THE TUPE REGULATIONS

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THE TUPE REGULATIONS

• Shella Smith
• HR and Training Manager
• Basingstoke and Deane

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• Objectives
• Understand the TUPE Regulations and when they
  apply
• The ETO defence
• Varying contracts, dismissals and redundancies
  under TUPE
• Information and consultation requirements under
  TUPE
• Pension implications
• Recent cases and their implications

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Definition of the Regulations

• Derive from the Acquired Rights Directives 1977
  and 2001
• In the UK The Transfer of Undertakings
  (Protection of Employment) Regulations 1981 and
  2006 - TUPE
• Provides employment rights to employees when
  their employer changes as a result of a transfer
  of an undertaking

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The 2006 Changes

• Widened the Regulations to cover service
  provision changes
• New duty on transferring employer to supply
  information about the transferring employees to
  the new employer
• Clarification on when employers and employees can
  agree to vary contracts or dismiss when a
  transfer occurs

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Application of the Regulations

• TUPE applies to relevant transfers, i.e.
• When a business, undertaking (or part of one) is
  transferred from one employer to another as a
  going concern (A business transfer)
• OR
• A client engages a contractor to carry out work
  on its behalf, or when it reassigns such a
  contract including bringing the work back
  in-house (A service provision change)

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Application of the Regulations

• Business Transfers
• Is there a stable economic entity that is
  capable of being transferred?
• Will the economic entity retain its identity
  after the transfer in question?
• Is the type of business being conducted by the
  transferee the same as the transferor's?
• Have the majority of employees been taken over by
  the new employer?
• Have the customers transferred?

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Application of the Regulations

• Service Provision Changes
• When a client engages a contractor to do work on
  its behalf, or
• reassigns the contract to a new contractor, or
• brings the work in-house
• It will not be a service provision change if
• the contract is wholly or mainly for the supply
  of goods for the clients use, or
• the activities are carried out in connection with
  a single specific event or a task of short-term
  duration

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Who and What Transfers

• All employees who were employed immediately
  before the transfer automatically transfer from
  the old employer (the transferor) to the new
  employer (the transferee)
• New employer takes over
• All rights and obligations arising from contracts
  of employment, except criminal liabilities/some
  pension benefits 
• Any liabilities relating to employees who were
  dismissed before the transfer (for a reason
  connected with it)
• Any collective agreements and recognition
  agreements made with recognised trade unions

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Who and What Transfers

• The transferring employer cannot retain
  employees, unless they are permanently
  re-assigned to other work outside the organised
  grouping before the transfer
• Continuous service is not broken by a transfer
  for the purpose of calculating statutory
  employment rights
• Previous terms and conditions carry over to the
  new employer

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Changes to Terms Conditions

• Neither the new employer nor the previous one can
  dismiss an employee, or vary their terms and
  conditions, because of the transfer or a reason
  connected with it
• UNLESS it is for an 'economic, technical or
  organisational' (ETO) reason entailing changes in
  the workforce

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Changes to Terms Conditions

• NB
• Changes to terms and conditions which are agreed
  by the parties and are entirely positive are not
  prevented by the Regulations

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The ETO Defence

• There is no statutory definition of an ETO reason
• The ETO defence can only be used when it entails
  changes in the workforce
• This means that there must be a reduction in the
  number of employees employed OR an entire change
  in their job functions

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The ETO Defence

• An Economic Reason
• A reason relating to the profitability or market
  performance of the new employers business
• E.g. where the demand for output has fallen to
  such an extent that profitability of the entity
  is unsustainable without dismissing staff

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The ETO Defence

• A Technical Reason
• A reason relating to the nature of the equipment
  or production processes which the new employer
  operates
• E.g. where the new employer wishes to use new
  technology and the staff employed by the old
  employer do not have the necessary skills

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The ETO Defence

• An Organisational Reason
• A reason relating to the management or
  organisational structure of the new employers
  business
• E.g. where the new employer operates at a
  different location and it is not practical to
  transfer staff

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Varying Terms and Conditions

• Terms and conditions can only be changed before
  or after a transfer if the sole or principal
  reason is either
• entirely unconnected with the transfer, or
• connected with the transfer, but for an ETO
  reason
• Harmonisation of transferred workers terms and
  conditions to those of equivalent existing
  employees is therefore not permitted
• Time period when it is safe to harmonise?

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Dismissals and Redundancies

• Dismissals for redundancy are permitted by TUPE
  as they will normally be for an ETO reason
• The employer must comply with all other
  legislation affecting redundancies, including
  consultation, payments etc.

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Information

• From April 2006 the transferor must provide the
  following information to the transferee before
  the transfer, namely
• Identity and age of the employees who will
  transfer
• Information contained in the employees written
  particulars of employment
• Details of collective agreements which apply
• Any disciplinary proceedings taken against the
  employees or grievances brought by them in the
  last two years
• Any legal actions brought by the employees
  against the transferor in the last two years
• Any legal actions that the transferor reasonably
  believes might be brought

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Information

• Must be provided in writing or in other forms
  which are accessible to the employer (e.g.
  electronic files)
• Must be given at least two weeks before the
  transfer
• Can be given in several instalments
• If any information changes before the transfer,
  the new employer must be given written notice of
  the changes

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TUPE Consultation

• Both the old and new employers must inform and
  consult with those affected, including
• Employees who will transfer
• Colleagues who will not transfer but whose jobs
  may be affected
• Colleagues employed by the new employer whose
  jobs may be affected

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TUPE Consultation

• Either the old or new employer must inform the
  employees representatives of the following
• That a transfer is happening, when and why
• The legal, social and economic implications for
  the affected employees
• Whether the employer envisages taking any action
  in connection with the transfer, and if so what
  (e.g. re-organisation)
• Where the old employer is required to give the
  information, they must disclose whether the new
  employer envisages taking any action which will
  affect the employees, and if so what. The new
  employer must therefore provide this

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TUPE Consultation

• When should consultation take place?
• No time is specified for undertaking consultation
  
• Information should be supplied 'long enough
  before the transfer' to enable meaningful
  consultations to take place with employee
  representatives
• Consultation must be undertaken with a view to
  seeking agreement to the intended measures
• The employer must consider and respond to any
  representations made during consultation. If the
  employer rejects the representations, he must
  state the reasons why

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Remedies under TUPE

• If employees feel their rights have been
  infringed, they can complain to an employment
  tribunal if they are
• An employee who has been dismissed or who felt
  they were entitled to resign because of the
  consequences of the transfer
• An elected or TU Representative if the employer
  does not comply with the information or
  consultation requirements
• An affected employee where the employer has not
  complied with the information or consultation
  requirements
• A representative who has been unreasonably
  refused time off by an employer in respect of a
  transfer

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Remedies under TUPE

• If complaints are upheld, awards may be made
  against either the old or new employer as
  follows
• Unfair dismissal award and/or order for
  reinstatement or re-engagement
• Compensation for failure to consult under TUPE is
  up to 13 weeks pay per employee
• Compensation for failure to provide employee
  liability information is no less than 500 for
  each employee for whom the information was not
  provided or was defective (ET can award a lesser
  sum, e.g. for trivial or unwitting breaches)

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Pensions under TUPE

• Obligations relating to provisions about benefits
  for old age, invalidity or survivors in
  employees' occupational pension schemes do not
  transfer under TUPE
• However, the provisions of the Pensions Act 2004
  sections 257 and 258 do apply to transfers taking
  place after 6 April 2005
• In effect, this means that provisions similar to
  the TUPE regulations apply to pension rights from
  that date

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Pensions under TUPE

• Implications of the Pensions Act 2004
• Where
• there is a transfer
• and the transferred had access to an occupational
  pension scheme with employer contributions
• Then the transferee must offer either
• A scheme that meets a minimum set out in
  Regulations (i.e. with matching employer
  contribution rates up to 6 of salary)
• An equivalent alternative

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Recent Cases involving TUPE

• Regent Security Services v Ltd Power (2008) IRLR
  66 Contractual changes that are entirely
  advantageous are not prohibited by the
  regulations
• Jackson v Computershare Investor Services PLC
  (2007,Court of Appeal) TUPE does not confer
  additional rights or improve the situation of
  employees
• London Metropolitan University v Sackur (2006,
  EAT) Employer cannot unilaterally impose
  post-transfer changes

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• Any questions?