Transcript Providing a service? The new TUPE Regulations.

Providing a service?
The new TUPE Regulations.
Stephen Cavalier
Richard Arthur
Thompsons Solicitors
Controversy, Confusion
and Litigation
• When is there a TUPE transfer?
• Can employers change terms and
conditions?
• Which employees transfer?
• Which employer is liable for a failure to
inform or consult?
• Do collective agreements transfer?
• Can employees object to transferring?
When is there a TUPE transfer?
• “Standard transfers”;
• New definition of “service provision
changes”;
• TUPE applies to public and private
sectors;
• Exclusion of “administrative
reorganisations of public administrative
authorities”; and
• Share transfers still excluded.
“Standard Transfers”
• Transfer of an undertaking (or part)
situated immediately before the transfer in
the United Kingdom;
• Where there is “a transfer of an economic
entity which retains its identity”;
• Encapsulates existing case law.
“Economic Entity”
• “An organised grouping of resources
which has the objective of pursuing an
economic activity, whether or not that
activity is ancillary or central”;
• Needs to be stable;
• Doesn’t need to be separate from the rest
of the old employer’s undertaking.
“Retains its identity”
• Type of operation;
• Whether assets transfer;
• Whether or not a majority of the workforce
is transferred; and
• The extent to which activities carried out
before the transfer are the same as those
carried out after.
Contracting-out
• ECJ rulings that the Directive applied to
the transfer of ancillary services, and
contracting-out;
• Similar cases won by the unions in the
UK – eg Dines;
• Uncertainty from Ayse Suzen case;
• Distinction drawn in the ECJ between
asset-reliant and labour-intensive
undertakings.
“Service Provision Changes”
“Activities cease to be carried out by”:
• The client and are instead carried out by a
contractor (contracting-out);
• A contractor and are instead carried out by
a new contractor (second generation
contracting); or
• A contractor and are instead carried out by
the client (contracting-in).
Condition 1: Organised
Grouping of Employees
• “..Organised grouping of
employees…which has as its principal
purpose the carrying out of the
activities…”;
• “Organised grouping of employees” does
not need to retain its identity;
• No exemption for “innovative bids”; and
• Includes a single employee.
Condition 2: Exclusion
of “One-off Events or Tasks”
• The client must intend that the activities
will be carried out “other than in
connection with a single specific event or
task of short term duration”.
• DTI example-contracts for security for the
Olympic games.
Condition 3: Exclusion of
Contracts for Supply of
Goods or Services
• The activities must not “consist wholly or
mainly of the supply of goods or services”.
• DTI example – staff canteen/contract to
provide sandwiches and drinks.
• No exclusion of “professional business
services”.
Public Sector:
Government Policy
• TUPE will usually apply;
• Cabinet Office Statement of Practice:
“Staff Transfers in the Public Sector”;
• Case-specific legislation;
• “Staff Transfers from Central Government:
a Fair Deal for Staff Pensions”;
• NHS Retention of Employment Model; and
• Code of Practice on Workforce Matters in
Local Authority Service Contracts 2003.
Public Administrative Authorities
• TUPE does not apply to “an administrative
reorganisation of public administrative
authorities or the transfer of administrative
functions between public administrative
authorities”.
• Exclusion to be interpreted narrowly.
What Happens When
TUPE Applies? (1)
• “Assigned” employees transfer
automatically;
• Rights and liabilities under or in
connection with the contract transfer;
• Continuity of employment is preserved;
• Relaxation of automatic transfer provisions
in the event of insolvency;
• Dismissals: automatically unfair (ETO
reasons).
What Happens When TUPE
Applies? (2)
• Variations to terms and conditions (ETO
reasons);
• Information and consultation;
• Recognition and collective agreements
transfer; and
• Notification of “employee liability
information”.
Who Transfers (and When)?
• Employees “assigned” to organised grouping of
employees or resources;
• “Assigned” “other than on a temporary basis”;
• Includes those who would have been employed
if they had not been unfairly dismissed for a
reason connected with the transfer;
• Date on which “responsibility as employer”
transfers.
The Right to Object to Transfer
• If the employee refuses to transfer, without
more, she is treated as having resigned;
• Where the transfer “…involves a substantial
change in working conditions to the material
detriment…” the employee can treat herself as
dismissed;
• DTI examples: major relocation of workplace;
• No need for fundamental breach of contract;
• No right to pay in lieu of notice.
Transferring rights and
obligations
• Continuity of employment;
• Rights and liabilities under or in
connection with the contract;
• Personal injury claims;
• Collective agreements;
• Not pensions.
The Werhof case
• Unions’ success in arguing for transfer of
entitlements to pay awards;
• Werhof: “static” interpretation. Only applies
to collective agreements in force at the
date of transfer;
• Werhof not conclusive.
Changes to Terms and
Conditions: New Mechanism (1)
Where the reason for the variation is:
• The transfer itself; or
• A reason connected with the transfer that is not
an “ETO” reason
the variation is void.
Changes to terms and
conditions: new mechanism (2)
Variations are permitted where the “sole or
principal reason for the variation” is:
• A reason connected with the transfer that
is an “ETO” reason; or
• A reason that is not connected with the
transfer.
“ETOs”
“Economic, technical or organisational
reason entailing changes in the
workforce”;
• Change in job description or headcount;
• Harmonisation itself not permitted;
• Query whether variations for ETO reasons
permitted by the Directive.
Transfer-Connected Dismissals:
New Mechanism
• Mirrors scheme for permitted variations to
terms and conditions;
• When is the reason for a dismissal or
variation “the transfer itself” as opposed to
“connected with the transfer”?
Insolvency (1)
Where the employer is subject to insolvency
or bankruptcy proceedings “instituted with
a view to the liquidation of the assets..”
• Rights in connection with the contract do
not transfer; and
• There is no protection from dismissal.
Insolvency (2)
Where the employer is subject to “relevant
insolvency proceedings”:
• The new employer is exempted from
inheriting debts up to the limits which
would have been payable under the
statutory schemes if the employee had
been dismissed; and
• An employer can agree “permitted
variations” to terms and conditions.
Pensions
• Not transferred by TUPE (but see Cabinet
office Statement of Practice);
• Limited protection in Pensions Act 2004;
• Employees can not resign and claim
constructive dismissal; and
• The Beckmann and Martin cases:
enhanced redundancy payments.
Information and Consultation (1)
Information to be provided:
• The fact of the transfer, when and why;
• The legal, economic and social implications for
affected employees;
• The measures the transferor envisages it will
take in relation to affected employees; and
• The measures which the transferor envisages
the transferee will take in relation to affected
employees.
Information and Consultation (2)
Two further changes:
• Liability rests with the employer in default;
and
• Joint and several liability for transferor’s
default.
Employee Liability Information
The transferor must provide “employee
liability information” to the transferee.
No right for the union to receive that
information.
Interface with Other Employment
Legislation and the Future
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Equalities Legislation;
Industrial action;
Statutory recognition;
Territorial scope;
Beware: the Government will attempt to
amend the Directive to permit
harmonisation.