TUPE Transfers: A Standard Operating Procedure for Employers, Study notes of Business

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Employment Manual TRANSFER OF UNDERTAKINGS (TUPE) GUIDANCE FOR MANAGERS Last Review June 2018 Next Scheduled Review June 2021 Last Updated April 2019 CONTENTS 1 INTRODUCTION ................................................................................................. 1 2 OVERVIEW ......................................................................................................... 1 2.1 What is a relevant transfer of an undertaking? ............................................................. 1 2.2 Business Transfers ...................................................................................................... 1 2.3 Service provision changes ........................................................................................... 2 2.4 The situations in which TUPE does and does not apply ............................................... 3 2.5 Who and what transfers ............................................................................................... 3 2.6 Impact of a breach of the TUPE regulations ................................................................. 4 2.7 Employment Checks .................................................................................................... 4 2.8 Pension Arrangements................................................................................................. 5 2.9 Data Protection - Legal Requirements ......................................................................... 6 2.10 Role of Legal Services ............................................................................................... 7 2.11 Role of the HR Administration Service ....................................................................... 7 2.12 Role of Procurement Lincolnshire .............................................................................. 7 2.13 Financial Matters ........................................................................................................ 9 3 LCC AS THE SENDER......................................................................................... 10 3.1 Flowchart – Transfers Out (Sender) ........................................................................... 10 3.2 Standard Operating Procedure – TUPE Transfer Out (Sender) .................................. 11 3.3 Introduction ................................................................................................................ 13 3.4 Measures/legal and social implications ...................................................................... 14 3.5 Consultation and notification ...................................................................................... 14 3.6 Information about employees transferring .................................................................. 14 3.7 Transfer out employment checks ............................................................................... 15 3.8 Files being transferred ............................................................................................... 15 3.9 Liability passing on to the incoming contractor ........................................................... 15 3.10 Pensions .................................................................................................................. 16 3.11 Staff on Secondment ............................................................................................... 16 3.12 A Last Minute Delay ................................................................................................. 16 4. THE COUNCIL AS THE RECIPIENT ................................................................... 17 4.1 FLOWCHART – TRANSFERS IN (RECIPIENT) ........................................................ 17 4.2 Standard Operating Procedure – TUPE Transfer In Recipient ................................... 18 4.3 Introduction ................................................................................................................ 19 4.4 Consultation and notification ...................................................................................... 19 4.5 TUPE and Redundancy ............................................................................................. 20 4.6 Information ................................................................................................................. 20 4.7 Transfer in Employment Checks ................................................................................ 21 4.8 Measures/ Legal and Social Implications and Liabilities ............................................. 21 4.9 Pension ...................................................................................................................... 22 4.10 Preparation for Staff Transfer to the Council ............................................................ 22 4.11 The situation in an emergency transfer .................................................................... 23 An example of a business transfer would be the transfer of staff in a Local Authority going to an Academy. 2.3 Service provision changes The service provision change provisions introduced by the 2006 TUPE Regulations as amended 2014 effectively include 3 situations: • outsourcing • contracting in or in-sourcing, and • re-tendering In order for there to be a service provision change the following conditions must apply: • there must be an organised grouping of employees with a principal purpose (e.g. if a contractor was engaged to provide a courier service, but the collections and deliveries were carried out each day by various different couriers on an ad hoc basis rather than by an identifiable team of employees, there would be no service provision change.) • it must not relate to a single specific (one-off) task (e.g. where a contractor is engaged to organise a single conference for a client, even if the contractor has established an organised group of staff to carry out activities involved in fulfilling that task, and the client subsequently holds a second conference using a different contractor, there would be no transfer) • it must not be of a short-term duration (e.g. a contract relating to the security of a major sporting event concerning the provision of security advice over a period of years leading up to the event, and another contract concerns the hiring of security staff during the event itself, only the first contract would likely to be covered) • the activities must not consist wholly or mainly of the supply of goods or services for the client’s use (e.g., if a contractor is engaged to supply sandwiches and drinks to a client’s canteen, for the client to sell on to its own staff, TUPE will not apply. If, however, the contract is for the contractor to run the client’s staff canteen, TUPE may apply). A grouping of employees can consist of just one person. The principal purpose element is intended to confine the provisions to cases where the sender has in place a team carrying out the service activities and that team is essentially dedicated to carrying out the activities that are transferring. The 2014 Regulations amended the TUPE Regulations to require that the activities carried out after the change must be fundamentally the same as the activities carried out before the change, in order for it to be a service provision change. This reflects the position taken in case law (which referred to the activities being “fundamentally or essentially” the same). This means that if the service requirement was changed fundamentally, there would be no service provision change. On the other hand, minor differences between the nature of the tasks would not normally on their own be sufficient to mean that the activities are not fundamentally the same. Where the service provision change may include blocks of a service, it is possible that TUPE may apply to those specific elements. HR advice should be taken prior to entering into any discussions regarding such a change. 2 2.4 The situations in which TUPE does and does not apply By way of broad guidance TUPE has been found to apply to: • Mergers. • Sales of businesses by sale of assets. • A change of licensee or franchisee. • The gift of a business through the execution of a will contracting out of services. • Changing contractors. • Where all or part of a sole trader’s business or partnership is sold or otherwise transferred. However, TUPE does not apply to: • Transfers by share take-over. • Transfers of assets only (for example, the sale of equipment alone would not be covered), but the sale of a going concern including equipment would be covered. • Transfers of a contract to provide goods or services where this does not involve the transfer of a business or part of a business. • The supply of goods for the client’s use, for example, supplying food to a client to sell in its staff canteen, rather than a situation where the contractor runs the canteen for the client. 2.5 Who and what transfers Except where an employee objects to a transfer, and their employment is therefore terminated, on completion of the transfer, the receiving organisation will take over all of the senders’ employees, rights, powers, duties and liabilities and any act or omission before the transfer is completed. The receiving employer will take over all of the rights and obligations arising from the contracts of employment of the transferring employees, except for criminal liabilities and some benefits under an occupational pension scheme Liability for statutory claims existing prior to the transfer will transfer, e.g. a Recipient will become liable for a Sender’s act of discrimination which occurred prior to the transfer. Any trade union recognition will transfer so long as the transfer is of an organised group of employees who retain their identity distinct from the remainder of the receiving employers business. If they do not retain this identity then the recognition will lapse. A service provision change will often capture situations where an existing service contract is re-tendered by the client and awarded to a new contractor. It would also potentially cover situations where just some of those activities in the original service contract are re-tendered and awarded to a new contractor, or where the original service contract is split up into two or more components, each of which is assigned to a different contractor. In each of these cases, it is necessary to consider whether the activities after the change are fundamentally the same as those carried out before it and then whether there was an organised grouping which had as its principal purpose the carrying out of the activities that are transferred. However, the activities might be divided up so much that there is no service provision change. This is often 3 called “fragmentation” of the service and it will depend upon the circumstances as to whether a service is so fragmented that it is not a service provision change. Employment contracts may incorporate provisions of collective agreements as may be agreed from time to time. For example, collective agreements between the transferor (or sender) employer and the recognised union(s), or collective agreements agreed by a national body for the sector on which employers and unions are represented. Terms and conditions in new collective agreements, or changes to existing ones, may then be automatically incorporated into individual contracts of employment. Under the amendments made by the 2014 Regulations, rights in relation to future collective agreements which have not been agreed at the time of transfer do not transfer if the transferee is not party to the later collective agreement, nor a party to the collective bargaining for it. If the transferee does participate in that collective bargaining, then the employee does have rights to any terms and conditions which would be incorporated from it. 2.6 Impact of a breach of the TUPE regulations If a TUPE transfer applies, all terms and conditions and continuity of employment should be preserved. This principle applies to all employees who were employed in the entity transferred immediately before the transfer; and those who would have been so employed if they had not been unfairly dismissed for a reason connected with the transfer. Subject to a two year qualifying period for an Unfair Dismissal claim, such a dismissal will be automatically unfair for a reason connected with the transfer unless it is an ‘economic, technical or organisational’ (ETO) reason entailing a change in the workforce. (NB Anyone employed prior to April 2012 will have a one year qualifying period for an unfair dismissal claim.) 2.7 Employment Checks Both the TUPE Regulations and the Immigration, Asylum and Nationality Act 2006 are silent on the obligations of transferees that inherit employees, in the event of a TUPE transfer, to check the right of those employees to work in the UK. However, the UK Border Agency in its Comprehensive Guidance for Employers on “Preventing Illegal Working” (on the UK Border Agency website) states that, “Employers who acquire staff as a result of a TUPE transfer are provided with a grace period of 28 days in which to undertake the appropriate document checks and establish an excuse, following the date of transfer”. Upon receipt of Due Diligence, where it is indicated that an individual is not a UK resident, it is important that the processes are followed to establish what paper work should be completed. If an application for a licence is required and this application is unsuccessful then letter 9 should be used to write to the individual terminating their employment There are Right to Work champions within the HR Adviser teams and these can be consulted in the event that clarity is required 4 2.10 Role of Legal Services The Council’s Legal Services will ensure that robust terms and conditions of the service contract are in place to aid contract management and to facilitate smooth transitions of staff from one employer to another. In particular, Legal Services, or those drafting any contract between the Council and an external service provider, may wish to include specific contractual provisions, whereby the external service provider is placed under obligations to provide employee liability information more than 28 days prior to any transfer and, where necessary, for such information to be more comprehensive than the minimum required by the TUPE Regulations. In addition, consideration may be given to requiring indemnities to be provided by the parties. 2.11 Role of the HR Administration Service This is another important part of the transfer so it is necessary that the HR Administration Service (HR Admin) are contacted at the earliest opportunity. • A HR Admin representative must be involved in the information collection to ensure that any Business World On! configurations changes are identified and the workload demands can be measured. • Any changes to the Business World On! configuration will be raised by the appropriate HR Admin team leader following the ‘Business World On! change request’ procedure. • Any Organisational Structure information will be inputted by the HR Admin Builders team before the transfer. This is necessary to ensure that the records can be inputted before the first payroll run following the transfer. • HR Admin will be required to assign the additional records to an assistant who will input the payroll information. • Storage space will be identified for additional personal files. • It is not necessary for HR Admin to produce contracts unless in exceptional circumstances. 2.12 Role of Procurement Lincolnshire When procurement involves the potential transfer of staff, the manager will first need to determine if a TUPE situation exists by reference to Legal Services and People Management. This determination will need to be made prior to any notice being put out for the service. Procurement Lincolnshire is responsible for all major procurement activities within Lincolnshire and they work to the Council’s Contract and Procurement Procedure Rules (CPPR’s). Procurement will work with the manager to ensure that TUPE is built into any tendering process. Procurement will ensure adherence to obligations under TUPE and will include provisions in its contracts giving effect to these obligations. 7 When undertaking a procurement exercise that may involve TUPE it is important that the corporately agreed standard documents are used. These are available Procurement Lincolnshire website at: Procurement.Lincolnshire@lincolnshire.gov.uk To the extent that it can, procurement will require the incumbent contractor to provide TUPE information about employees affected by the transfer should the incumbent contractor bid for but not be awarded the contract. If the current provider is LCC then Procurement documentation will provide details of the information required. As a part of the tendering process the council may assess bidder’s past experience in delivering similar contracts, which may include their track record in managing TUPE transfers. Failure to provide sufficient assurances may result in a contractor’s tender not proceeding to the second stage. The following documents, in relation to TUPE will be sent with the Invitation to Tender: • The anonomised TUPE information about any affected employees. • Where the tender involves a transfer of staff from the authority to an external organisation a Pensions Information Memorandum including an actuarial assessment of the likely employer contribution rate should a contractor become an admitted body to the LGPS together with a suggested amount for any bond or indemnity (if necessary). Details of contractor’s obligations in relation to pensions including the requirement to provide a broadly comparable pension scheme for LA employees will be provided. This would include within it the following information: Admitted Body Status If you wish to become an admitted body in the LGPS to ensure the employees transferring from local government (or who have transferred in the past from local government) can remain entitled to access that scheme, you will need to obtain “admitted body status” through entering into an Admission Agreement with the Council. Procurement will provide you with the level of employer contribution that would be required in relation to the Transferring Employees together with the amount of any indemnity or bond required to cover default situations. You will then be able to factor in the costs of providing the pension into your bid. Admitted Bodies must comply with the terms of the Admission Agreement and in particular, must ensure that it informs the Council if any of the scheme members cease to work on the Council’s contract. The following link should be used to access the WYPF website for Admitted Body Status: http://www.wypf.org.uk/Member/Administration/contractorSeekingAdmission/cont ractorSeekingAdmission.aspx GAD Certified Scheme If the new employer offers its own scheme, the Council will require a Certificate from the Government Actuary’s Department stating that the benefits are broadly 8 comparable to those which the employees would have received under the LGPS. (See 2.8 Pension Arrangements.) 2.13 Financial Matters Whether receiving or moving staff to another organisation there will be a number of financial matters to consider, including the funding of posts and the transfer of relevant budgets. Managers will need to work with their financial advisers to ensure that all possible financial matters are addressed before a transfer is undertaken. GOOD PRACTICE TIPS - MANAGER It is critical that Managers take the lead in co-ordinating all Pre Tender work, particularly in relation to pension costs, BEFORE Procurement becomes involved in the TUPE transfer. SEE APPENDIX 3 – PRE-TENDER CHECKLIST 9 STEP MANAGER RESPONSIBILTY HR ADVISER RESPONSIBILITY Arrange consultation meeting with staff and unions Identify dates and venue for meeting with staff Check diary for availability if necessary to attend consultation meeting Issue final consultation document and revised job descriptions (if these are being amended as part of measures) to Union representatives Send consultation document to relevant trade union representatives Provide information and advice as necessary Issue consultation document to staff and unions Email/post consultation document to staff affected Provide information and advice as necessary. Hold consultation meeting with affected staff Lead consultation meeting, answer questions raised and take away questions Support manager at meeting to answer HR queries raised by staff Consultation period. Good practice would be to consult for 30 days. However, depending on the circumstances of the individual case, this period may be greater or shorter. Any consultation must be meaningful regardless of its duration Collate responses from staff. Review during the progress Be available to respond to HR queries Consider comments from staff following consultation period Consider all responses from staff and draft responses Meet with manager to discuss employee responses and the response from management Final communication with staff/trade unions Reply to staff comments and amend consultation document if appropriate Advise manager on changes to consultation document Obtain legal advice about liabilities which may transfer Consult with legal services about what liabilities will transfer, such as building, equipment, finances Liaise with legal services and manager about liabilities which may affect employees, e.g. change of location etc. See Section 3.9 Transfer of staffing information to recipient Complete TUPE List – Personal Information spreadsheet with information required under TUPE regulations Provide information and advice as necessary. Provide HR policies and terms and conditions to new employer. See Section 3.6, 3.7 12 STEP MANAGER RESPONSIBILTY HR ADVISER RESPONSIBILITY Leaver information processing Notify HR Admin of staff transferring to remove from payroll at least one month before transfer occurs and then send confirmation the day after transfer Arrange for personal files to be transferred to new employer. These should be checked and only essential information retained. See Section 3.8 3.3 Introduction The Council’s Procurement Team will have been involved in any arrangement to outsource a Council service. Please see overview section on Procurement. All staff and their recognised trade union representatives should be informed at the earliest opportunity if they may be subject to a transfer out of the Council. At the earliest opportunity an Impact Analysis should be completed. A consultation document should be produced in liaison with the recipient organisation. Following the consultation period affected employees and trade union representatives should be informed of the following: 1. The outcome of the consultation process. 2. When the transfer will take place. 3. Reassurance of future terms and conditions. 4. Further details of the new employer. 5. Details of pension arrangements. It is important at this point to ensure that any employees that do not wish to transfer have clarified their reasons and will in effect terminate their contract. The reason for termination should not be because of a substantial and detrimental change to working conditions as a result of the transfer. If an employee believes that this is the case, they may claim that they have been unfairly dismissed. In effect, the employee has chosen to resign rather than transfer to a new employer, and their only recourse would be to claim that the changes being proposed were so detrimental to them that they had no choice other than to resign and claim unfair dismissal. Once all copies of signed contracts between the Council and a new employer have been received, the HR Adviser should arrange a final meeting with the affected employees to confirm the actual date of transfer. At least one month before the transfer the manager should inform HR Admin of the staff members that are transferring to the new employer through Business World On! Leaver form. This process could also be completed using a table or spreadsheet if there is a large number of staff involved. 13 3.4 Measures/legal and social implications Regulation 13(2) of the TUPE Regulations 2006 as amended 2014, provides that an employer of affected employees should consult with appropriate representatives of affected employees on the legal, economic and social implications of the transfer for any affected employees. For example the new employer may be seeking to consult on changes affecting the transferring terms and conditions of employment such as job descriptions, the pay date or a specific procedure such as redundancy. At Employment Tribunal, case law has indicated that the following things should be considered. • The 2014 regulations allow the transferee (receiver) to work with the transferer (sender) on redundancy post transfer. However, decisions to dismiss must be taken post transfer and hence notice will start when the receiver takes the staff group on. This should be agreed in writing as per letter 11. • The 2014 change means that a piece of legislation applying to that particular staff group can no longer apply in this case. The Employment Rights Act Section 218(7) specifically covered staff retaining continuous service when they moved from local authority schools to local government roles. This could no longer apply once the staff had been TUPE transferred to an academy and therefore were no longer employees of a local authority school. • Where the organisation being transferred to is not covered by overarching legislation which applies to the sender organisation. • Where the organisation being transferred to is no longer part of the collective bargaining machinery that determined some terms and conditions. If you feel that these or similar circumstances may apply they should be included as an additional section in the consultation document. 3.5 Consultation and notification The sender has a responsibility to conduct a full and meaningful consultation with employees and recognised Trade Unions at the earliest practicable time. Failure to conduct consultation, with both affected employees and recognised Trade Unions, results in liability for the payment of compensation which may be up to 13 actual weeks’ pay. The sender and the recipient are both liable for any award of compensation made by an Employment Tribunal for failure to inform and consult. A reasonable period of consultation should be given to employees concerned and should be in line with the terms of statutory redundancy consultation i.e. at least 30 days. If the transfer would affect 100 or more employees, the consultation should be at least 45 days. 3.6 Information about employees transferring From 6 April 2006, senders became obliged to give the recipient written information about the employees who are to transfer and all the associated rights and obligations towards them. This information includes, for example, the identity and age of the employees who will transfer, information contained 14 4. THE COUNCIL AS THE RECIPIENT 4.1 FLOWCHART – TRANSFERS IN (RECIPIENT) TRANSFER SITUATION IDENTIFIED IMPLICATIONS CONSIDERED ESTABLISH DATE OF TRANSFER CONSULTATION WITH STAFF/TRADE UNIONS DATA COLLECTION AND LIAISON WITH HR ADMIN BUSINESS WORLD ON! CONFIGURATION BUSINESS WORLD ON! INPUT COMMUNICATION TO STAFF/TRADE UNIONS STAFF TRANSFER WELCOME AND INDUCTION C O M PLETE AN D R EVIEW IM PAC T AN ALYSIS 17 4.2 Standard Operating Procedure – TUPE Transfer In Recipient STEP MANAGER RESPONSIBILTY HR ADVISER RESPONSIBILITY Impact Assessment on proposed change to service delivery To carry out the initial impact assessment and plan for its continued review throughout the process To support the IA as necessary Transfer situation identified, including staff in scope of transfer. Obtain advice that TUPE does apply Manager contacts HR Adviser when TUPE transfer situation identified, staff in scope Advise on processes to follow Implications considered Considers impact of TUPE into the Council and the service. Consider completing an Impact Analysis Continuing advice on TUPE transfer process Consider any measures envisaged as the recipient post transfer via a measures letter. Incorporate into consultation document Provide information to the sender on the measures post transfer. Consider and include in consultation document Consider measures and advice on impact of these on the staff post transfer. Request HR policies, pay scales, terms and conditions from sender. See Sections 4.4, 4.5 and 4.7 Use letter 11 to inform the sender or confirm changes with letter 12 Communicate with staff/trade unions Send consultation document to relevant trade union representatives Provide information and advice as necessary Data collection and liaison with HR Admin. Complete terms and conditions comparison table To review due diligence and terms and conditions info received and understand the effect this will have on service delivery. Sender completes TUPE List – Personal Information spreadsheet with information required under TUPE regulations. Information required as early as possible but at least 2 months before transfer Request due diligence info if possible 2 months before date of transfer. Complete all due diligence information and identify any gaps where further information is required. Provide info and advice as necessary. Complete terms and conditions table ensuring all columns are populated Retain all columns in spreadsheet regardless of whether detail is available Business World On! Configuration Establish posts for transferring staff at least 1 month prior to receiving staff Provide advice on structure and posts to HR Admin. 18 STEP MANAGER RESPONSIBILTY HR ADVISER RESPONSIBILITY Business World On! input Liaise with HR Admin to input staff details Provide information and advice as necessary Communication to staff/trade unions Reply to staff comments and amend consultation document if appropriate Advise manager on changes to consultation document Obtain legal advice about liabilities which may transfer Consult with legal services about liabilities such as building, equipment, finances Liaise with legal services and manager about liabilities which may affect employees, e.g. change of location etc. Staff transfer Provide transfer information for staff in scope to HR Admin, arrange for email accounts, logins etc. Liaise with HR in outgoing organisation for smooth transition to determine any anomalies with pay etc. which could affect future pay levels Provide transfer information for staff in scope to OD & Learning Services Welcome and introduction Arrange welcome/ induction meeting and on-going induction for incoming staff Attend meetings if required First days post transfer Ensure on-going arrangements are in place for pay awards from sender are implemented when due. Inform manager of changes. Confirm which aspects of the T and Cs will remain static. Ensure a record is kept of all the T and C’s people transfer across on and the location of relevant documents by completing the final column of the comparison of terms and conditions document. 4.3 Introduction The Council may find that staff are joining the organisation under TUPE as the result of a number of possible situations. Examples of this could be a decision to bring a service in house, contractor liquidation or government initiative to transfer in a public service not currently under the remit of Local Government. 4.4 Consultation and notification With assistance from People Management, a manager will need to liaise with the transferring organisation and arrange to attend a meeting or meetings with them including any consultation meetings as agreed by the sender. They will need to ensure that appropriate information is provided to LCC. It is important 19 However before any legal agreements between both parties are considered it is important that appropriate legal advice is taken. In Addition Regulation 13(2) of the TUPE Regulations 2006 as amended 2014, provides that an employer of affected employees should consult with appropriate representatives of affected employees on the legal, economic and social implications of the transfer for any affected employees. There is little guidance or case law around this duty. However, at Employment Tribunal, case law has indicated that the following things should be considered. • The change means that a piece of legislation applying to that particular staff group can no longer apply in this case. The Employment Rights Act Section 218(7) specifically covered staff retaining continuous service when they moved from local authority schools to local government roles. This could no longer apply once the staff had been TUPE transferred to an academy and therefore were no longer employees of a local authority school. • Where the organisation being transferred to is not covered by overarching legislation which applies to the sender organisation. • Where the organisation being transferred to is no longer part of the collective bargaining machinery that determined some terms and conditions. If you feel that these or similar circumstances may apply they should be included as an additional section in the consultation document. 4.9 Pension In the case of staff transferring to the Council already in the Local Government Pension Scheme with their current employer, a bulk transfer value will be agreed by the actuaries representing the funds. All new employees transferring to the Council will become members of the Council’s Local Government Pension Scheme unless they actively decide to opt-out of the scheme. If transferring employees retain membership of another pension scheme, the decision on any early retirement provision contained within the scheme, becomes the duty of the Council. Notify payroll and pensions if this is the course to be taken and identify any practical issues this may cause. 4.10 Preparation for Staff Transfer to the Council Once the consultation period has ended it is necessary for the appropriate manager to ensure that the following staffing information is received at least 1 month before the transfer. They should liaise with HR Admin on the necessary timescale. • Organisational structure information. • Terms and conditions information (to ensure that their pay can be actioned within current Business World On! configuration). • Personal Files. 22 • Involve OD & Learning Services • Appointment forms completed or a multiple record sheet where a large number of staff are transferring. • Pre-employment/CRB checks where considered necessary. • Information on Right to Work. • P45s if applicable. Spread sheet to be completed for HR Admin, retaining all columns. The manager will also ensure that the appropriate welcome letter is produced and distributed to the transferring staff (see letter 6). 4.11 The situation in an emergency transfer In a situation where a business is failing and the employees are transferring to the Council, the TUPE Regulations make special provisions where the sender organisation is subject to insolvency proceedings. The Regulations ensure that some of the sending employer’s debts do not pass to the Council. These concern any obligations to pay employees statutory redundancy pay, arrears of pay, payment in lieu of notice, holiday pay, or a basic award for unfair dismissal. These will be met by the Secretary of State through the National Insurance Fund. However any debts over and above these will pass to the Council. The Regulations also provide greater scope in these circumstances to vary terms and conditions of employment after the transfer. These changes must be agreed with representatives of the employees, or trade union representatives or non-union representatives empowered by the employees to agree changes. If the changes are agreed with non-trade union representatives these must be confirmed in writing and signed by that representative and a copy of the changes proposed provided to all affected employees. The changes proposed must not breach other statutory entitlements, e.g. National Minimum Wage. The purpose of this is to enable the safeguarding of employment. Special arrangements will also need to be put into place to consult with employees in the situation of an emergency transfer. Depending on the time available, meetings with staff and representatives should be arranged, even if the transfer has been undertaken to safeguard employment. Letters will still need to be sent to new employees to inform them of the transfer, welcome them to the County Council, and inform them of emergency measures which may have been taken. 4.12 The situation concerning future changes In August 2013, the European Court of Justice (ECJ) held that a receiving employer is not bound by clauses in contracts of employment referring to collective agreements negotiated after a transfer, where that receiving employer cannot participate in the negotiation process. The Council has previously taken the view that employees transferring to the Council will be subject to any changes agreed by the previous employer, even 23 when these occur after the transfer. This ECJ case has altered this view. In particular, this will relate to cost of living increases negotiated by employers outside of local government, which will not therefore be implemented, post transfer. However, where the transfer is between one local authority and another the previous “dynamic” view is still held. Human Resources and HR Admin will need to put measures in place to be informed of any such changes by the previous local government employer and forward details of such changes to the appropriate team for action. 4.13 Keeping a record of TUPE T and Cs and relevant documents It is important that Terms and Conditions that relate to staff brought into the organisation via a TUPE transfer are easy to locate at any time, and also available for use by those who manage the pay, pension etc. arrangements for that group of staff, or support the management of them using relevant HR policies and procedures. 4.14 Car Loan Schemes Any employer who is transferring employees to the Council will need to be asked the Due Diligence questions. One question asks them to give details of any Car Loan Scheme. If a transferring employer has such a scheme then there is no facility for this to be replicated in the Council so action will need to be taken by the transferring employer to manage this situation before the employee transfers. 4.15 Lease Car Schemes In addition, an employer who is transferring employees to the Council may indicate that a lease car arrangement is in place. These need to be identified as early as possible, detail sought and advice obtained if the Council is able or unable to transfer these. That advice should be obtained from Serco Finance Department on 01522 555396 24 What is the ETO defence under TUPE? A dismissal of an employee by either the transferor or recipient because of the transfer will be automatically unfair unless there is an economic, technical or organisational (ETO) reason entailing changes in the workforce. Examples include: • Economic reasons - where the demand for output has fallen to such an extent that profitability of the entity is unsustainable without dismissing staff. • Technical reasons - where the transferee wishes to use new technology and the staff employed by the transferor in the entity do not have the requisite skills. • Organisational reasons - where the transferee operates at a different location and it is not practical to transfer staff. ETO reasons have an impact in two main areas: dismissal and variations to terms and conditions. Variations to terms and conditions for which the sole or principal reason is not the transfer itself, but is for an ETO reason connected with the transfer may be effective subject to being agreed between the parties (or their representatives). How can an employer avoid TUPE altogether, or at least minimise its impact? The whole point of the Regulations is that they apply to protect the employees regardless of whether the transferee wants the employees or not. The issue of whether TUPE applies at all can be a complex one and those involved in a transaction should take detailed HR/legal advice. Two main ways the parties may address the impact of TUPE are to: (i) Ascertain whether there is an economic, technical or organisational (ETO) reason for any proposed dismissals or variations to terms and conditions. A dismissal of an employee by either the transferor or recipient because of the transfer will be automatically unfair unless there is an ETO reason entailing changes in the workforce. This will not avoid the application of TUPE but may minimise its impact. ETO reasons are explained in the question above on the ETO defence and variations to terms and conditions. (ii) Negotiate indemnities. A variety of indemnities may be negotiated in a TUPE situation: The recipient may seek to limit liability for actions of the transferor which took place before the undertaking transferred, by requiring an indemnity from the transferor prior to the transfer. There may be mutual indemnities whereby the transferor provides an indemnity with respect to claims from retained employees who allege their contract has transferred to the recipient and the recipient provides an 27 indemnity with respect to claims from transferring employees who allege their contract did not transfer from the transferor. Warranties and indemnities in the transfer agreement should cover the obligation to inform and consult as TUPE 2006 introduced joint and several liabilities for a failure to do this. The parties should either agree to do this collaboratively or, if the transferor agrees to take responsibility for this, appropriate warranties and indemnities should be included. In a TUPE situation, what information should be given by the transferor to the recipient concerning the transferor’s rights, powers, duties and liabilities towards any employees who are to transfer? In practice, even before a legal requirement was imposed on the transferor to pass any information to the recipient, information was made available voluntarily in writing to the recipient in most cases. From 6 April 2006 this practice was given legal force in that transferors became obliged to give the recipient written information about the employees who are to transfer and all the associated rights and obligations towards them. It is not possible to contract out this obligation. There is a checklist of information provided as part of this advice. Information to be supplied From April 2006 the transferor must provide the following information to the recipient before the transfer, namely: • The identity and age of the employees who will transfer. • Information contained in the employees’ written particulars of employment under section 1 of the Employment Rights Act 1996. • Information on any collective agreements affecting the employees that will apply after the transfer. • Any disciplinary proceedings taken against the employees or grievances brought by them in the last two years. • Any claims brought by the employees against the transferor in the last two years. • Any claims that the transferor reasonably believes might be brought. Relevant Time Limits The information should be given at least 14 days before the transfer (in very rare special circumstances a shorter period may be permissible). As a matter of best practice, where reasonably possible, it is helpful for a transferor to try and supply the information in advance of the 14 days to give the recipient ample time to consider it. Once the relevant information has been provided, the transferor must provide written notification of any changes which occur between the time they have first been notified to the recipient and the actual completion of the transfer. Information must be no more than two weeks old. 28 Remedies If the transferor does not provide this information then the recipient may apply to an employment tribunal for: such amount as it considers just and equitable (having regard to the recipient’s loss and any contractual terms between the recipient and transferor), and compensation starting at a minimum of £500 for each employee in respect of whom the information was not provided (or was defective), or a lesser sum that the tribunal considers that it would be unjust or inequitable to award this minimum payment. The information may be notified indirectly through a third party. This latter provision will allow the information to be passed between the contractors via the client in a service provision change case involving the reassignment of the contract, but will not require it. In a TUPE situation, what information should be given by the transferor and the recipient to the employees affected? The employer of employees affected by the transfer (i.e. either the transferor or the recipient) must inform the appropriate representatives of any affected employees of the following: • The fact that there is a transfer happening. • Approximately when it is happening. • The reasons why it is happening. • The legal, social and economic implications for the affected employees. • The measures which the employer intends to take in relation to those employees. • If no measures will be taken, the fact that there won’t be any such measures. • If the employer is the transferor, the measures, which the recipient envisages that they will take in relation to those employees who are to be assigned to the transfer. • If the employer is the transferor and the recipient envisages no measures will be taken then that fact. Additional points to note: • Where an employer proposes to take any measures in relation to affected employees, they must consult with the appropriate representatives in ‘good time’ before the transfer. • The transferor and recipient are jointly and severally liable for any award of compensation for failure to inform and consult made by an employment tribunal for failure by the transferor to comply with these information and consultation requirements. (If such a liability were to pass wholly to the recipient, there would arguably be little or no incentive for the transferor to comply with the relevant information and consultation requirements.) • If there is a claim against the transferor for failing to comply with its obligations to inform and consult, the transferor may assert that the reason that they did not comply was the recipient’s failure to provide information on its proposed measures in time. If the transferor intends to argue this it must tell the recipient and the recipient will then become a party to the proceedings. 29 The guidance produced by the Department for Business, Enterprise and Regulatory Reform (BERR) provides some indication of when the reason for a change is transfer-connected and when it isn’t. The guidance states that where an employer changes terms and conditions simply because of the transfer and there are no extenuating circumstances linked to the reason for that decision, then the change is by reason of the transfer itself. Example of a reason unconnected with the transfer The recipient needs to re-qualify staff to use the different machinery used by the recipient. Here the reason for the change is prompted by the knock-on effect of the transfer and not solely the transfer itself. The reason is not exclusively connected to the transfer and the change is therefore permissible. Example of a reason connected to the transfer The recipient wishes to make changes to harmonise terms with those of the recipient’s existing workforce. These changes are by reason of the transfer itself and are therefore void. (Such changes may not fall within the definition of an ETO reason anyway.) The employer and employee may therefore agree a variation of the contract if the sole or principal reason for the variation is a reason connected with the transfer that is an economic, technical or organisational (ETO) reason entailing changes in the workforce. Is it possible to dismiss employees following the transfer of an undertaking if there is an ETO reason? The essential point is that dismissals as a result of the transfer may be automatically unfair. However, where there is an ETO reason the dismissals may be fair. The Transfer of Undertakings (Protection of Employment) Regulations 2006 set out three different categories of dismissal: • Dismissals for which the sole or principal reason is the transfer itself or a reason connected with the transfer that is not an ETO reason – these dismissals remain automatically unfair under the unfair dismissal legislation. • Dismissals for which the sole or principal reason is unconnected with the transfer – these dismissals fall outside TUPE as they are unrelated to a relevant transfer and the usual unfair dismissal principles will apply. This is the case even though the dismissals may be made around the time of such a transfer. Employees must still have one year’s service to bring a claim under TUPE 2006 unless they can argue unfair dismissal for asserting their statutory rights. Can a transferor dismiss employees in anticipation of a TUPE transfer and rely on the recipient’s ETO reasons? A transferor is exposed if they dismiss employees in anticipation of a TUPE transfer and then seek to justify the dismissals by relying on the recipient’s ETO reasons. The ETO reason must therefore relate to the transferor’s future conduct of the business. 32 Accordingly an ETO reason is only established where the employer dismisses the employee for reasons relating to its own future conduct of the business, entailing a change in its own workforce. There is a greater chance of establishing an ETO where redundancies arising on a transfer are implemented by the transferor rather than the recipient. Practical points to note include: • Employees who were dismissed before a business transfer will normally sue both the new owner of the business and the former employer. • Transferors should not make any pre-transfer dismissals in reliance on the recipient’s post-transfer ETO reason unless the recipient agrees to indemnify the transferor against any liability. • Recipients may make such dismissals post-transfer if a valid ETO reason exists. • Recipients must however follow the statutory dismissal procedure in full and a fair overall procedure which will often entail pooling the transferred employees with their own existing workforce before selecting the redundant employees. Can an employee pick and choose from transferring terms and conditions and new ones which may be more advantageous? • Despite the fact that it appears to fly in the face of TUPE, an employee can pick and choose terms and conditions that they consider to be more favourable. The Employment Appeal Tribunal (EAT) stated in the case of Power v Regent Security Services Ltd (2007) that an employee could take advantage of a favourable variation even if he had not agreed to that change – in this case the employee used the retirement age of his new employer rather than his old employer’s earlier date. 33 APPENDIX 3 PRE TENDER CHECKLIST – PENSIONS PRE-TENDER PENSIONS CHECKLIST At the point of considering a transfer and prior to any discussions with Procurement, need to ensure that the below have been taken into account by management and liaised with Pensions/Legal/HR, as appropriate. Are staff transferring out? Management to liaise with HR & Legal to determine those individuals that would be in scope of TUPE. If staff not transferring, nothing needed on pensions and therefore the below questions are not relevant. Yes/No Management to check if they have the budget for the recharges that will be incurred (check figures with Pensions team)? Costs will be recharged for actuarial reports providing the employer contribution rate (indicative and final) and any legal fees in drawing up the admission agreement. Management to discuss with WYPF re the questions asked at the top of the TUPE Enquiry spreadsheet. Assumptions need to be made on: • Whether it will be open or closed to new entrants. • What type of guarantee are LCC willing to offer? 1. Cover all liabilities should the supplier fail and take back any deficit (shortfall following a cessation calculation) at contract end 2. Cover all liabilities should the supplier fail but require the supplier to pay any cessation value at contract end (if there is a shortfall in the pensions pot) 3. Guarantor of last resort but require the supplier to provide an insurance bond (or equivalent) to cover the risk of being unable to pay, and the supplier must pay any cessation value at contract end If 3) above, has a bond value been requested from Pensions team, alongside the contribution rate? Since May 2018, any surplus (greater than 100% funded following a cessation calculation) at the end of a contract must be repaid to the employer. Consideration must be given (and included in contract) about what will happen to either a deficit of a surplus. 34