This on-demand webinar focuses on the practical issues that come up in an outsourcing involving a TUPE transfer, and how to make sure those issues are covered to protect the business and deliver the benefit of changing provider. From the customer side, this involves, for example, understanding the contract with the existing provider through to ensuring it can obtain employee information on exit. For the new provider, this involves planning for mobilisation on day one of taking over, including any changes it needs to make post-transfer. This on-demand webinar should hopefully answer all of your questions.
Jane Fielding: Good morning. I am Jane Fielding and I am head of the employment, labour and equalities team here at Gowling WLG in the UK and I am delighted to welcome you to this, the second of our series of four webinars when we take a mid-year look at what is going on in the world of employment law.
Those of you who listened in to our first webinar on Tuesday this week, will have heard me say we really did not expect to be doing these remotely a year after we did the last sets last summer, but here we are and life goes on.
And for us, that means that businesses are still being sold, services are still being outsourced, insourced, retendered and we still get to advise on one of our favourite topics, which is TUPE.
Judging by the fact that there are 400 of you registered to listen in today for our webinar, it is topical for you as well and you have been experiencing the same.
Our topic today is achieving a smooth TUPE outsourcing. Obviously you need a good contract in the first place to rely on. You need to understand what is in it and be familiar with what tools you have in it and then you need very effective planning from the outset.
Our speaker today, who is going to put the flesh on the bones of all of those aspects of a successful outsourcing is Hannah Swindle, who is a principal associate in our team,who has got 15 years' experience, much of which she spent developing a real expertise in TUPE and some of you on the call will have been guided through TUPE transfers by Hannah in the past.
Hannah is going to speak for about 25 minutes and then we will have ten minutes at the end for questions and we will close the webinar at 11:40. If you want to ask a question, please can you use the Q&A function which, if you are not familiar with Zoom, it is in the bottom of your screen.
If you ask a question only Hannah and I- and Lucy, who is helping us on the tech side,- will be able to see the questions, so do not worry about the fact it is not anonymous. Nobody else will be able to see it. We will do our best to get through all of the questions but if we do not get to yours, then do not worry, we will follow up afterwards with all the ones we have not managed to talk about.
If you have got any tech issues during the webinar, which hopefully it will not happen, then please also use the Q&A function and Lucy will try to sort that out for you, behind the scenes and at the end, before we close I will just flag it again, but we do circulate after the webinar a feedback form. We would be really grateful if you would fill it in, it only takes a couple of minutes. We do read them and we do use your ideas and feedback to generate future sessions.
I will mention that again at the end, but I have flagged it now so you know to look out for it. Other than that, I think I have covered everything so I will turn off my mic, go dark and hand you over to Hannah.
Hannah Swindle: Thank you Jane and good morning everyone. As Jane said, I am going to talk to you about outsourcing. I am going to assume that this is a private sector outsourcing because there is lots of additional factors to consider when the outsourcing is within the public sector. For example, there are requirements about procurement that would need to be followed.
I am going to go through an outsourcing process from the customer's side first. Including what you need to consider when looking at the existing contract. Then I will look at the supplier's side. Of course, the two are very much inter-connected.
I will also touch on how a supplier might validly change terms and conditions of employment because this often comes up after a transfer, and finally I want to give everyone a quick heads-up on two new cases which have been decided recently that have potentially significant effects.
Our first one to look at, where a customer is outsourcing services that it is currently providing for itself. It is really important that the customer plans the process in good time. It works out where it needs to get to, so there is enough time to put everything in place and deal with any potential issues that might arise.
In every outsourcing, HR teams, legal and procurement or purchasing teams all need to work together so they are joined up and nothing falls between the cracks.
A first generation outsourcing where there is a transfer from the customer of its own employees should be simpler in many ways. The customer knows its own employees what they do, so it should be able to easily identify who will be in scope to transfer. The customer has got to provide employee liability information about these employees, 28 days before the transfer. But if you are inviting a supplier to tender a bid, you will want to provide employee information a lot sooner so they know who they might inherit and what their employee costs will look like, so they can give a much more accurate picture of their charges.
Another part of planning is to make sure that the right people are retained to run the rest of the business after the transfer. If there are employees you need to keep, then there are a number of ways of ensuring they don't transfer, you will usually need the employee's agreement.
At the start of the process you can move employees out of scope into other departments or onto different services or potentially you could keep employees in place until the transfer, but ask the employees to sign an opt-out confirming they do not want to transfer and re-engaging them elsewhere in the business.
Although a first generation transfer can be simpler in some ways, it can also throw up additional challenges that a customer needs to be alive to. Often employees are unhappy at being transferred out to a third party company. They need to be able to clearly explain why particular employees are in scope. Employees often complain that they have been unfairly targeted for a transfer, when other colleagues have not been included.
This highlights another reason to start the planning process early, it is important to allow enough time for effective consultation. This is key to smoothing any employee relations issues that might arise and helps to ensure services can be up and running effectively from day one.
When an incoming employer has been identified, the customer will need to ask for their measures information - changes they propose to make post-transfer. And this makes up part of the information and consultation process.
It is usually helpful to invite the incoming employer to speak directly to staff as part of consultation and this can help to resolve any issues the employees might have.
I want to look now at the contract that the customer is going to negotiate with the incoming supplier. The contract underpins the commercial relationship and context for the services and ensures that the customer and the supplier both have the protections and the rights they need.
I have set out on the slide what a customer is likely to be asked to include in relation to entry. Where TUPE applies, the employees transfer with all of their existing rights and liabilities. Therefore any pre-existing claims will transfer across. So the supplier will want indemnities or contractual protections to cover any liabilities which arose before the transfer. They will also want protection against any costs which might result from a failure of the customer to inform and consult.
As TUPE applies to anyone assigned to the services whether or not they have been included in a list of transferring employees, there could be employees who have not been identified previously but could still transfer unexpectedly. The supplier would then be on the hook for their salary costs to employ them going forward, or the cost of terminating their employment.
Often the supplier is going to have costed a service, taking into account a certain number of transferring employees, so if more transfer, this could wipe out any profit. A supplier will often ask for protection against the risk of unexpected transferring employees as well.
Here, we have only got employees coming from the customer's own workforce, so it is easier for the customer to be aware of any risks and provide these protections. It is reasonable to protect the supplier from liabilities which result from its own actions.
The customer is going to want some indemnity protections from the supplier as well and they will want to cover costs arising from a failure by the incoming employer to provide that. Measures information for consultation. Any post-transfer liabilities and also, any liabilities that arise from the supplier's proposals to make post-transfer changes if they are to the employee's significant detrimental, a substantial breach of contract. Because under TUPE, the employees have the right to resign and bring a claim as a result of these. The customer will want to make sure the supplier is responsible for any costs that might result if the employees resign before the transfer.
As with any contract, the context is always really important. If the supplier intends to sub-contract the services, then the indemnities will also need to cover liabilities caused by sub-contractors because they might inherit employees or sub-contractor employees could also be within the scope of a transfer on exit. And in turn, the supplier will want the indemnities it receives from the customer to cover liabilities that its sub-contractors incur as well, because most likely it is going to be asked to stand behind these in its sub-contract.
If this is a second generation outsourcing with an existing supplier already in place, the customer should stay involved to manage the transfer, even though no-one is coming directly from the customer, because it needs to ensure that its services continue without disruption.
So, who is going to transfer will impact the cost charged by the new supplier and it is also important to ensure there is service continuity. There might be service critical employees that the customer wants to keep in place and again, planning is really important.
First of all, the customer needs to check the existing contract. What rights does it have to ask the existing supplier for employee information and when? It needs to know, which supplier employees might be in scope to transfer and what their terms are, at an early stage of the procurement process.
This will feed into both the new supplier's pricing and also negotiation of that new contract with the incoming supplier. It might take the supplier some time to mobilise, so the customer needs to allow enough time to receive the information after making the request.
The customer will also want to check the information it receives. Sometimes the supplier might try and offload additional employees who have not been working on the services. The customer might be able to use its own employees who manage the supplier service who are on the ground, to verify what it is being told by the supplier.
It is also helpful if the contract prevents a supplier moving employees out of scope of the transfer, offloading poor performers or expensive employees or changing transferring employees terms and conditions, so to give them perhaps, generous termination payments. Because everything is going to be inherited by the incoming employer under TUPE's automatic transfer principle. And that is why these provisions are often called anti-sabotage provisions. They are to try to prevent the outgoing supplier negatively impacting the competitor.
Finally, as the employees are transferring from the existing supplier not the customer, the customer has got to look at the indemnities it has, in its existing contract and also what obligations it is subject to and in the next slide I will go through what these might be.
As a reminder, there is no direct contract between the suppliers, so all indemnities have to be flowed through the customer.
The incoming supplier will ask for the same protections on entry as those we have just looked at when it is a first generation outsourcing. But here, as the employees are transferring from the existing supplier, the customer needs to check that it has got adequate indemnities in its existing supplier contracts which protect both the customer and the incoming supplier, so it can pass these on.
As the protection is usually needed, the indemnities must cover the pre-transfer liabilities, any failure to form and consult and also to cover the costs when the expected transferring employees. If there is a potential gap in the protection the customer has from the existing supplier and what the incoming supplier is asking for, the customer has got to weigh up the risk of giving that indemnity protection and not being able to pass it back, or possibly having the supplier price in any risk. The context is key to working out that level of risk. How many employees are in scope to transfer, what is their profile, do they all have long-service which means they have unfair dismissal rights for example.
Often, it is better for the customer to give the indemnity and then have a contingent risk, rather than have increased charges throughout the length of the contract if it does not.
The customer may also have given some protections to the existing supplier in the contract to cover its own acts and also those of any incoming supplier. These will usually include a protection for failure to provide that measures information, post-transfer liabilities and also if any costs arise from proposals to make post-transfer changes.
It will need to make sure that it obtains these indemnities from the incoming supplier in the new contract for the benefit of itself and also the previous employer so that it does not end up being responsible for the incoming supplier's acts or omissions.
If we now turn to look at things from the supplier side. When entering a contract, what does a supplier need to think about? It will be asked to provide pricing information to the customer, so it needs to know which employees are transferring from the existing supplier and what their salaries and benefits are. Pension rights especially can be really costly. The supplier has also got to work out whether it has got enough resource and skills to provide the services from day one, of it needs to recruit which can take some time.
What does a supplier do if the employee information it receives is inaccurate? It might not be a problem necessarily if there's a straightforward pass-through of costs to the customer. But otherwise, any increase in salary costs might wipe out profit. The supplier might be able to obtain a specific indemnity from the customer to cover losses, or alternatively they might have to price and risk.
Other options might be a charging adjustment mechanism, once the employee information can be verified post-transfer.
We have looked at the usual indemnities a supplier will typically need in relation to entry and also asked to give. But as other considerations, if the supplier is asked to restructure the services by a customer, then redundancy costs might also need to be taken into account for redundancies made in that period post-transfer, often dealt with by way of an indemnity from the customer to cover or share the cost, or the supplier will need to build in those costs into the charges.
It is really important parties do not forget about the potential for TUPE on exit when negotiating the contract. They need to deal with it appropriately. I have mentioned the customer who would want rights to us, the supplier, to provide employee information on behalf of itself and any sub-contractor at an early stage before termination.
The supplier needs to work out what information it can provide, in how much detail and how quickly. What it can agree might depend on how many employees work on the services and whether it has got the relevant rights in its sub-contracts to require parties lower down the chain to provide this as well.
A supplier is often asked to warrant the accuracy of information. Can it do that? It might feel comfortable doing this for its own employees, but maybe not for the information coming from its sub-contractors.
I have talked about anti-sabotage divisions which prevent supplier changes to the workforce in the lead-up to termination. Before agreeing, a supplier needs to makes sure it has still got that sufficient flexibility to be able to run the services effectively to comply with its KPIs at all time, up to exit.
I have mentioned the types of indemnities that a supplier will be asked to give in relation to exit and will also need from the customer. There is something else to think about. A supplier might also need redundancy cost protection to take into account a situation on exit where TUPE does not apply. Again here, context is really important. It is going to be a much bigger issue for the supplier if there are a large number of employees working on the services or if it has taken on a large number of transferring employees on entry.
So this again highlights the need to be joined up within the business. Often we have got the legal team negotiating contract terms. They will need to be in contact with the business, with the HR teams to know the context of the services and what that employee risk is looking like because this all governs what protections are essential or can be dropped and what obligations can be signed up to.
The next one to highlight just a few useful tips to remember for the contract. First of all, make sure the indemnities are wide enough in scope so the customer can pass protections onto a new supplier or back to the previous supplier and there is no gap. Does the customer want it suppliers to be able to enforce the protections directly instead of going through them?
If so, then the suppliers need third party rights because they are not a party to the contract and this needs to be carved-out of the third party exclusion cores. Next, remember that TUPE applies to employees and workers. Any indemnity protection for unexpected transferring employees must cover anyone employed or engaged. Also this type of indemnity only really works properly if you have got a list of transferring employees agreed and the protection works to cover anyone outside of that list.
Where TUPE does not apply on exit because, for example, the services are coming to an end, the supplier will be responsible for redundancy costs unless indemnity protection has been given by the customer. A customer must also check whether any protection is given elsewhere in the contract. For example wrapped up in any general employment charges or costs during the contract or perhaps site closure charges before deciding to take any specific approach on TUPE.
Finally, do not forget about sub-contractors if they are carrying out the services. You need to include them within the scope of protections from both the supplier and the customer.
Next, I want to quickly look at a problem that suppliers often come across when they are inheriting employees on a transfer. Often they are going to inherit employee's terms significantly different to their existing employees. It might want to then make some changes for a number of reasons, for example, the working patterns might not fit how the supplier runs its business or because there might be potential equal pay issues going to arise.
Employees have increased protection under TUPE in relation to terms and conditions – in relation to changing terms and conditions of employment. Even if employees agree to changes, changes cannot be validly made and enforced at a later date by the employer unless they are un-connecting of the transfer, so the changes affect the whole entire workforce not just the transferring employees or where, if they are in connection with a transfer, there is an economic, technical or organisational reason entailing changes in the workforce.
Entailing changes in the workforce basically means a change in job function or numbers, so typically redundancies. How would you handle this in practice? It might be possible for the employer to justify the changes with an ETO. The downside of this is that you need some changes in job functions or job losses and often you do not want to reduce your workforce and also you will not have any certainty that a tribunal would agree with you that it is an ETO and enforce the change until the change was brought and that was all looked at.
But it might be appropriate for an employer to use if there is no potential financial loss that employees can claim at a later date because the risk of the change being unenforceable might then be lower. If it is essential that the employer has certainty around the change, then it can dismiss employees and re-engage them on the new terms. This must be handled carefully, it has got to be done under a settlement agreement because otherwise any dismissal would be automatically unfair because it is made by reason of the transfer and also because you would need to make sure you reduce the potential for employee relations issues.
For non TUPE changes, this method has been highlighted recently as being considered very heavy-handed. You would need to make sure that there was a very clear communication process and consultation with employees to know that this was being done administratively to ensure certainty.
If you are going to be reducing say, holiday entitlement or overtime payments then this might be a way you would want to do it because you do not want any financial loss to accrue and then that claim could be made against you at a later date.
Sometimes employers choose to buy-out a benefit that employees have. This will not be enforceable if an employee wants to back out later, but you could get employees to sign an agreement that they repay the amounts they had received if they do choose to challenge it later, so that you are not left out of pocket if you have to unpick everything.
If employees are putting together a package of changes, employees might not be so likely to challenge the individual terms later, but of course it is absolutely open for them to cherry pick the ones they want to keep. Of course, employees are less likely to raise an issue at a later date about beneficial changes such as a pay rise.
It is important to remember as an incoming employer that any changes you are proposing will be a measure, they need to be passed onto the outgoing employer so it can be included in the consultation process with employee representatives. It is important for that incoming employer to get involved in the consultation process if possible, so that you can speak directly to employees and try and iron out any issues that might come up from the proposed changes and get the employee's buy-in if possible.
There is also a risk that if employees do not like the proposed changes they could resign and bring a claim and that is under Regulation 49 and 411 of TUPE. They would have to be able to claim the changes substantial and to their material detriment for a fundamental breach of contract and I have mentioned these protections earlier.
TUPE gives the employees protection, the resignation would then be treated as a dismissal and employees can claim it was automatically unfair and I have mentioned earlier, that usually this risk is covered by indemnity protection and you usually see provisions in the contract to deal with that.
As I flagged at the start, we have had two recent decisions which have caused a bit of a stir in the employment world. I am just going to give everyone a heads-up today because we do not have time to go into this in detail and it is still really unclear what the potential impact will be.
The first was a European decision on the Acquired Rights Directive,ISS and Govaerts in respect of business transfer, and the second case was McTear and Bennett in the Scottish EAT looking at outsourcings under the UK service provision change provisions.
Govaerts involved a cleaning business which was transferred to two transferees. An employee worked on both parts of the business so the court was asked to decide how to deal with that employee's employment. The European court decided that the employment could be split between the two transferees into two part-time contracts and a split could be done either by looking at the time spent on the different parts of the business or their economic value.
They did say that no split should be made if it is not possible or if it caused a worsening of working conditions or adverse effect on the individuals' rights. If that was the case, then the transferees would be responsible for any termination liabilities from an actual dismissal or if the individual resigns and claims constructive dismissal because they do not like what is being proposed in relation to the split.
But helpfully the court did not provide any guidance on how the employers were supposed to work this out. How to work out the split or how to determine what would be a worsening of working conditions. They said it was for the national courts to decide how to organise it.
UK law has always approached a transfer looking at whether an individual is assigned to the part of the business that transfers to either one of the transferees or instead as provision change cases, the courts have also held that the transferee that takes over the greater part of the transferred activities takes on the relevant employees of the transferor in certain cases.
We have now had that second decision I mentioned, McTear and Bennett in the EAT which has moved the problem onto service provision change. Previously the Govaerts case related to business transfers, but now this second case has said that we should apply that principal to service provision changes. There are a lot of practical difficulties with splitting contracts. How do you split it up fairly? How do you determine what is going to be adverse working conditions for the employees? What happens if there are many transferees? That is going to be almost impossible to split a contract between five incoming suppliers.
You would have to manage the split in working hours, the employees might be asked to work in different locations. It might be the case that the transferees are competitors, so you have got employees working for two or more competing organisations and they are going to manage that confidential information, for example.
No-one seems to be taking this decision into account in their drafting at the moment. I think everyone is waiting to see if it is going to be appealed. In the meantime, some potential ways that we might look to deal with this additional risk is to use obligations, warranties, indemnities in these services agreement.
For example on entry, a supplier is going to want certainty around who they are going to get, but also how many working hours. They might expect a full-time employee but if this principle is applied, they may only receive part of an employee's working hours. They might want to ask the customer to warrant the accuracy of the information they are receiving, for example.
They also need to check that when they are getting the protection from unexpected transferring employees that that applies to part of an employment contract as well as an entire employment contract. On exit, a customer is probably going to want to ask for a lot more detailed information about the supplier and employees to check which part of the service each employee works on, so that if those services are split, they can have an idea of which employees will go where.
They might also include an obligation on outgoing suppliers to reallocate the staff so that it is clearer where they sit in terms of the service lines. Or perhaps to ask the supplier to help facilitate redundancies if there is going to be a risk the employees could be split between a number of incoming transferees, and it is better to manage a termination of employmentrather than waiting for an employee to resign and try to allocate liabilities accordingly.
Just a quick heads-up there on those new cases. We will be watching and waiting to see what is going to happen with those and we will update you on those as soon as we can.
Now we have some time for some questions.
Jane: Thanks Hannah and we have had a few coming through which I have been keeping an eye on so we will try to get through as many as we can.
Firstly, you mentioned just there actually, in the context of talking about those two new cases that the incoming employer might need to make redundancies. If that is the case and the new provider wants to do that, can redundancy consultation start before the transfer, is the question.
Hannah: There are a couple of points to think about here because the incoming employer can only fairly make dismissals after it becomes the employer because of the enhanced protections TUPE gives employees around dismissals and that will apply to the employees where they have got two or more years' service.
The outgoing employer cannot borrow the incoming employers' redundancy reason. You have got to have that ETO reason to make a dismissal. Any dismissals made by the outgoing employer, will be automatically unfair and the incoming employer will inherit all the liability for them.
The incoming employer does not employ the employees until the transfer, so even if it is going to make the dismissals after the transfer, any individual consultation it carries out before the transfer, is also not technically going to count towards that consultation for dismissal purposes. An employer, as you know, got to carry out a fair consultation before making a redundancy dismissal.
The situation is different where we have got collective redundancy consultations. That is triggered if there is twenty or more proposed dismissals made by the employer in the same establishment within 90 days. If it is triggered, we have got additional obligations for the employer and there needs to be a minimum period of 30 days or 45 days if more than 100 employees are affected before any dismissals take effect.
There are now special statutory provisions in place which permit pre-transfer collective consultation if certain conditions are met so that can start before the transfer which is really helpful because you have got that long time period before you can actually make dismissals.
It is the incoming employer's process but it is reliant on the outgoing employer to allow access to the employees and help elect any new reps, for example. So it can be really complicated in practice. It is essential that you have got co-operation between the parties, you are usually going to ask the parties to enter into an agreement to try and agree where potential liabilities sit.
It is possible for the incoming employer to make dismissals before the transfer if it is really needed but you have got to deal with unfair dismissal risk that I mentioned earlier, usually you would ask the employees to enter into settlement agreements. Just as a quick reminder as well, if you are going to make those redundancies post-transfer, that is going to be a measure so you need to feed that into the information and consultation process.
Jane: Okay. I think the next question also comes from that Govaerts and McTear cases actually. And to some extent you covered it, but I will ask it anyway because it is an interesting topic for everyone.
If the services are being split between lots of different suppliers, will TUPE still apply?
Hannah: It's always very difficult to determine with certainty. It is going to really depend on the factual situation for any case but, the UK position has always been that TUPE can apply where there are different suppliers appointed but if the activities are split between lots of different suppliers, it is going to be increasingly difficult to identify that service provision change.
If you cannot say with any certainty where any relevant activities have ended up and it is all allocated in an ad-hoc way for example, then TUPE is unlikely to apply. But if a large percentage of activities end up with one particular supplier, even if you have got others appointed, then you could get a service provision change transferred to that supplier of all the staff?
Or if you have got distinct groups of employees which can be shown to correspond with the split in services to each different supplier appointed, then the employees can also be transferred along those lines. But, those two recent cases could mean that we have a big significant change to what we understand the position to be, so we are going to have to take that into account as well.
Jane: Yes. There is a comment here and a question. The comment is, the rules around rules being split seem completely impractical, as you said. Were concerns expressed by industry at the time the rules changed and has there been commentary since that suggest this may be revisited.
Well, I mean it was case law so there was not an opportunity to comment in advance other I am sure these concerns did come up in the arguments and there has certainly been commentary since that it is impractical, but as you said, I think we are just waiting to see if they appeal it, aren't we? But they must be getting close to their time limit by now?
Hannah: Yes. We have not heard anything yet, have we so it does remain to be seen how everyone chooses to deal with this and as I said, we have not seen any indication that any parties are taking this into account at the moment and in drafting, so we will just have to wait and see.
Jane: Sure. Next question is a bit of a different angle on all of this. What happens if the supplier is insolvent. Does this prevent TUPE applying and I assume from that, it means the incumbent supplier.
Hannah: Yes. Here, if your existing supplier has gone bump and you need to get someone else in to provide the services for you, the key question is what type of insolvency process the existing supplier has entered into.
In brief, if I just talk about the two main types of insolvency process. If you have got an administration, even a pre-pack, the automatic transfer principle of TUPE will still apply, so anyone coming in to take over those services will inherit the staff but as the outgoing supplier is insolvent, they are not going to get any of those indemnity protections to cover pre-existing liabilities.
That could be very difficult. There could be wage arrears and things like that for example. Often a customer in those circumstances, is asked to stand behind that risk. And it might have to agree, if it needs those services, to continue and it does not have a choice.
On the flip side, if you got a compulsory liquidation, there is not going to be an automatic transfer of employees so if you get an incoming supplier taking over the services, they can choose whether to take on the staff of the existing supplier and they will not inherit any liabilities. In some ways that can be more helpful.
We have done a recent webinar on this as well if anyone is interested and wants to look at the position insolvency in employment law, in more detail.
Jane: I think it is still on our website actually, is it not? So, yes. Okay. There are a couple of questions here around employee liability information? One is, a question around what are the data protection implications of providing that, particularly sensitive personal data or special category data as we are now supposed to call it, are we not? And at what stage of the transaction that should be shared, anonymously.
And then the second question is more around a timing one? ELI has to be provided 28 days before the transfer but the question is saying are there not some special circumstances where you can give that later and what are they, if any?
Did you want to pick up the first one on data protection?
Hannah: Yes. Absolutely. Yes. We are all subject to very stringent data protection requirements now. I have talked about employee information being shared at an early stage so that everyone can plan the process, plan the pricing, know what costs are involved. This will all have to be provided on anonymous basis and it has to be properly anonymised so you cannot just take out employee names when it is very clear there is only person in one role and can be identified perhaps by a search on the website.
Ideally, you group data or give age ranges, for example, anything to make sure that that information is properly anonymised but you need enough detail for the supplier to work out costs and it is always going to be a balancing act to do that.
Once you share information, you would want to ensure there is appropriate confidentiality obligations and requirements on whoever is receiving that information to keep it safe. If you are handling data, you have got an obligation to ensure that.
Once we hit ELI timescales, so 28 days before the transfer then because this information which includes names and ages of employees, because it is required by TUPE, then that is a carve-out. Just a clear carve-out from data protection requirements and it can be shared. And it should be kept updated so that if anything changes prior to the transfer, then that is all shared with the incoming employer, so you are safe. Once you hit that 28 days and you have got and identified incoming employer, you are protected.
Jane: Sure. So the special circumstances question. Traditionally, whenever special circumstances are mentioned so, forget about that because you are never going to be able to bring yourself into it, but I think in the case of ELI, I suppose the one I was thinking about is this case/question came through was - and it would be unusual – but if somebody were assigned to the services between the 28 day before the transfer and the transfer, then if you were going to maintain the argument that they were assigned, you should be consistent with that and provide employee liability information for them.
Can you think of any other special circumstances. Running insolvency? Would that...?
Hannah: Yes. Absolutely. An insolvency situation would definitely give rise to quick transfers where you do not have that 28 day period before the incoming employer takes over and quite often, contracts for services are going to have step-in rights? A customer needs to have the ability to step straight in and keep services going even if the supplier fundamentally breaches the contract or goes insolvent and so when the customer takes those over, that also is going to be an immediate transfer where you do not have 28 days to so.
And as you said, if people move in and out of scope, then you have to keep that employee information refreshed. It is not just static at the date 28 days before the transfer. You have got to make sure that it is kept updated and applies to everyone in scope.
Jane: Okay. And then we have got one final question, which is the million dollar question really.
On a service transfer out a business, who has the final say on whether the employees are in scope of TUPE or not?
I mean, that's the employment tribunal ultimately if it gets challenged, but that is why we spend such a long time trying to work out who is assigned properly and that becomes a negotiating point sometimes does it not?
Hannah: Yes. Exactly. And there is always practical difficulties in challenging information because you cannot see behind the veil that the supplier is giving you and it is just using all the resources that you have. Your employees on the ground, have those people that the supplier is saying are on the services, have they been turning up to work? More difficult now we are all working from home. But we might be back into facilities. I think, one piece of advice that a colleague gave me is, that if there really is a dispute, it is quite often good to get the parties together in face, if possible – but obviously over Zoom if not – to actually question why one side is saying the party is in scope and why the other is not, and then face-to-face it is often very difficult to maintain any of that artifice and you have to give over more detail.
Jane: Yes. Great. Okay. Well, our time is up today. Thank you very much Hannah and thank you to all of you for joining and for those very interesting questions. As I mentioned, you will, after the webinar, get emailed a questionnaire. Do, please take a couple of minutes to fill that in and send it back to us and we will use that going forward.
If we did not get to your question, we did have a couple leftover which we could not fit in and we will come back to you by email, separately.
Otherwise, I hope to see you at our next webinar which is next Tuesday. Same time – 11 o'clock where we will be taking a closer look at how to do an effective investigation.
Thank you again for joining and have a good rest of the day.
Hannah: Thank you.
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