The world of TUPE transfers is complex in language and in process. As employment lawyers and training professionals, we mainly get asked three questions about the TUPE process: what are the obligations for a transferee, a transferor and when does TUPE actually apply?
We’re going to cover these off today. Firstly though, a little note on the language that you can refer back to whilst reading:
- The transferor – the employer who is making the transfer (e.g. they have lost a contract)
- The transferee – the employer who is taking on the transfer (e.g. they are inheriting a new contract)
Now that’s cleared up, here’s some guidance on those key questions that arise during the TUPE transfer process.
What are the key considerations for the Transferor in the TUPE process?
Firstly, you need to establish who is assigned to the activities (‘the undertaking’) that is being transferred to the employer inheriting the contract (the transferee).
Once you have established that group of employees, you have an obligation to inform and consult with appropriate representatives. These representatives can either be a recognised trade union, or in the absence of such – elected workplace representatives.
As a transferor in a TUPE situation there is also an obligation to provide employee liability information in relation to those employees who will transfer. This comprises certain prescribed information in relation to terms and conditions of employment etc and must be completed 28 days before the transfer date.
If you breach these obligations as a transferor, there can be significant penalties. For example, if as a transferor you fail to comply with your obligations to inform and consult under TUPE, an award of up to 13 weeks pay can be made per affected employee. An award can also be made if you fail to provide employee liability information accurately and on time. The amount here depends very much on the loss sustained by the transferee, but generally it’s a minimum award of up to £500 per employee.
So it’s essential to start thinking about the obligations you have as a transferor and properly plan and prepare for these before you start the TUPE process.
What are the key considerations for a Transferee in the TUPE process?
If you find yourself in the role of transferee, it’s time to think commercially about the new relationship(s) you are inheriting.
As transferee you must have a clear view of what it is that you are proposed to do in relation to the employees that you are going to inherit. Consider whether there are any commercial implications that you may need to speak to clients about in terms of indemnities and warranties.
You will also need to clearly and accurately communicate your proposed measures to the transferor, long enough before the transfer to allow meaningful consultation to take place. These ‘proposed measures’ are things like; a change in pay date, an adoption of policies and procedures and confirmation of the different schemes that will be put in place. These may be coupled with more substantive changes such as proposed redundancies or relocations all of which need to be communicated clearly and accurately, as a measure.
When does TUPE apply? Bidder beware…
You might be thinking, that’s all well and good but I don’t think TUPE applies to our situation. As a bidder for a new and exciting contract – ‘bidder beware’.
Try not to be fooled by your colleagues (even if its all of them!) saying that TUPE doesn’t apply. We’ve seen plenty of situations where everyone in the bidding organisation believes TUPE doesn’t apply, and it does. It’s important to consider the tests yourself or check with your legal advisor when the topic arises.
Think: is there an organised group of employees whose principal purpose is to undertake the activities that you are going to be carrying out? If the answer is yes, and the client’s intention is that you will continue fundamentally the same activities – there is a good chance that TUPE will apply.
If it does, then be aware that as you inherit the transferors employees your cost base may increase and the basis upon which you are tendering for the new contract may change.
Don’t panic though, we know you want to win that new deal. What we’d say is this; think about the new contract in both contexts. What happens for your organisation if TUPE does apply, and what happens if it doesn’t? Weigh up the answers to both those questions and you’ll be in a good position to move forwards.
If you are concerned, we always advocate speaking to the client. It can be a really valuable (and mutually beneficial) step in the process. Having this conversation allows you to check whether they would be willing to indemnify you against the costs that you may incur in order to rationalise, reorganise and restructure to deliver the contract, and importantly – make sure that the contract is efficient from the clients’ perspective and profitable from your own.
If you’d like a deeper dive into mastering the TUPE process, we’re running a one day workshop which will provide the knowledge and skills you need to recognise when TUPE applies and how you can manage an efficient and effective transfer in a sensitive way.