When starting up a provider organisation, it is important to consider the application of the Transfer of Undertakings (Protection of Employees) Regulations 2006 (TUPE).
TUPE is triggered by a business transfer, or where services are outsourced or the provider of the services changes.
The aim of TUPE is to protect and preserve continuity of employment for employees where their work is instead carried out by a new provider. Effectively, the new provider takes on all rights and liabilities in relation to the employees.
Old and new providers
If TUPE applies, there is information and, if employment changes are envisaged, consultation obligations that apply to both the old provider and the new provider. Both would need to advise 'appropriate representatives' of their own affected employees (a trades union or others selected by an election process) of specific information in relation to the transfer.
This can include details of the transfer; social, economic or legal implications; and any 'measures' predicted. This process should start in good time to allow for meaningful consultation. The term 'measures' is wide and would include changes to terms and conditions or planned redundancies. The new provider needs to inform the previous provider of the measures it envisages. Failing to properly inform and consult can result in affected employees being entitled to a compensatory award of 13 weeks' actual pay per affected employee.
There are also obligations on the previous provider to give the new provider certain information in relation to the employees. Transferring employees move on their current terms and conditions and are protected from any variation to their pre-transfer terms and conditions of employment and any transfer-related dismissal.
Dismissals will be automatically unfair, and variations of terms to the detriment of the employee are void unless they are either:
- Unconnected to the relevant transfer.
- For an economic, technical or organisational reason entailing changes in the workforce. This is difficult to prove in practice but could include restructuring with redundancies that may involve altering the roles of retained employees.
If there are employees who should have transferred under TUPE, but the provisions of TUPE have not been complied with in relation to such employees, the organisation could be liable for claims for compensation from those employees for employment-related claims, such as unfair dismissal. The employer could also be liable for awards for a failure to inform and consult.
TUPE applies as a matter of law and cannot be disregarded. However, often parties look to enter into a commercial agreement to agree how any liability that arises under TUPE will be apportioned between them.
- Polly Ellison, company secretary, Portal Health Cheltenham Ltd, supported by Foot Anstey LLP, solicitors.