UK: Tupe Club: Who's Assigned; Information & Consultation And Changing Benefits Post Transfer

In this TUPE podcast, Jane Fielding, Partner in our Employment, Labour & Equalities team and Hannah Swindle, Principal Associate in the team, discuss three of the perennial risk areas on a TUPE Transfer.

  • Who is really assigned?
  • How do you avoid the pitfall of informing and consulting under TUPE?
  • What should you do about benefits that cannot be replicated post transfer?

These issues can give rise to some of the most significant legal and commercial challenges and have a material impact on the negotiation and delivery of a deal.

Transcript

Siobhan Bishop: Welcome to our TUPE Club podcast. Today, we are going to be looking at who is assigned, avoiding some of the common pitfalls on an information and consultation process and, also, dealing with employee benefits after a transfer.

So, in a nutshell, today we are talking about 'the who and the how' of TUPE. These issues will be really relevant if you are in-house Counsel or if you are a HR professional or, in fact, anybody who is dealing with TUPE on the ground. If you get these issues wrong, it can mean your organisation is exposed to expensive indemnity claims under the contract, penalty awards which can reach up to a quarter of your annual wage bill, and also the ongoing risk of claims for changed benefits.

So in this podcast we will help you manage three of the particular risk areas on a TUPE transfer. Firstly, who is really assigned? Secondly, how do you avoid the pitfalls of information and consultation under TUPE? And thirdly, what exactly should you do about those benefits which cannot be replicated post-transfer?

I would like to introduce Jane Fielding, a partner in the Employment, Labour & Equalities team at Gowling WLG and also Hannah Swindle, a principal associate in our team.

Firstly, Hannah, figuring out who is actually in the scope to transfer is still one of the most difficult issues on the ground. Why is it so important?

Hannah Swindle: Figuring out who is assigned to a transfer is a really important question. It can affect the viability of the deal, making sure you've got the right people, and if you don't get it right the transferor will have increased its liability under the indemnities given in the contract, as there's usually an indemnity against so-called 'unexpected transferring employees' coming across.

Siobhan: Okay, so where do you actually start when deciding if someone is assigned?

Hannah: That's a good question. Where do you start?

People often use time spent as a rule of thumb by looking at whether an employee spends 50% or more of their time on the relevant services or part of the services. Unfortunately, while that may be a useful starting point, it is a common misunderstanding that this is the test for assignment.

In fact, there's no specific percentage of time that an employee must spend. There is no magic number which means that they will be assigned. So assignment is essentially a factual question taking into account a number of factors.

Siobhan: Okay, so what advice do you give to employers on how to get it right?

Hannah: Well, firstly, TUPE is going to apply to employees. So that includes fixed term employees and also, importantly, those temporarily absent. So, for example, it could include employees on maternity leave or sickness absence, provided that it is intended that the employee will return to work at some point.

Secondly, to work out then whether an employee is assigned, it is necessary to look principally at activities that they carry out immediately before the transfer. So, you are going to consider the time they spend on the services, the nature of work that the employee does, what does the employee's contract of employment say about the duties they can be required to do? Do they have responsibilities to other parts of the business and how is their cost allocated? Is it to a particular client contract, for example? What is the value of the work they do and, finally, is there a factual connection to the work in question? In other words, what do they do in actual fact, notwithstanding what it says they do in their contract?

So, once you've decided if someone is assigned then other practical issues arise. For example, do the parties actually want a particular employee to transfer? If not, they are going to have to consider alternative options, such as asking the employee to opt out, moving them onto different duties or making them redundant.

Assignment is a question of fact for the employment tribunal, so the case law is inevitably fact specific, but it does give us an indication and some principles to follow. But this means that it is sometimes hard to determine which way a tribunal would decide, but working through the issues step by step will put you in the best position to seek the protection you need.

Siobhan: Many thanks, Hannah.

So Jane, picking up on the second point we are looking at today, where it is very easy to make a mistake, can you talk about information and consultation process under TUPE and why it is such a big issue?

Jane Fielding: Well, it is important to get this right because the potential penalties of a breach are significant. So it's up to 13 weeks' gross pay per affected employee, so not just the people assigned, but all affected employees.

If you don't do anything to inform and consult, 13 weeks is the starting point and you have to come up with a very good reason to persuade the tribunal to award a lower amount. The process on the face of it seems quite straightforward, but there are a number of technicalities where it is easy to make a mistake so you do have to be on top of the detail of it and plan ahead.

Siobhan: Right, yes, and that really is a very significant penalty. So, how do you avoid those pitfalls and get the process right?

Jane: Well, the first thing to remember is that the obligations to inform and consult are separate, distinct duties. You have to inform in every case where there is a TUPE transfer but you only to have consult, there's only a duty to consult, if as the employer you envisage taking measures in respect of the affected staff. That's the obligation to consult, but you do always need to factor into your timetable some time for a voluntary consultation even if there are no measures. The idea is that the representatives or the staff may still have questions about what's happening and you need to factor some time for them to ask those questions.

The second thing to mention is that measures, which are the trigger for the duty to consult, does not have a clear definition under TUPE at all, but it has been fleshed out by case law and what the cases tell us is that it is a very low threshold for what constitutes a measure. So, for example, there was a case where in a care home some employees transferred. The only change was to payroll date and, in fact, for some people that meant they were slightly better off from a tax perspective and we are only talking about tiny amounts anyway. But, nonetheless, that was still held to be a measure, even though for some of them it was positive, so it is a low threshold.

There are a number of steps to check before you embark on an information and consultation exercise. So, the first thing to think about is, well, who are you going to be talking to? Have you got the right group of employees, have you defined who is affected? So, case law tell us that that is wider than the people who are assigned, it's not just those who are in scope to transfer but it will obviously include them. It will be people also whose job is potentially in jeopardy because of the proposed transfer. It may mean that the transferor does not have enough work for everybody and there are going to be redundancies so they are affected. Or it could be people who have internal job applications into the part of the business, or the services, which are going to be transferred and those job applications are pending at the time of the transfer. They will want to know whether or not they can still go ahead with those applications or not, so they are affected. But it's not every single person in the organisation, there has to be some sort of link.

The second thing we would always recommend checking is that you are consulting the right representatives of the affected employees. So, unions here have priority. So, if you are an employer that has a recognised union, then they are the people to consult with for the bargaining unit they represent. If they don't represent all the affected employees then you have a choice as an employer. You can either go with representatives who are already in place, on a pre-existing body that has got authority that is wide enough to cover a TUPE transfer, so not the social committee, I would suggest, but maybe another type of body that has slightly weightier responsibilities. And you have got to check that their authority has not expired, that's caught employers out in the past as well. If you don't have pre-existing body or you don't want to use one because you are worried that they don't have a mandate, then you need to invite the affected staff to elect appropriate representatives and there are various requirements for a fair election that are set out in TUPE.

Thirdly, you obviously need to allow enough time at each part of the process, so if you are electing you need to factor that into the timetable. Then, as I mentioned earlier, once you've given the information, as required by TUPE, then you need to allow some time for voluntary consultation even if you don't have an obligation to consult because there are no measures. Again, you need to think about whether the time that you are allowing the representatives to talk to their constituents in the consultation period, whether it's valuable time in the sense of are the employees actually around? So employers have been caught out by attempting to do this over an annual shutdown, for example, where a factory has closed, everybody's on holiday. The rep may be there, but they've got no one to talk to. That's not good enough. It has got to be qualitative time that can be properly used.

The final point to mention on consultation is, it's not a negotiation in the sense that the reps can't veto something; ultimately the employer decides what to do. But it is a kind of enhanced consultation. It's specifically a consultation 'with a view to reaching agreement'. So, as an employer you do need to be keeping a paper trail which shows that you have taken on board comments that the reps have made. It may be that you want to hold a bit of a 'give' up your sleeve so that you can show that you have given something during that conversation. So, you've got to be able to demonstrate a genuine two-way process if you want to be able to avoid the types of award that I mentioned at the start.

Siobhan: Many thanks, Jane, for that step by step guide to avoiding some of those common pitfalls which are very easy to fall into.

Now, Hannah let's talk about the last issue today, which is changing terms and conditions. We know that terms and conditions will transfer under TUPE but in some cases it is just not possible to replicate those exact benefits going forward. So, for example, if an employee is entitled to shares under a share scheme, the new employer cannot replicate that, so what happens then?

Hannah: That's right Siobhan. There are a number of examples where benefits just cannot be replicated post transfer.

As you mentioned, a share scheme for example, or perhaps, a crèche provided by the employer and some bonus schemes. The usual principle will still apply, so the terms transfer and they must be replicated or else it's a breach and the employees could bring a claim. They could bring claims for breach of contract, or perhaps unpaid wages, it all depends on the circumstances. However, as we've said the reality is just that some terms simply cannot be replicated. So, in that case, case law confirms that if it is going to be unjust, absurd or impossible to replicate, then the employer must put into place something of substantial equivalence. Careful planning is going to be needed to implement this.

Siobhan: Thank you Hannah, and that's just another example of why it is so important to start planning early, to make sure you have a smooth transfer. It is really important that these risks are addressed and covered at the planning stage, as we've mentioned, but also in the negotiation and the contract itself.

We hope you've found today's podcast useful and if you have any queries on the topics we've covered today or any other queries generally about TUPE, please do contact Jane Fielding or Hannah Swindle and they would be delighted to help you.

Thank you.

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
Events from this Firm
26 Sep 2019, Seminar, London, UK

Providing GCs, Heads of Legal and senior in-house lawyers with timely, topical and practical legal advice on a variety of topics.

8 Oct 2019, Seminar, Birmingham, UK

Supporting the development of paralegals, trainees and lawyers of up to five years' PQE by providing valuable knowledge and guidance together with practical tips.

10 Oct 2019, Seminar, London, UK

Supporting the development of paralegals, trainees and lawyers of up to five years' PQE by providing valuable knowledge and guidance together with practical tips.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions