Can you provide guidance in a TUPE service provision change scenario?Posted in : Seamus Says - Employment Law Discussion on 2 March 2018
Q: Can you provide guidance in a TUPE service provision change scenario?
Scott: How do we agree “measures” in a TUPE service provision change scenario? For example, under the information and consultation requirements, we’ve got to give a lot of information, the fact that’s happening, socioeconomic things and so on.
The bottom line here is the outgoing employer must provide information about various measures. The incoming employer has to do pretty much the same. But the two contractors aren’t speaking. They’re going and the old contractor wants the business but doesn’t want the new one to get it. So, they’re not providing the information. What would you advise the contractors here?
Seamus: Well, I think the bottom line is that there’s no alternative to the TUPE provisions and those that we find in the legislation that covers on TUPE. The bottom line is they apply. We have no alternative. We need to get on with it. My view on that is there are two options for the employer. One is if you’re not happy with the loss of the contract, you can seek to challenge that through the court system.
If you’re not prepared to seek challenge on that, you need to accept the position that you’re losing this contract and you need to get on board, get on the train in terms of filling your obligations under TUPE, whether that is providing the due diligence information and the employee information across to the new employer.
If they’re not playing ball with you, remind them that you’re giving them the information and if they don’t comply, there will be serious consequences in terms of penalties that can be issued, tribunal claims and ultimately if you’re fulfilling your end of the job, you’ll be warning them in terms of the fact that you might end up having to sue them in terms of coverng your losses as well.
Scott: There’s joint and several liability there. Both employers, the outgoing and the incoming can be held liable under TUPE for failing to do this. But ultimately, if it’s an unfair dismissal claim and somebody refuses to take on employees, it’s going to be the incoming contractor, if TUPE applies, who will have all the problems. If it doesn’t apply and sometimes you’re never going to, then it’s going to be the outgoing employer.
The bottom line is it comes down to the contract that was agreed by the contracting employer, if you like, or the person who needs the service. If they’ve written it correctly, they could have required incoming and outgoing contractors to provide this information or suffer penalties.
Seamus: Exactly. That’s what it’s about. I think that where there is an issue and you’re not going to challenge, you need to take the reins and hold up your end of the bargain, comply with your obligations in the legislation and warn the other party about the risks of not engaging and the liability of that.
Scott: Apart from that, what the outgoing contractor should do is send over all the rubbish employees. Is that what you’re trying to tell me? I would get rid of all the dross and keep your good ones.
Seamus: Absolutely. Certainly, I know from my own experience working with my clients, that’s what it can feel like when the client is overjoyed to obtain a contract and they forget all about the fact that they’re going to have to take employees with it. The next thing is that the suspicious antenna is up and they’re thinking we’re getting all the bad employees, all the late employees, all the poor performers, all that kind of stuff.
It’s really important as to why whenever you get your employee information that you do start to go through that with a fine-tooth comb and you are looking and you’re asking the questions that you’re entitled to ask and you’re looking for details in respect of disciplinary screens that have been raised, their salary, the bonuses that they have been paid, pension details, their working hours, their start commencement dates, if they’ve left and if they’ve come back. All of that information is really important.
Scott: That’s because the employees transfer across. Finally, this question here is talking about affected employees. The people who are affected by TUPE include the incoming contractors’ existing employees and if there are redundancies that have to be made because there are too many employees around, then that could go back to the question we had about redundancy earlier, that pool includes the incoming employees from the outgoing contractor and they also include the incoming contractors as if they’re employees. That’s the pool. It’s not that you can get rid of all the new guys.
Seamus: No. I mean, you’re opening yourself up there to - there are unfair dismissal claims and then there’s a separate claim that the employees can take under TUPE and there’s a certain penalty if their team makes it that the tribunal can impose if that process hasn’t been correctly followed in terms of it. Really, you want to get on board. It’s an interesting one just in terms of I know we’re coming to the end when it comes down to that type of redundancy because there’s lots of the TUPE legislation that you can’t actually contract out of and it leaves you exposed.
My experience with these types of cases tends to be that it tends to be a bit of a hotpot of everything thrown in at once and through discussions and consultation, you get to the point at the end where you’re hopefully getting the correct employees that are supposed to be transferring across under the legislation, but accept that there’s a number of these cases that are very complex that end up before the tribunal.
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More on Transfer of Undertakings (TUPE)
- TUPE Update: Construction of an indemnity clause; Continuity of employment; Automatic unfair dismissal
- TUPE Update: “Successor Employers”, Reinstatement Orders, Contractual Variations
- Failure to Inform or Consult Prior to TUPE Transfer: How do I handle it?
- TUPE Update: Suspension of Activities; Scope of Regulation 3(5); Automatic Unfair Dismissal
- In Brief: Important Updates from June 2018
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