Transferring employees under TUPE

Alistair Dunsmuir
By Alistair Dunsmuir January 5, 2020 16:57 Updated

In its latest article offering legal advice to golf clubs, the National Golf Clubs’ Advisory Association (NGCAA) details the law relating to transferring employees.

We often give advice to golf clubs in relation to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’) where employees can transfer. It will usually involve a situation where employees transfer between outsourced catering and bar operators, club pros or cleaning companies; alternatively, it can be a transfer back in-house to the club from any of them or to them from the club.

Even where the transfer is between two service providers, it is important for a club to understand the law relating to transferring employees, since if the proposed change does not pan out, it is quite possible that the club will take over the provision of the service, sometimes for a short period, in which case the employees will be likely to transfer to the club under the provisions of TUPE.

When does TUPE apply?

TUPE can apply to a service provision change, as outlined above, or a business transfer such as the sale of a golf club.

In this note, we will concentrate on a service provision change, since that is most common in golf clubs. It covers:

  • services outsourced to a contractor by the club
  • services brought back in-house from an external contractor and
  • the contractor is replaced by a new contractor.

The service provision change will occur where the activities carried out before transfer are fundamentally the same as those carried on after it, where there is an organised group of employees whose principal purpose is the carrying out of those activities and where it is not for a short term task for a specific event or a contract for the supply of goods.

What is the effect of TUPE?

Employees who are ‘assigned’ to the undertaking should transfer from the outgoing contractor / employer to the incoming contractor / employer. The employees transfer on their existing terms of employment together with their continuity of service. The incoming employer effectively steps into the shoes of the previous employer as if the contracts of employment were originally made between the employees and the incoming employer.

In addition, the incoming employer becomes responsible for all acts and omissions of the outgoing employer.

The incoming employer will inherit the employees, their contractual terms and any liabilities.

It is important that the incoming employer considers the employee liability information provided by the outgoing employer to consider any risks and contractual terms in relation to those employees.

If it is a commercial contract between the parties, then this can be an opportunity to negotiate how certain risks will be apportioned.

Where the club is managing a transition between a change of service providers (such as catering contractors), the obligations are between those two parties, with the club sitting in the background.

Who transfers?

Any employees of the outgoing employer will transfer provided that they are employed immediately before the transfer and that they are assigned to the organised grouping of employees which is the subject of the transfer, other than on a temporary basis.

An employee who is assigned will automatically transfer, unless they object to the transfer. If they do object, this will bring their employment to an end by operation of law and they will neither be considered dismissed nor having resigned. In such situations there is no need for them to work their notice. The question of whether an employee is assigned to an organised grouping is a question of fact, taking into account a number of factors including the percentage of time spent working in the undertaking of the service being transferred. Where employees spend part of their time in the service which is transferring, the percentage of time spent test is not absolutely definitive and an employer should take advice in this regard.

What are an employer’s duties on a TUPE transfer?

The obligations on the outgoing employer are to inform and (where appropriate) consult, as well as to provide Employee Liability Information under regulation 11 of TUPE.

Employee liability information

This information must be provided at least 28 days before the transfer date and a failure to do so can result in claims from employees with penalties of £500 (minimum) for each employee in respect of whom the information was not provided or was defective.

The information which must be provided to the incoming employer in writing is:

  • The identity and age of the employees who will transfer
  • The terms and conditions of employment
  • Information on any collective agreements affecting those employees
  • Any disciplinary proceedings taken against an employee or grievances brought by employees in the previous two years
  • Any court or tribunal claims taken by those employees against the employer in the previous two years or any potential litigation that the outgoing employer has reasonable grounds to believe might be brought.

Informing and consulting

This duty applies to both the outgoing and the incoming employer and applies to not only those employees who are transferring, but those who are not transferring but whose jobs may still be affected by the transfer.

The duty to inform arises in every case, but the duty to consult only arises in circumstances where the incoming employer proposes to take ‘measures’ in respect of the transferring employees. This would include proposed redundancies or changes to contracts. Information and consultation must be with either a recognised trade union (if any), existing employee representatives who have authority or, more likely in the case of golf clubs, employee representatives who are specifically elected for the purposes of the TUPE transfer. If the club employs fewer than 10 employees there is a special exemption to allow information and consultation to be carried out with employees directly. There is no minimum timescale for information and consultation, but it must be done ‘in good time’ ahead of the transfer.

The details around election of employee representatives can be complex, so clubs are urged to take advice in respect of this.

The information and consultation process must include the provision of written information to the representatives specifying the fact of the transfer, the date of when it is to take place and the reasons for it, as well as the legal, economic and social implications of the transfer for the affected employees and any ‘measures’ proposed by the incoming employer.

The incoming employer has an additional obligation to provide information to the outgoing employer about any measures that are proposed, allowing the outgoing employer to pass on that information to the transferring employees’ representatives.

Can employees’ terms and conditions be changed?

Any change to contractual terms is void if the principal reason for the change is the transfer. Therefore, if an employer inherits staff pursuant to TUPE and wishes to make their contractual terms consistent with existing employees (known as harmonisation) then any changes to those contractual terms will be void as the reason for them will be the transfer. If the reason for the change is not the transfer, it may be possible (normally subject to their agreement) or if the change is entirely beneficial to the employee, it is permitted.

If the reason for the changes to terms and conditions is the transfer but it involves an economic, technical or organisational reason entailing changes to the workforce (an ETO reason) and the changes are agreed, then it may be permitted. The employer needs to identify an ETO reason but it must entail a change in the number of the employees or a change in their functions. An example of this could be if the employer intended to carry out a redundancy or restructuring exercise. It is strongly recommended, though, that employers take advice if this is contemplated.

What protection do employees have against dismissal?

There is enhanced protection for employees in a transfer situation. Dismissals are automatically unfair if the principal reason for the dismissal is the transfer unless the employer has an ETO reason entailing changes to the workforce (for example, redundancy).

Employees would still need to have two years of continuous service in order to bring claims of automatic unfair dismissal. There is also additional protection for employees who resign in response to a fundamental breach of the contract or substantial change to their working conditions to their material detriment. Employers should therefore exercise caution in proposing any changes to terms and conditions or other matters relating to working conditions or arrangements.

 

 

For further advice on this or any other matter affecting the law for a golf club, please contact Alistair Smith on 01886812943 or alistair@ngcaa.co.uk

The National Golf Clubs’ Advisory Association (NGCAA)

The Media Centre, Emirates Riverside,

Chester-le-Street, County Durham, DH3 3QR

Tel: 01886 812943

email info@ngcaa.co.uk

www.ngcaa.co.uk

 

Alistair Dunsmuir
By Alistair Dunsmuir January 5, 2020 16:57 Updated
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