Early Bird SeminarTUPE: Clearing a path through the minefieldMarch 2011

Agenda

• Update

• Practical guide to TUPE transfers

� Worked example

� Key procedural steps: focus on Transferor

� 5 things a Transferee should do

� 5 tricky issues for a Transferee

� Cost of getting it wrong

Update on…

Shared paternity leave• 26 weeks “additional maternity leave” transferred to

baby’s father (similar arrangements for same sex and adopting families)

• 3 April 2011Retirement • Removal of default retirement age • 1 October 2011Bribery Act• Delayed

Compensation Limits and National Minimum Wage (1 Feb 11)

• Max. compensatory award for unfair dismissal increased from £65,300 to £68,400

• Max. limit on a week’s pay increased from £380 to £400

• Min. basic award for certain unfair dismissals (e.g. dismissal for reason of being a trade union member) increased to £5,000

• Standard minimum wage rate (workers over 21) = £5.93 an hour

TUPE – Clearing a path through

the minefield

When might TUPE apply?

Are you bidding or

relinquishing a commercial

contract?

Changing an old contractor for a new one?

In-sourcing or out-sourcing a

team, department or business function?

Restructuring your group

companies?Changing the status of your business, for

example Ltd to LLP?

Buying another

business or selling part of

your own?

When could a transfer

occur?

Typical outsourcing scenario

Today’s example – outsourcing

• O. LYMPIC Ltd has decided to outsource two functions of its business to RINGS Ltd: its courier function and its surveying function

• There are 24 O. LYMPIC staff that work on the courier service and 6 staff in the surveying team

• O. LYMPIC and RINGS have agreed that RINGS Ltd will take on the two functions from 1 June 2011

Example

Transfer date: 1st June 2011

“Transferee”

Main workforce

O. LYMPIC Ltd

Courier Service

Surveyors

RINGS Ltd

“Transferor”

Transferring staff

TUPE transfer in practice

• Identifying affected employees

• Appropriate Representatives: Trade Union and/or employee reps

• Election of Employee Representatives

• Employee Liability Information

• Measures

• Duty to inform

• Duty to consult

Identifying affected employees

• Transferor must identify which employees are actually “affected” by the transfer

• These will include the transferring employees

• Non-transferring employees may still be “affected”

• Duties to inform/consult apply to “affected employees” not just to transferring employees

Identifying the “appropriate representatives”

• Obligations to inform and to consult require appropriate representatives

• May require a mixture of union reps and employee reps if union only recognised in respect of part of the transferring workforce

Electing Employee Representatives

• Announce the need to have employee reps

• Determine how many reps you require (1 rep : 15 employees as a guide)

• Invite candidates: simple ballot required

• Too few candidates/no candidates: no requirement to have reps, just a requirement to allow employees to put themselves forward as candidates

HALF TIME

So…

• Affected employees identified• Scope of union recognition (if any) identified• Union reps identified (if union recognised)• Employee reps elected

What happens now…?

Employee Liability Information

• Transferor must send to the Transferee the E.L.I for each transferring employee

• E.L.I must be sent 14 days before the transfer, but ideally earlier

• The E.L.I will enable Transferee to:– understand the terms/liabilities that apply to the

employees that will transfer– identify what measures it envisages

• Ongoing obligation on Transferor to update E.L.I right up to the Transfer Date

Transferee sends measures letter to Transferor

• What next? Transferee should send a measures letter to the Transferor

• What’s this? Letter must explain any ‘measures’ that the Transferee envisages taking in relation to the transferring employees

• No measures? If Transferee envisages no measures, that fact must be confirmed in writing to the Transferor

• When? Letter must be sent “in good time”. Aim for no later than 3 weeks pre transfer

Transferee sends measures letter to Transferor

• Measures? Any action, step or arrangement proposed by the Transferee which could affect the transferring employees’ contractual terms and/or working arrangements

• What next? Transferor must incorporate Transferee's measures in TUPE information letter

Inform representatives

• Who? Written information must be provided to “appropriate representatives” of “affected employees”

• When? “Long enough before the transfer to enable consultation to take place between the employer and the employees’ representatives”. Generally, no later than 14 days pre transfer.

• What information?

Mandatory Consultation

• Transferor must consult with the appropriate reps (with a view to seeking their agreement) about any measures it, the Transferor, wishes to take and which may have an impact on affected employees

• In practice, it’s rare for the Transferor to propose any measures, so mandatory consultation not normally triggered

Voluntary Consultation

• If Transferor proposes no measures, it’s still common practice for Transferor to hold informal consultation meetings with representatives and affected employees about key issues

• The Transferee is not legally required to consult with the Transferor’s employees before the transfer, but this may be beneficial commercially.

Part 2: Focus on the Transferee

• 5 things a Transferee should do

• 5 tricky issues for a Transferee

• The cost of getting it wrong

5 things a Transferee should do

1. Check the Employee Liability Information very carefully2. Send your ‘measures’ letter in good time3. Even small ‘administrative’ changes should be

mentioned in the measures letter 4. Where possible, Transferee to participate pre-transfer

informal consultation with transferring employees 5. Consider whether any of the Transferee’s existing

employees are “affected” by the transfer

5 tricky issues for a Transferee

1. Making employees redundant (pre & post transfer)

2. Where appropriate, do not forget to ‘pool’ transferring

employees AND existing employees for post-transfer redundancies

3. Harmonising terms and conditions of employment

4. New place of work

5. Pensions

6. Replicating ‘unfamiliar’ benefits

7. Union recognition

Getting it wrong

• Protective award (failure to inform/consult)

– 13 weeks’ actual gross pay per employee

– joint and several liability

– punitive, not compensatory

– e.g. 20 employees @ £25k p.a. @ 7 weeks award = £67,000!

• Automatic unfair dismissals if transfer related and no ETO

• Regulation 4(9) dismissals – possibly unfair

• Contract variations VOID if transfer related and no ETO

Questions?