The transfer window
Be aware of employees’ rights when a change of service provision occurs, warns Marc Long, partner at Clarke Willmott
In the world of competitive tendering, the word ‘TUPE’ can strike dread into many a person. TUPE - or the Transfer of Undertakings (Protection of Employment) Regulations 2006 to give it its full name - has one simple aim: to preserve the rights of staff whenever they transfer from one employer to another.
When does TUPE apply?
If staff are moving from one employer to another pursuant to an acquisition or sale of assets, or following a competitive tendering process, the parties need to recognise that TUPE may apply to those employees. While the regulations can apply when assets are transferred from one person to another (a business transfer) the more common application of TUPE in a social housing context is when there is a change of service provision.
This change normally takes place in three situations:
- when a service undertaken previously by an employer is awarded to a contractor;
- when a contract is assigned to a new firm during a re-tendering process and the contract is withdrawn from the current contractor;
- when a contract ends and the service is taken back in-house by the former client.
Of course, the fact a contract has moved from one party to another is only relevant, as far as TUPE is concerned, if staff are working on the contract. For example, if contractor A wins the service contract from contractor B, what happens to the staff of the losing contractor? If TUPE applies, those staff can find themselves becoming the employees of the new contractor automatically (unless they formally object to the transfer).
Perhaps more problematically, staff who were considered to have performed poorly for contractor B could move across to contractor A and end up still working on the same contract.
TUPE is also very relevant in relation to the management of housing stock and the establishment or disbanding of arm’s-length management organisations. When an ALMO is established or wound up by a local authority, staff will be transferred under TUPE on the basis that there has been a service provision change.
What else transfers?
When staff move from one employer to another, the new employer inherits all rights, liabilities and obligations in relation to the transferring employees - including any outstanding claims.
Similarly, staff transfer on the same terms and conditions of employment, and their continuity of employment will also be preserved.
It follows that any contractual variation by the new employer is void if the sole or principal reason is connected with the transfer itself. Given that most changes will be, in some sense connected with the transfer, harmonising contracts post-transfer can be fraught with difficulty.
Common mistakes made by employers include: not knowing that TUPE exists; failure to inform and consult; and dismissing staff without realising a dismissal related to TUPE is automatically unfair.