TUPE – practical application of case law

1. TUPE – practical application of case law Shantha David, Legal Officer – Solicitor UNISON Legal Services

3. Matters to be discussed today: • What is TUPE? • What is the difference between TUPE and COSOP • How do secondments fit in with TUPE • Post transfer variations to contract including harmonisation.

4. WHAT IS TUPE? • Transfer of Undertakings (Protection of Employment) Regulations 2006 - came into force on 6 April 2006. • TUPE is derived from European Community law, to fulfil the UK’s obligations under the EC Council Directive 77/187 (Acquired Rights Directive)

5. TUPE operates to preserve an employee’s contractual employment rights that the employee had before the transfer.

6. WHAT IS PROTECTED? • All the old employer’s rights, powers, duties and liabilities • Continuous employment • Collective agreements • Recognition • All contractual rights • Match pension contributions

7. When does TUPE apply? • An undertaking • A transfer of the undertaking • Retention of identify after the transfer

8. What is an undertaking? • Regulation 3(2): • ‘an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary’.

9. What is an undertaking cont... • economic objective • organisational framework • the economic entity must be stable • transfer of whole or part of an undertaking

10. Transfer of the undertaking • For TUPE to apply there must • always be a • ‘relevant transfer’ • as set out in Regulation 3(1) • of TUPE.

11. Relevant Transfer • Transfer of a business or an undertaking i.e. An economic entity which retains its identity; • OR • Service Provision Change (Outsourcing, Change of Contractor, bring back in-house).

12. Retention of Identity • “multi-factorial test” • the type of undertaking • whether tangible assets transfer? • the value of intangible assets at the time of the transfer? • whether the majority of the undertaking’s employees are taken over by the new employer; • whether or not customers are transferred; • the degree of similarity between the activities carried on before and after the transfer • the period, if any, for which those activities were suspended

13. HENKE exemption • Henke v Gemeinde Schierke [1996] IRLR 701 • TUPE does not cover an administrative reorganisation of public administrative authorities or the transfer of administrative functions between public administrative authorities

14. COSOP • The Cabinet Office Statement of Practice on Staff Transfers in the Public Sector (‘COSOP’) has no statutory basis or force

15. Transfer of Undertakings (Protection of Employment) (Greater London Authority) Order 2000, SI 2000/686

16. TUPE OR SECONDMENT ?

17. RoEM • Retention of Employment Model • Celtec Ltd v Astley & OrsC-478/03, EC • Capita Health Solutions Ltd v McLean[2008] IRLR 595

18. ROEM in practice • Follow steps as though TUPE transfer will take place, including information and consultation. • Must be a fixed day for TUPE transfer • Employees object to transfer on day of transfer • Just after objection, Employees sign up to new contracts with the Transferor, containing clause re secondment.

19. Regulation 4(4), 4(5) TUPE 2006 • 4 Effect of relevant transfer on contracts of employment • (4) Subject to regulation 9, in respect of a contract of employment that is, or will be, transferred by paragraph (1), any purported variation of the contract shall be void if the sole or principal reason for the variation is— • (a) the transfer itself; or • (b) a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce. • (5) Paragraph (4) shall not prevent the employer and his employee, whose contract of employment is, or will be, transferred by paragraph (1), from agreeing a variation of that contract if the sole or principal reason for the variation is— • (a) a reason connected with the transfer that is an economic, technical or organisational reason entailing changes in the workforce; or • (b) a reason unconnected with the transfer.

20. Post transfer, the new employer cannot vary a contract if: • the ‘sole or principal’ reason for the variation relates back to the transfer; OR • The reason for the variation is not an economic, technical or organisational reason entailing changes in the workforce.

21. QUIZ

22. Q.1 Can the new employer harmonise the terms and conditions of those who have just transferred over? • YES • NO • DEPENDS

23. A.1 = C • Employer can only vary ts and cs post transfer if: • It has nothing to do with the transfer • There is an economic, technical or organisational reason entailing changes in the workforce.

24. Q. 2 Is this variation connected to the transfer? • FACTS • Prior to the transfer, employees paid full-time, worked part-time hours • 3 years post transfer, the employer noticed this. • Employees agreed to be paid pro-rata

25. A.2 NO! • Smith & Ors v Trustees of Brooklands College [2011] • “…real reason for the variation was the respondent's belief that the claimants had been mistakenly paid at the full time rate and that as a consequence they were out of step with the rest of the sector”.

26. Q.3 Can you vary ts and cs post transfer in circumstances below? • Harmonise terms and conditions across 37 difference contracts of employment • Employees object; are dismissed and are re-engaged on harmonised ts and cs. • Is this a breach of TUPE?

27. A.3 YES! • Manchester College v Hazel UKEAT/0136/12 (9 July 2012, unreported) • The fact that others are dismissed for the reason of redundancy (a change in the number of the workforce) does not alter the fact that these employees may have been dismissed for the reason of harmonisation (not a change in the workforce).

28. Q.4 Is a change of location post transfer a breach of TUPE? • An employee objects to transfer on the basis that there is a change to her work location? • Is this variation to the contract post transfer a breach of the TUPE Regulations

29. A.4. YES! • Constructively dismissed under reg 4 (9) of TUPE, because change of work location was a substantial change in working conditions to her material detriment. • Due a redundancy payment • Unfairly dismissed • Tapere v The South London and Maudsley NHS Trust [2009] IRLR 972, [2009] ICR 1563 • Confirmed in Abellio London Limited v CentreWest London Buses Ltd UKEAT/0283/11

30. Q.5 Were Meter Readers who were franchisees part of the workforce? • So was this dismissal unfair?

31. A.5 Hardy v Meter U Ltd • ET said Yes, unfair dismissal and breach of TUPE • EAT said NO – not breach of TUPE! • Case remitted to the ET to decide if dismissal fair, and if franchise is a sham.

32. Q.6 Was a failure by the transferee to honour a term of the contract post transfer a breach of TUPE? E.g. where that term relates to a pay increase awarded under a collective agreement i.e. by a body outside the contract where the transferee is not part of the negotiating machinery?

33. A.6 Yes breach of Duty? • CJEU decision on 19 February 2013!

34. REMEMBER NO FACT IS TOO SMALL!!

35. BIS Consultation on TUPE • Repealing service provision change • Post transfer harmonisation after 12 months • Amend Regulation 4 so it does not allow for a dynamic interpretation • Changing the meaning of what is a substantial change in working conditions to an employee’s material detriment.

36. BIS Consultation on TUPE cont... • Amending meaning of ‘entailing changes in the workforce’ to cover changes in the location of the workforce. • A transferor should be able to rely on a transferee’s ETO reasons entailing changes in the workforce in respect of pre –transfer dismissals  

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