided.
It is advisable to have comprehensive provisions about the ongoing notification of employee information throughout the provision of the services in the transfer agreement. This will ensure the client remains aware of how the services are being provided, and will assist when structuring any future transfers or service provision changes.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Q Are there any other major changes?
A TUPE 2006 also introduces joint and several liability for a failure to inform and consult. Therefore, it is important that the parties undertake this exercise collaboratively or, if one party is going to take responsibility for this (usually the transferor), that appropriate warranties and indemnities are included in the transfer agreement.
Changes to the territorial application of TUPE mean that staff who work overseas may also be caught by the transfer. The scope of a transfer must be carefully considered at the outset.
Q What should we do now?
A The regulations apply to any transfer that takes place on or after 6 April 2006. Further transitional provisions exist for the duty to provide employee liability information, and information and consultation obligations. You should review proposed transfers and transfer documentation now to see whether they fall within TUPE 2006. Existing outsourcing arrangements should also be reviewed to ensure that appropriate provisions are in place when the service provision comes to an end.
1 comment
I live in a block of apartments and it has been decided to deploy the present management and go RTM. We have been informed that the RTM management will be responsible for the Eployment of the Scheme manager once the change is in place even though we are employing another management company. Is this True? and what exactly will the RTM company be responsible for
Comments are closed.