TUPE ADVICE FOR COMPANIES OUTSOURCING, BRINGING CONTRACTED WORK IN HOUSE OR TRANSFERING SERVICES FROM ONE CONTRACTOR TO ANOTHER

WHAT IS TUPE?

TUPE is the Transfer of Undertakings (Protection of Employment) Regulations 2006, as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014.

The TUPE regulations can apply when a company is sold, activities are outsourced, brought in-house, transferred or a contract for services is moved from one provider to another. 

Employees from the newly-acquired business, service or contract will transfer automatically to the incoming employer.  Their terms and conditions of employment (apart from occupational pensions) and continuity of service transfer with them and they also receive certain protection around dismissal and redundancy.

There are impacts for: 

• The employer who the employees are transferring from (also known as the outgoing employer/the old employer/the transferor).
• The employer who is taking on the employees who are transferring (also known as the incoming employer/the new employer or the transferee).
• The affected employee, including any employees remaining with the outgoing employer and existing employees of the incoming employer as well as those who are transferring.

RIGHTS FOR TUPE EMPLOYEES

When an employee transfers under the TUPE regulations, the following rights and obligations, powers and liabilities also transfer with them to the incoming employer:

• Contracts of employment, including all terms and conditions of employment, such as pay, commission and bonus entitlements, holiday entitlement, job title and function and sick pay provisions.
• The employer's 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.

Employees who transfer from the outgoing employer to the incoming employer are not regarded as dismissed under TUPE, so a transfer does not trigger an entitlement to redundancy pay or pay in lieu of notice unless there is an actual dismissal. 

The incoming employer takes over any collective agreements made by or on behalf of the outgoing employer in respect of any of the transferring employers 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.

THE TUPE PROCESS

Stage 1

Outgoing Employer: At this stage, the outgoing employer should consider whether to: 

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

Incoming Employer: At this stage the incoming employer should:

• Consider informing trade unions and employees representatives/ employees of a potential purchase/bid
• Weigh up the pros and cons of committing to a transfer/ service provision
• Begin to construct a TUPE process plan

Stage 2

Outgoing Employer: At this stage the outgoing employer must:

• Inform/consult the affected employees, about the transfer and any measures
• Identify who will transfer
• Provide Employee Liability Information (ELI) to the incoming employer at least 28 days before the transfer date- this information must be accurate or the incoming employer may apply to an employment tribunal for compensation which starts at a minimum of £500 for each employee for whom the information was not provided or was incorrect

Incoming Employer: At this stage the incoming employer must:

• Inform/consult with the affected employees about the transfer and any measures 
• Identify who will transfer
• Request ELI from the outgoing employer at least 28 days before the transfer date.
• Introduce WINNS Services and provide the affected staff with the Employee Handbook and the WINNS Services website so they can look up the company and familiarise themselves with the services we provide. 
• Ensure all ELI details for transferring employees have been passed to Head Office staff, to enable all necessary paperwork to be sent to employees via Panda Docs and completed before the transfer date.
• Let the employees know they will receive an Application Form, Job Descriptions, Welcome Letter and Employment Contracts via emails from Panda Docs and to assist them to complete these forms

Stage 3

Outgoing Employer: At this stage the outgoing employer loses the transferring staff and:

• Must inform/consult about the transfer with remaining staff
• Should ensure that all remaining employees are managed, settled and clear about their duties. 

Incoming Employee: At this stage the incoming employer gains the transferring staff and:

• Must inform/consult the affected staff about the transfer
• Should ensure that all employees/teams are managed, settled and clear about their duties. 

Stage 4

Outgoing Employer: At this stage the outgoing employer: 

• Must inform/consult about potential redundancies (if any)
• Should inform/ consult with remaining employees in general as good practice to preserve food morale
• Should address concerns to avoid drops/falls in performance and quality of work.

Incoming Employer: At this stage the incoming employer: 

• Must inform/consult with all employees about potential redundancies (if any)
• Should inform/consult with all employees in general and ensure reasonable allowances are made whilst employees adjust and integrate
• Should review the effectiveness of procedures.

**At all stages of the TUPE process, the incoming employer should be meeting regularly with affected employees to reassure and support them throughout this process and ensure they understand their rights**

TUPE AND TERMINATING EMPLOYMENT 

If an employee is dismissed by either the outgoing or incoming employer before or after a transfer and the sole or principal reason for the dismissal is the transfer, it will be automatically unfair. 

If the reason for the dismissal isn’t the transfer, it won't be automatically unfair but it may still be an unfair dismissal if the employer hasn’t hollowed a proper redundancy or dismissal procedure (see the Disciplinary and Grievance Procedure)

Employees who believe that their Terms and Conditions have been substantially changed, to their detriment before, during or after a transfer have the right to terminate their employment and claim constructive unfair dismissal at a tribunal. TUPE classifies these types of resignations as dismissals. If the sole or principal reason for the change was the transfer, the dismissal will be automatically unfair. If the reason for the change is not the transfer the dismissal will only be unfair if the employer acted unreasonably. 

TUPE AND REDUNDANCY

Employers are often able to minimise or prevent redundancies and other dismissals when transfers take place. However, there will be occasions when they cannot be avoided.

Where there are fewer than 20 employees being made redundant within a 90-day period, there is still a legal requirement to consult with employees individually but there are no prescribed time limits in which to do so. Employers must first consult with a recognised trade union where they exist, and if there is no recognised union, then with elected employee representatives. 

EMPLOYEES OBJECTING TO THE TRANSFER

Some employees may tell their employer that they refuse to transfer. If the employee then wishes to resign before the transfer they should submit their objection to the transfer of their employment to the outgoing employer as this will prevent them from transferring and their employment will cease.  In these situations:

They will be treated as having resigned from their current employment. This would usually involve a need for them to work and be paid for their notice period.

• They will lose any continuity of employment under their current contract of employment and any associated employment rights that have accrued. 
• Their employment will come to an end at the point of transfer. 
• They will not become an employee of the incoming employer and they will not remain an employee of the outgoing employer.
• They will not be entitled to any additional payments such as redundancy payment. 
• They will be entitled to any outstanding wages owed and payment for any accrued but untaken annual leave when their employment ends. 

In these situations where the resignation is of a valid constructive dismissal, the employee will not be entitled to claim unfair dismissal. 

If a transfer has not yet taken place, the outgoing employer may- if they choose- offer alternative vacancies to any employee (objecting or otherwise) who is assigned to the group but does not wish to transfer. If such a decision takes place after the ELI has been provided to the incoming employer, the outgoing employer will need to inform the incoming employer that the employee will no longer be transferring. 

If an Employee resigns after the transfer their employment will have already transferred, they will therefore not normally be able to object to the transfer and will be resigning from the incoming employer, However, if an employee had not been told about the TUPE transfer or given the name of the incoming employer, employment tribunals may allow post-transfer objections to be heard, provided they are made as soon as the employee learns of the transfer. 

Employers should not assume that an informal protest or grievance is enough of an indication that the employee has both objected and resigned from employment. They should ask for confirmation in writing that the employee has formally objected to the transfer of their employment. Similarly employees should ensure they submit their objections in writing. A record makes it clear the employee has understood the implications of objecting in case there is any subsequent dispute over the matter. 

FAILURE TO INFORM OR CONSULT AFFECTED EMPLOYEES

Incoming and outgoing employers must comply with the information and consultation requirements as they can be liable for a failure to consult if employees or representatives challenge this at a tribunal. However, time constraints may make this difficult, particularly when the outgoing employer has no elected representatives in place and has to arrange consultation themselves. 

Failure to inform/consult can impact employment relations:

• An employer who does not inform/consult with employees runs the risk of the transfer not being as successful as it should be. If employees are not kept informed, they may become concerned about the impact of the transfer of their job security and unsettled because they cannot plan for their future. 
• Transferring employees may have never heard of the incoming employer and doesn't know what kind of organisation they are. This uncertainty may cause resentment leading to a drop in morale and loss of focus on work. 

Failure to inform/consult can have legal consequences:

• If the complaint was about failure to elect representatives, the employer would need to show they had complied with election requirements. If they can show they have arranged an election as soon as practicably possible and allowed reasonable time to consult afterwards, they will be deemed to have complied. 
• If the complaint was about the outgoing employer not providing the incoming employer with information about the transfer or any measures despite being asked, the incoming employer can be added to any proceedings. 

Failure to inform/consult can be expensive for employers:

• Either or both employers can be liable for compensation of up to 13 weeks gross uncapped pay for EACH employee affected by the transfer based on the seriousness of the breach. The award is 13 weeks in total, it is not 13 weeks per employer, so if both employers are found liable, they share the amount between them. This applies even if only one employee or their representative brings a claim.