UK: Are You A Property Service Provider? If So You Need To Be Aware Of The Impact Of TUPE For Your Business

Last Updated: 13 April 2015
Article by Emma Bartlett

Managing agents and property service companies who employ staff to provide services such as security, maintenance, cleaning or caretaking to buildings should take note: if the landlord/owner terminates their service contract and engages another agent or service company their staff may well transfer automatically to the new service provider if the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") apply. Similarly, if the landlord directly employs security guards or cleaning staff and then decides to contract out the service, TUPE is likely to apply.

Importantly, on the sale of a property in certain circumstances, the services of such security, maintenance, cleaning or caretaking staff may also have rights under TUPE to follow their work.

What is TUPE?

TUPE applies where there is a "relevant transfer", either where a business or part is sold (a business transfer) or where there is a change in service provider (a service provision change (SPC)). It is important to be aware of this, because there are a number of legal obligations which arise if TUPE does apply. There are financial consequences if they are not complied with. This article focuses on the SPC aspects and their application to staff who provide services to buildings through managing agents and property service companies.

A guide to identifying service provision changes

Very briefly, there are three types of SPC; where a service is outsourced (by the client to a contractor), it is reassigned (second generation outsourcing) or it is brought back in-house (in-sourced). However, if a property is sold or leased, but there is no change in the managing agent or service provider, there would be no TUPE transfer as the employees continue to be employed by the same employer.

In order for a change in activities to qualify as an SPC there are other conditions, which must also be satisfied:

  • Organised grouping
    There must be an organised grouping of employees situated in Great Britain before the change, whose principal purpose is carrying out activities for the client. An "organised grouping" can include a single employee, therefore there can be an SPC, for example, where there is one employee carrying out caretaking services or cleaning services at a building. It is also important to determine whether the employees are assigned to the "organised grouping of resources or employees," that is the subject of the transfer. This can be difficult to assess where an employee provides services to a number of properties managed by the managing agent or serviced by the service provider. If the services are carried out on an ad hoc basis for the client or for a number of different clients it is likely that they would not fall within the test. Contracts for the supply of goods or for the one-off buying-in of services are excluded from TUPE.
  • Activities
    In order for TUPE to apply, the activities must be "fundamentally the same" before and after the SPC. This will depend on the facts of each case. Activities are generally defined broadly by Employment Tribunals so that TUPE applies.
  • The client
    In order for the SPC provisions to apply, the services provided before and after the change must be for the same client. If there is a change in the contractor providing the services and, at the same time, a change in the owner of the property, TUPE will not apply. If this is the case, the outgoing service provider will need to consider how to deal with the risk they will be left with superfluous staff if their contract is terminated in connection with the sale of the building.
    It is, however, also possible for there to be an SPC where the services are provided to more than one client under different contracts. TUPE will apply in this event if the clients before and after the SPC are the same and the clients demonstrate a common intention, but there is a change in who is providing the services. This is likely to arise in situations where the tenants in commercial premises or residents management companies on a residential estate group together to commission activities, eg property maintenance or security either under a single umbrella arrangement or under separate contracts.

Effect of TUPE applying and practical considerations

This is a complicated area of law and there is a great deal of litigation concerning the application of TUPE. If this is not properly considered in advance, there are significant implications and consequences. It is important to be aware of these. Broadly, if TUPE applies:

  • The employees will automatically transfer from the previous service provider ("the transferor") to the new provider ("the transferee") under their existing terms and conditions (save in respect of occupational pension rights). Their continuity of service will be preserved and the transferee will inherit all rights and liabilities in relation to them. It is therefore important for the new provider to carry out due diligence in advance to see what it will be inheriting in terms of staffing costs, to ascertain whether redundancies may be necessary and the likely costs.
  • There are information and consultation provisions, which must be complied with. An employment tribunal may award up to 13 weeks actual pay for such failure for each affected employee. The transferor and transferee are jointly and severally liable in this respect.
  • There is very limited scope for a transferee to harmonise terms and conditions of employees who transfer under TUPE and this reinforces the need for careful due diligence prior to taking on a contract.
  • There is enhanced protection against dismissal, which may have cost implications for the transferee and the transferor.
  • TUPE expressly preserves the right for an employee to resign and claim constructive unfair dismissal if the transfer results in a repudiatory breach of their contract or a substantial change in their working conditions to their material detriment (ie where the new contractor is proposing changes).
  • The transferor must also provide employee liability information (including age and identity of employees, their disciplinary and grievance records and details of any claims) to the transferee at least 28 days before the transfer. Failure to do so may result in a minimum award of £500 payable to the transferee by the transferor for each employee for whom it failed to provide information.

It is important for any service company involved in a change of service provider to take specialist employment advice on whether TUPE is likely to apply, irrespective of whether they are the transferor or transferee. This will put them in a good position to assess the likely cost consequences and to consider what provisions and protection, including indemnities, they will need in any outsourcing agreement.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.