UK: TUPE Update - July 2014

Last Updated: 30 July 2014
Article by Bob Mecrate-Butcher

TUPE AND SHARE ACQUISITIONS - A REMINDER OF THE RISKS

The EAT's decision in Jackson Lloyds Limited v Smith is a reminder that even where an acquisition is structured as a share transfer there may also be a TUPE transfer. This, and an earlier case, illustrate that if a process of integration takes place too quickly resulting in the business being purchased being no longer controlled by the purchased entity there will be a risk of there being a TUPE transfer.

SERVICE PROVISION CHANGE TRANSFERS - RELEVANCE OF CONTRACTUAL TERMS

Two recent cases looked at the relevance of contractual documentation in determining whether there has been a SPC transfer. The cases providing opposing views on the importance of the contract terms when identifying the activities.

Contractual documentation relevant in identifying the "activities" in a SPC

In Qlog v O'Brien & Ors the contractual terms were relevant in deciding there was a transfer even though the incoming provider was providing the service in a different way by sub-contracting part of that service. The case serves as a reminder to any service provider to ensure it has proper indemnities in place to cover staff who do transfer when it is assuming that they will not.

Relevant activities - what employees are doing "on the ground"

In contrast, the EAT held in Lorne Stewart plc v Hyde that, in determining what the relevant activities are, it may be necessary to look at what the employees are doing "on the ground" rather relying on what their strict contractual duties are.

Tasks of short-term duration - "intends" means more than "hope and wish"

In Robert Sage Ltd t/a Prestige Nursing Care Ltd v O'Connell and ors, the EAT held that for the tasks of short-term duration exception to apply the word "intends" means the client must have more than a hope or wish that the particular event or task will be short-term. In this case the company contracting the services commissioned "temporary emergency cover" but had no control over the timeframe and the exception was held not to apply.

INFORMATION AND CONSULTATION

No direct action against transferee for compensation

In Allen and others v Morrisons Facilities Services Ltd the EAT held that transferred employees cannot claim directly against the transferee for providing misleading information pre-transfer. The only route for a claim is against the transferor (their employer at the time of the breach).

Maximum award should only be starting point where employer has done nothing

In London Borough of Barnet v Unison and anor the EAT held that the tribunal had erred in identifying the "starting point" for calculating compensation for failure to inform and consult as the maximum amount. This should not be applied mechanically where, as in this case, there has been some compliance.

Dismissals due to harmonisation were not for an ETO reason

The Court of Appeal in Hazel and anor v The Manchester College upheld a tribunal's findings that two employees who refused to sign new contracts after a transfer were unfairly dismissed. As the harmonisation process was separate from the redundancy process and although the dismissals were for an ETO reason, they did not entail changes in workforce numbers or functions so that an ETO defence to automatic unfair dismissal was not available. The decision reinforces the need for strategic advice on how to structure post-transfer contractual changes.

Change in location – not an ETO

In NSL v Besagni, the EAT held that a change in location following a TUPE transfer was not a "change in the workforce". Interestingly, the EAT also commented, albeit obiter, that it did not consider "changes in the workforce" to be limited to changes to numbers and functions.

LEGISLATION - REMINDER OF TUPE CHANGES

Set out below is a brief reminder of the TUPE changes that have come into force from the beginning of the year and what is still to come.

31 January 2014:

Changes to restrictions on varying contracts; change of location will be an ETO; variation of terms incorporated from collective agreements and changes to pre-transfer collective redundancy consultation.

6 April 2014:

Amendments to the pension protection regime that operates on a TUPE transfer of employees to reflect the impact of auto-enrolment.

1 May 2014:

Obligation to provide TUPE employee liability information increased from 14 to 28 days before transfer

31 July 2014:

Micro-employers (less than 10 employees) can inform and consult directly with affected employees.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Bob Mecrate-Butcher
 
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