TUPE: working conditions clause can trip up even the experts

HR managers may be best placed to handle key aspects of staff transfers under TUPE.

Imagine being told by your board that 23 unwanted, unhappy employees will be landing on your payroll shortly. You are told to absorb them with no fuss. ‘Oh, and by the way can you look into that new TUPE thingy… something to do with the new constructive dismissal rules?’

Paying the price

The recent case of Royden and others v Barnetts Solicitors illustrates how TUPE (Transfer of Undertakings (Protection of Employment) Regulations) rules can crop up unexpectedly with potentially disastrous consequences and how even a firm of solicitors can slip up.

This was the first case to deal with solicitors, but it has significant implications for any business that has a designated team looking after a particular client or one inheriting such a contract.

It also indicates how HR managers can help to make a virtue out of what seems a horrendous obstruction to implementing change in very tough economic times.

But back to TUPE. In addition to the old style TUPE, which covered a business transfer, the 2006 update protects employees where there is a ‘relevant transfer’ of ‘activities’ by a client. For example, when a group of employees is mainly working on one contract, if that contract moves, so do they.

This can be because of outsourcing, in-sourcing or where the services are transferred between providers.

Those employees whose principal purpose is carrying out the activities for the client, will transfer – subject to their existing terms and conditions. And any dismissal related to the transfer will be automatically unfair.

There is also a brand new softer constructive dismissal test. TUPE regulation 4(9) provides a right to claim automatic unfair dismissal where the transfer will involve substantial changes in the employees’ working conditions which are to their material detriment.

Risky business

There is always a risk of conflict when change occurs, and in Royden and others the main stumbling block was the additional travel time and expense that the employees would face.

This led to a mass resignation immediately after the transfer took place, at which point the total claims could have exceeded £400,000. Normally, the employer could use a ‘mobility clause’ to require relocation, but that doesn’t work where TUPE applies because the term ‘working conditions’ is not a contractual test so the travel time counted as ‘substantial changes’ to the employees’ ‘material detriment’.

HR holds the key

TUPE 2006 is horrendously complex. For example, the terms ‘material’ and ‘substantial’ will lead to massive complexity and much legal tomfoolery. But these definitions, in the right hands, could actually be the key to making the regulations work for managers.

That is why HR managers, rather than lawyers, are more likely to prevent litigation, as winning the hearts and minds of the employees is the first hurdle so that negotiations can be put on an even keel. Exchanges, often over-legalistic and inevitably passed on instantly by e-mail, can fan existing fears and create perfect conditions for conflict. The trick is to take the opposite approach, because in unlocking the fear of change, it is possible to identify individual detriments and to render them irrelevant for legal reasons.

Each employee is different. Those with families may have particular needs but only on particular days. With internet and remote access, a little flexibility with an agreement to review and adapt constructively could be all that is needed to take the sting out of staff transfers and create a genuine enthusiasm for the move.

Gordon Turner, principal, Partners Law (acted for Royden and others)

Key points

  • Look out for TUPE whenever contracts move
  • Ensure communications take place in an orderly, singular way, possibly through schedules
  • Give genuine consideration to the specific material detriments raised and avoid presumptions
  • Confirm decisions in writing.

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