TUPE in Contracts Presentation to CIPS. 18 February Lisa Gettins

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1 TUPE in Contracts Presentation to CIPS 18 February 2015 Lisa Gettins

2 Aims for Tonight A brief overview of the Transfer of Undertakings (Protection of Employment) Regulations 2006 and their relevance to procurement and supply 2014 changes Commercial contract considerations

3 TUPE An Introduction Acquired Rights Directive Directive 2001/23/EC Transfer of Undertakings (Protection of Employment) Regulations 1981 Transfer of Undertakings (Protection of Employment) Regulations 2006 Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014

4 TUPE Principles It is necessary to provide for the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded The Transferors rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the Transferee The regulations apply to the Transfer of an undertaking, business or part of an undertaking, or a service provision change An economic entity is an organised grouping of resources which has its objective pursuance of an economic activity

5 TUPE Principles continued Immediately before a service provision change there has to be an organised grouping of employees which has as its principal purpose for carrying out of the activities concerned on behalf of the client A relevant transfer shall not terminate the contract of employment of any person employed by the Transferor and assigned to organised grouping of resources or employees that is subject to the relevant transfer.. any such contract shall have a effect after the transfer as if originally made between the person so employed and the Transferee

6 TUPE Principles continued Where at the time of the relevant transfer a collective agreement exists made on or behalf of the Transferor with a Trade Union recognised by the Transferor or in respect of any employee whose contract of employment transfers.. that agreement, in its application in relation to the employee, shall, after the transfer, have effect of this made by or on behalf of the Transferee with that Trade Union

7 Relevance to Procurement Comes into play at commencement of service provision, and expiry of service provision. Cannot transfer out of TUPE, but:- Workforce can be managed to minimise risk of conditions being met for TUPE to apply. Can agree contractual provisions to allocate risk. Can ensure contractor considers in contract price.

8 Service Provision Changes Service Provision Changes arises when:- Activity ceases to be carried out by a person on his own behalf and is instead carried out by another person or by a contractor An activity ceases to be carried out by a contractor on a client s behalf and is carried out by another person described as a subsequent contractor Activity ceases to be carried out by a contractor on a client s behalf and is carried out by the client on his own behalf

9 How to identify a Service Provision Change 1. Identify the relevant activities carried out by the original contractor 2. Assess if the activity is carried on by this subsequent contractor of fundamentally or essentially the same as those carried out by the original contractor 3. Does the division of services amongst a number of different contractors after the relevant date amount to a fragmentation 4. If 1 3 are satisfied assess :- That there is an organised grouping of employees in Great Britain which has as its principal purpose, the carrying out of activities on behalf of the client The client intends that post-transfer, the Transferee will not carry out the activities for a short-term duration or a single event The activities are not wholly or mainly for supply of goods 5. Was each claimant assigned to the organised grouping of employees?

10 Assignment of Employees Johnson Controls Limited a centralised taxi booking administration service was taken back in-house by the client and no longer operated thereafter as a centralised service. It was a different activity therefore no TUPE. Eddie Stobart Limited v Morman there was not an organised grouping because of the effects of the working pattern. The factual division of the work was not enough to constitute an organised grouping. Argyle Coastal Services v Stirling the phrase organised grouping of employees connotes a number of employees which is less than the whole of the Transferor s entire workforce, deliberately organised for the purposes of carrying out the activities required by the particular client contract and who worked together as a team.

11 Assignment of Employees - continued Seawell Limited v Moffat the description organised group of employees connotes a deliberate putting together of a group of employees for the purpose of the relevant client work it is not a matter of happenstance.

12 TUPE in January 2014 what did not change? The Government did not implement some of its previous proposals as follows:- To abolish the service provision provisions To repeal the employee liability information provisions To change the wording of the provisions concerning a substantial change in working conditions to the material detriment of the employee To allow a Transferor to rely on a Transferee s ETO reason

13 2014 What did change? Service provision changes activities must be fundamentally the same Changing terms and conditions and dismissal protections apply only where TUPE is the sole or principal reason for the dismissal or variation Change of ETO reason to include changes in the location of the work place following a transfer Collective agreements can be varied when more than a year has passed since the transfer and confirmation of the static approach Employee liability information to be provided 28 days prior to the transfer in respect of transfers after 1 May 2014

14 2014 What did change? - continued Transferee can begin consulting about collective redundancies prior to the transfer Small businesses can inform employees directly if no Trade Union or employee representatives are in existence in respect of transfers after 31 July 2014

15 Commercial Considerations on Bidding and Exit Commencement Bid/contract terms will TUPE apply? Subcontractors Pricing mechanisms Service impact Expiry Contract to provide exit provisions Redundancy costs

16 QUESTIONS and ANSWERS