The TUPE effect

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) protects employees if the business in which they are employed changes ownership.

It applies to employees of any size of business in the UK regardless of where the head office is located. In addition, employees of a UK business who are based outside the UK can still be protected in certain circumstances.

The effect of TUPE (except when the business is insolvent) is that the employee’s job transfers to the new company along with their existing employment terms and conditions.

If the employer is insolvent and the business is being transferred to or taken over by another company, the protection employees get is different from a normal transfer. The employees are unlikely to be protected under TUPE if the business is closing down, there are however specific provisions available depending upon the circumstances and the requirement to consult will still apply, even if a company becomes insolvent at very short notice.

TUPE can be complex in nature and we strongly advise that employers seek professional advice before they proceed.

There are two types of TUPE transfer under the regulations:

  • Business transfers – where a business or part of a business moves from one employer to another. This can include mergers where two companies close and form a new one.
  • Service provision changes – where an in-house service (e.g. cleaning or workplace catering) is outsourced to a contractor or a current contract ends and is given to a new contractor or the work is transferred in-house by the former customer. Employees are not protected under TUPE if the contract is for the supply of goods for the company’s use (e.g. a restaurant changing food suppliers) or for a single event/short-term task (e.g. a catering company being used for a corporate event). Only the employees who can be clearly identified as providing the services being transferred are protected.

A good example of a sector that is subject to frequent service provision change is cleaning and facilities and TUPE becomes a factor when a client retenders and appoints a new cleaning or facilities provider. TUPE will usually apply, even if only one employee undertakes work for that particular client.

If there’s a trade union in the workplace, the employer must inform and consult with the representatives from the union. Employers with less than ten employees can inform and consult directly with employees. Otherwise, employee representatives must be informed and consulted. If there are no representatives they must be specially elected in accordance with TUPE for the purpose of the transfer.

Employee’s representatives must be consulted about anything that will affect employees and new Employers should try to gain agreement about any proposed changes, often referred to as “measure items”.

Four weeks before the transfer the existing employer must provide the new employer with information about employees. This normally includes:

  • name
  • age
  • main details of employment
  • disciplinary action taken against employees in the last two years
  • grievances raised by employees in the last two years
  • legal action taken by employees against the employer in the last two years
  • potential legal action the employer thinks employees might raise

TUPE regulations mean employees shouldn’t lose their existing employment rights. The new employer takes over employees’ employment contracts, including all the previous terms and conditions of employment, holiday entitlement, period of continuous employment and any collective agreements previously made. It’s a breach of contract if the new employer doesn’t meet the terms of the previous employment contract. Any failures of the previous employer to observe employees’ rights may enable employees to make a retrospective claim for discrimination against the new employer, even if the failure took place before the transfer, it is therefore usually the case that an indemnity is sought by the new employer from the existing employer prior to the transfer taking place.

Employees can refuse to work for the new employer. This is the same as resigning – they won’t normally be able to claim unfair dismissal or redundancy pay. Notice isn’t required. The employee simply tells the employer, or the new employer, that they do not wish to transfer before the transfer happens. Employment then ends at the time of transfer. But be aware that if an employee’s proposed working conditions are significantly worse because of the transfer, they can object to the transfer, or resign and claim unfair dismissal.

If an employer knows that an employee is transferring to another company, they can’t normally change the employee’s terms and conditions to make them the same as those of the new company – even if the employee agrees to the change. Also, the new employer can’t change the terms and conditions if the reason is the transfer itself.

The new employer can change an employee’s terms and conditions by agreement if it is for an ‘economic reason’ (to do with how the company is performing), a ‘technical reason’ (to do with the equipment or processes the company uses) or an ‘organisational reason’ (to do with the structure of the company) involving changes in the workforce or workplace, such as a result of redundancies or a move from a managerial to a non-managerial position.
After the transfer employers can improve employees’ terms and conditions only with agreement. For example, an increase in the amount of holiday to achieve equity.

Employees can be dismissed for an economic, technical, or organisational reason involving changes in the workforce (redundancies) and the normal rules around fair dismissal apply.

Collective agreements in place before the date of the transfer must be honoured, but the terms and conditions in the agreement can be renegotiated after one year if the change isn’t less favourable to the employee.

Employees’ company pension rights earned up to the time of a transfer are protected, but the new employer doesn’t have to continue an identical pension.

When the transfer is complete, employees should get an up-to-date written statement of employment, giving the name of the new employer and a statement that their terms and conditions haven’t changed. If their tax records are being updated, they will get a P45.

The new employer can’t make employees redundant just because they were transferred from another employer. However, the new employer can consult about redundancies before the transfer if the old employer agrees. If an employee is made redundant for an ‘economic, organisational or technical’ reason involving changes to the workforce, they may be entitled to a redundancy payment.

HR Wise provides an employee handbook and employment contracts (incorporating a statement of particulars). They are regularly updated by an industry expert, so you don’t have to worry about keeping on top of things. If you use our handbook and employment contracts, we help you navigate potential TUPE situations.

Please get in touch if you would like to enjoy affordable peace of mind.

Contains public sector information licensed under the Open Government Licence v3.0.

The Importance of an Employee Handbook

Why should your business have an employee handbook?

In the HR Wise January blog, the focus was on the Employment Contract. Many employers choose to support their contract of employment with an employee handbook. Although not explicitly required by law, having an employee handbook is something a good number of employers, whether  large  or small, adopt as a matter of course. Drafted properly, handbooks can form a useful tool for the promotion of a healthy workplace and create a framework for positive working relationships.

Where the employment contract provides the specifics for an individual employee, the handbook provides details that are relevant to every employee, regardless of their role in the company. It is for that reason that handbooks and contracts will often state that the contract will supersede the handbook where expressly stated in an individual’s letter of appointment or contract of employment, to recognise any personalised arrangement.

An employee handbook is helpful in that it can bring together all of your relevant policies and procedures into one document which can then provide a useful reference point for managers and employees. An employee handbook provides a company with the opportunity to define in words the company culture, vision, values, and mission and describe the types of behaviours the company expects from their employees. The handbook can be used to remind employees of all the company benefits and entitlements which the company has chosen to invest in and provide a brief company history and other interesting information.

A good handbook will be comprehensive but balanced.  Ensuring your handbook is easy to use and accessible is important or employees and managers may be put off from referring to it. However, producing a handbook is not a once only activity, a handbook is a living document which must be maintained to ensure it continues to reinforce your strategy and practices and to ensure it reflects any changes to your policies and procedures.

Contractual or Non-contractual?

  • A handbook can be classed as part of the employment contract however, if a handbook is expressed to be contractual, it will be treated as though all of its policies were included within the employee’s contract, so the employee will be strictly bound by them and if the employer fails to adhere to its own policy, it may be liable for breach of contract, opening the door for constructive dismissal claims.
  • A non-contractual handbook allows for more flexibility – policies can be altered and changed, within reason, without requiring explicit employee consent, and to quickly accommodate any change in the law. Your handbook should explicitly state whether it is or is not contractual (or in some cases which policies are, or are not, contractual).

Employers can use the policies in an employee handbook to provide guidance on the ethical and legal treatment of employees. A handbook should provide direction for employees planning annual or parental leave, reporting sickness, expectations of conduct etc., explaining exactly how the company will deal with an issue and what an employee can expect.

A handbook is a useful tool for orienting new members of staff. Many employers use the handbook to help new members of staff familiarise themselves with the company. An employee handbook can  cover key policies areas including:

  • Expectations of staff – raising grievances, facing disciplinary procedures and behavioural standards.
  • Avoiding Conflict of Interest – Anti-corruption/bribery/tax evasion – employers have a duty to take reasonable steps to prevent these offences.
  • Valuing Diversity & Dignity at Work – it’s vital to make sure a commitment to equal opportunities is stated clearly in the handbook, not only to promote a positive working environment but also because employers can be liable and vicariously liable for discrimination against employees (or even prospective employees).
  • Leave & Absence Arrangements – Annual leave, sickness absence, maternity, paternity, parental, shared parental and adoption leave – ensure your employees are aware of the different leave options and what they are entitled to.
  • Health and Safety – employers with more than five employees have a statutory duty to create a written statement of health and safety policies and to bring this to the attention of employees.
  • Enabling performance at work – induction, probationary support, appraisal and where an individual is unable to fulfil their role in spite of support, capability procedure.
  • Protection of business interests – for example, where intellectual property applies.
  • Leaving employment – retirement, resignation and processes which apply when an employee leaves the company.

The employee handbook helps to ensure employees understand what is acceptable and what is expected, if key policies and procedures are not expressly stated, it can lead to potential conflict, for example, your social media policy or data protection policies. For that reason, we would advise you ask your employees to sign and acknowledge that  they have reviewed the handbook and have understood and agreed to follow the polices.

To summarise, an employee handbook provides a useful tool for maintaining an open and transparent relationship between employees and management.

The HR Wise package provides a legally compliant employment contract and an employee handbook that is comprehensive and easy to digest. This can support your company to  affirm company policies and procedures and demonstrate “reasonable care” towards your employees.  We will ensure your handbook is up to date, and that it reflects any legislative changes thereby remaining compliant with the law.  The handbook we provide is instantly accessible online, through the HR Wise portal, saving unnecessary printing costs and ensuring your managers and employees are always able to refer to the current version.

Please get in touch if you would like to enjoy affordable peace of mind in this respect.

The Uber Case

The Supreme Court’s two-day hearing of the Uber BV and others v Aslam and others case took place week commencing 20 July 2020. It will be a landmark judgement in the field of employment law in relation to the definition of an employee, worker or self-employed contract. We can expect to hear the outcome in the next couple of months.

Why does it matter?

Employment status disputes are when an individual feels they are entitled to the same rights as if they were employed (or potentially vice versa). There are different categories of employment:

  • employees, who are entitled to a wide range of employment rights and benefits;
  • dependant workers, who are entitled to some, but not all, of those rights; and
  • third party contractors (self employed), who receive very little protection under employment legislation.

This is important for the Uber drivers, as if they are considered to be workers, they are entitled to many more rights (including paid leave, etc.) than if they are considered self employed.

The merits or otherwise of the gig-economy and zero-hours contracts have been debated widely over the last few years. There are benefits to some people of having flexible working but for some this is the only work they can obtain. More and more people are looking to work for companies like Uber, in a job market which could see a rise in unemployment of up to 13%, in a worst case scenario (Office for Budget Responsibility Fiscal sustainability report July 2020) .

The Supreme Court decision will be of vital importance to those who drive for Uber or work for other such similar companies, and for their employers…..