Weekly dilemma: transfers, terms and conditions

Q I’m an HR manager for a printing company that has just taken on facilities management staff from the local council. Do we have a duty to retain the old terms of their employment contracts or can we impose our own?

A If the TUPE regulations apply to the circumstances in which you have taken the staff on, you will be required to continue to employ them on their existing terms and conditions rather than imposing your own, subject to two specific exemptions.

TUPE stands for Transfer of Undertakings (Protection of Employment). The purpose of the regulations is to protect employees if the business in which they work changes hands. The effect of TUPE is that employees transfer with the business or undertaking, on the same terms and conditions and with their length of service preserved. Whether TUPE applies to you taking the staff in question is therefore the central issue.

TUPE applies to a transfer of a business or undertaking where what is transferred is an “economic entity” that retains its identity after the transfer. TUPE also applies to contracting-out and contracting-in exercises and to changes of contractor, all three of which TUPE refers to as “service provisions changes”.
If the staff came to you because you are contracting services to the council, this is likely to be a service provision change to which TUPE applies. If you are not contracting services to the council then whether or not TUPE applies will depend on precisely what was transferred to you from the council. As well as the staff you may have acquired (tangible or intangible) assets. 

TUPE will apply if what has been transferred amounted to an “organised grouping of resources that has the objective of pursuing an economic activity, whether or not that activity is central or ancillary”.

If TUPE does apply, any change to the terms and conditions of the transferred staff will be void. The exceptions to this are: if the change is either entirely unconnected to the transfer or if it is made for an “economic, technical or organisational reason entailing changes in the workforce”. 

If you want to impose your terms and conditions to harmonise the contracts with your other staff, it is unlikely that either of these exceptions would apply.

David Brown, associate solicitor, Simpson Millar

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