In this TUPE Club webinar, by popular demand, we host a Q&A session on any TUPE topic.
In response to your questions, this webinar covers some of the most topical and tricky TUPE issues including:
- GDPR and employee information;
- changing terms post transfer; and
- fragmentation of services.
Our speakers, Jane Fielding, Louise Clifford, Hannah Swindle and Siobhan Bishop deal with as many of your questions as possible during the session.
Transcript
Siobhan Bishop: Hello and welcome to this Gowling WLG TUPE Club Q&A Webinar. I am Siobhan Bishop from the Employment, Labour & Equalities Team and I am joined today by Jane Fielding, a Partner in the Team, Louise Clifford, a Director, and Hannah Swindle, a Principal Associate, and together they will form your expert panel ready to answer your questions on TUPE. This webinar will last for 45 minutes and we have dedicated the whole session to your questions on TUPE. Let me just explain how we are going to run the format today. When we sent out the invitations for the webinar, there were two ways to submit your questions. Firstly, you could send in your questions in advance and secondly you can, of course, ask questions at any point during the webinar. So, to be fair to those who submitted questions in advance and those who are listening today, we plan to split the webinar into sections. We have prepared some slides to answer some of the submitted questions but there will still be plenty of time for you to ask your question today, and we will deal with as many of those as we can. Just a few housekeeping points before we get started. The webinar player has a few simple controls. You will see the volume adjuster and the full screen option which are in the bottom right hand corner. There are also some tabs along the top which you can slick on to access details of today's speakers and the slides and there are a few downloads available as well. If for any reason you cannot see the current flag at any time, just slick on the slide tab to get it back. There are no polls today, so you don't need to worry about that tab. But of course the most important one today is the "ask a question" tab and you can ask a question at any time just by clicking on that tab, type in your question and pressing submit. We encourage you to ask any question that has been troubling you about TUPE and please be reassured that all questioners will remain completely anonymous, so feel free to ask anything that you've been wondering about. So, as I mentioned, there's a large number of questions come in in advance, more than we can even answer today, so we have chosen some of those and we'll deal with the most common issues and we've weaved in a few together as well. But don't forget at any point throughout the webinar we can answer your questions that you're sending in as well, so just get typing at any point and we'll deal with those as we can. But moving on now to the first question, which was submitted in advance, which is about the GDPR and how do you deal with the exchange of personal data required to enable a TUPE transfer especially in the context of going out to tender and Jane is going to deal with that question.
Jane Fielding: Thanks Siobhan.
Very topical question with our implementing legislation in the Data Protection Act, the new one that is going to replace the 1998 Act in the ping-pong process yesterday between the House of Commons and the House of Lords so hopefully, with ten days to go, we're going to get the final version of that Act very soon.
GDPR compliance is really important because while it's not meant to get in the way of anything that businesses legitimately want to do in a TUPE situation, it does mean that we will have to focus our minds more on why we're having information, why we're processing it and how we're going about doing that.
So, with that in mind, in this context there are probably three scenarios in which you want to transfer personal data.
So there is the giving of the employee liability information, perhaps because it is a contractual obligation between the client and the incumbent provider, when you're coming to the end of the contract or it may be for a tender process to enable bids to be targeted and costed in the right way.
So, just a starting point, you're going to need, under the GDPR, to understand and identify in advance what your lawful basis for processing is. I've put on the screen there some of the personal data potential grounds. I haven't put consent there because under the GDPR relying on consent is a much more restricted option and it is not going to be generally relevant in a TUPE context so you're going to need one of those lawful bases and you're going to identify that. If you're having to transfer special category data, which is the new name for sensitive personal data, then you're going to also need an article 9 condition and those are quite narrow. We don't have time to go into them today but if you are in the realms of special category data, for example, you might be disclosing under ELI that there's been a claim within the last two years and that indicates that an individual is a trade union member. You can see from the slides that trade union membership is special category personal data. So article 9 isn't completely irrelevant in this context.
So, if you're in ELI territory, it's fairly straightforward. To provide ELI, if you're the transferor, is a requirement under the legislation, under TUPE, so provided you provide that the right information to the transferee in the right timescale, so 28 days before the transfer, then your lawful basis will be complying with a legal obligation, your primary lawful basis. As I said, article 9 condition might be necessary if you do have any of that special category data and just as a reminder of what ELI is, there is a download available if you want to tap on to that. If you're in a contract situation or a tender situation though, you're going to have to perhaps work a bit harder to identify, you know, what your lawful basis is so you're going to have to assess that so that you could, if necessary, say what the basis for processing was and the most likely one and, in fact probably the most flexible one, is that it's in the legitimate interests of you as the data controller or a third party which you have the relationship with. So, if you're the customer and you need this data to look at to gauge whether TUPE applies, what the costings might be for bids, then that's going to be in your legitimate interest. So you need to make sure that you do what you can to avoid that information being disseminated more widely than is necessary. You need to try to anonymise it if possible or in the parlance of a GDPR pseudonymise, not sure what the difference is, but that's what they keep referring to, and perhaps encrypt it and protect it. If you're a public authority, you may be able to rely on this other processing being carried out by public authorities, but again you need to look at that closely.
So legitimate interest, as I say, it's the most common bases, and you need to identify your purpose, why it's necessary to achieve that legitimate basis and then you have got to balance your interests or the third party's interests against the rights of the data subject and again there's a download available which sets out legitimate interest in more detail and I think while we're all trying to get to grips with exactly how this works, it's probably worth having that on your desk so that when you do that assessment, you've got it clearly in mind.
So, just finally, some tips generally for dealing with personal data in a TUPE context and generally under the GDPR. As I say, pseudonymised information where you can, your staff privacy notice should already anticipate the fact that you may need to process personal data in a merger or TUPE situation and if you're handing information over that's personal data to third parties, whether it's your customer or direct to a potential bidder, then you need assurances from them on how it's used, how it's going to be safeguarded and if TUPE doesn't happen, the fact that that information is going to be returned or securely destroyed.
Finally, ICO guidance. The ICO is busy churning out guidance about the GDPR. At the moment, none of it refers specifically, that we've been able to find, to TUPE but they are holding some back pending a final version of the Act so it maybe that there is something in there at that point, but otherwise it's a useful reference point for the general GDPR principles.
Siobhan: Thank you very much Jane. We're now going to take one of the questions that has been submitted during the first few minutes of the webinar and I'm going to hand over to Louise Clifford who will deal with that one.
Louise Clifford: Thanks Siobhan.
We've got a question on holiday pay and specifically how you deal with holiday pay in the context of transfers.
I think the short answer here is that actually you don't need to do anything specific because an employee will simply transfer under TUPE with the benefit of whatever holiday they've accrued during the relevant holiday year minus what they've already taken and you're not expecting to see any specific holiday payments made to employees as part of the transfer process. The issue that sometimes bothers parties to a transaction is that depending on where you are in the holiday year, there could be a disproportionate burden on either the old or the new employer, if relevant employees have taken more holiday than they accrue during the relevant period, so what is fairly common in contracts is to agree that there might be a balancing payment either by or to the transferor which takes account of maybe over or under payment of holiday in that sense. So the short answer is you don't have to do anything but there is a way of managing that through the contract if you're concerned about apportionment.
Siobhan: Great. Thank you.
We'll now go back to one of the questions which was submitted in advance and Hannah is going to deal with this one which is what is the best way to deal with a situation where the transferor wants to retain some of the colleagues who would otherwise have been in scope to transfer.
Hannah Swindle: Thanks Siobhan.
Well, first of all, you need to work out who's in scope to transfer because if the employees that you want to retain wouldn't be covered by TUPE anyway, then you're not going to have an issue.
To work out who's assigned, I am not going to go into any detail here, but in summary TUPE applies to employees and workers who are assigned to the organised grouping of employees in a service provision change or a transferring undertaking in a business transfer. And to work out who's assigned, you need to look at all the relevant factors. It's going to be a question of fact in any given situation and the relevant factors are going to include things like the nature of the work they do, what their contract says about their duties and whether they can be required to work on any other contract. It's not just the time spent by an employee on any particular activity and depending on the context of the business type one factor may be more important than others in any particular situation.
The other point to remember about TUPE is that if it does apply to any employee, then they're going to transfer automatically. They don't need to agree to the transfer but they can choose not to transfer, if they don't want to, which I'll come on to in a moment.
It's also relevant to consider why an employer would want to retain any particular employees in the first place. So for the transferor, the outgoing employer, it needs to make sure that it's got the right number of employees with the right skills and knowledge to ensure that it can run its remaining business effectively after the transfer. So some employees in scope to transfer might carry out duties across a number of different contracts or functions and the transferor may wish to retain them to carry on those remaining contract duties after the transfer.
It might also be hard to recruit people with the right level of skills in a specific industry. The transferor might also have to retain staff because it's actually required by the contract. It might have a services agreement with a client and the client requires it to redeploy staff elsewhere in the business at termination with the aim of actually trying to prevent a transfer of staff in the first place.
Finally, retention may be relevant in the context of redundancies. So, the outgoing supplier or a seller in a business transfer may have agreed to make redundancies of in scope employees pre-transfer as part of the commercial agreement between the parties. And, as part of any redundancy process, the outgoing employer has to consider whether there's any alternative positions available and so move the employees elsewhere in its organisation if possible. Limiting the number of redundancies is going to reduce potential cost for whoever's bearing that cost and also just to flag here there's going to be risk attached to any dismissal made by the outgoing employer so the parties would need to consider how to minimise that risk and allocate it accordingly by maybe the use of indemnities or it might be appropriate to dismiss under a settlement agreement.
In an outsourcing situation, the next thing a supplier needs to consider before deciding to do anything about retaining employees who would otherwise transfer is to check whether there's any relevant contractual provisions in its supply agreement which would restrict it from taking decisions and moving employees around who work on the services. So, for example, the outgoing supplier may be prevented from moving staff on or off the services in a certain period of time before termination and it may also be prevented from changing their terms and conditions. Usually, if there are these provisions in an agreement, there is a carve out so changes can be made with customer consent but it is important to check what the restrictions are.
So how does an employer actually go about retaining its staff then? Well, one way is to reallocate staff onto different contracts or services or to move them around into a different part of the business so this could be immediately before the transfer or a little time before but you've also got to be careful. You've still got to actually deliver those services, especially if you have got KPIs in any particular contract and also the supplier has got to be careful not to breach any restrictions in the contract which would prevent them from reassigning staff that I have mentioned.
Employees are going to be in scope to transfer if they're assigned other than on a temporary basis. So if the outgoing employer does make any changes they've got to be made on a permanent basis so you can make sure then that the employees won't still be caught by TUPE accidentally.
The employer has got to consider whether the employee's contract allows it to make a change in their duties or the area of business that it's working in and if not then it needs to consider how to effect that change. Usually it's going to be with the particular employee's consent.
Sometimes an opt-out and re-engagement by the outgoing employer on different terms of employment will be the best way to achieve certainty around any move. An employee has got the right to object to a transfer, so that will mean that their employment comes to an automatic end, they're not entitled to any notice or redundancy pay if they choose to do this and so, understandably, the employee is not going to choose to do this without having the certainty of another job to go to. So usually the existing employer would offer the employee new terms elsewhere in the business to start immediately following the opt-out and in terms of the process that you would follow here, the employee would sign an opt-out letter and that would usually be sent both to the existing and incoming employer and then they would sign the offer of new terms of employment with the existing employer.
This also gives then the buyer or incoming supplier comfort that the employee is not going to change their mind and argue that they should have in fact transferred because they've actually decided to opt out of that transfer. And as the new terms start immediately there's no break in service to the employee and they're going to have continuous employment. I think, ultimately though, how successfully an outgoing employer is going to be in retaining staff is going to depend on whether the particular employee wants to transfer or wants to remain with their existing employer. If the employee wants to stay then they are less likely to raise issue about, raise issues about changing terms and conditions or try and argue that they are in fact still assigned to the transferring services or business.
Siobhan: Thank you Hannah and thank you to those of you who are submitting questions, we've had a number come in already and I'm going to handover now to Jane to deal with one of those.
Jane: Yes, there's one that builds on something Hannah mentioned actually about dismissing somebody under a settlement agreement. So the question is do settlement agreements work on a TUPE transfer? Well, the answer is, if somebody is leaving and you are putting a settlement agreement in place to draw a line under any claims they might have from the dismissal or the employment before that, the answer is yes, with one caveat, which is the slight hesitation in my voice which is, if there have been collective consultation processes either just for the TUPE scenario or also for redundancy, then due to a quirk in the legislation you can't actually settle under a settlement agreement any rights in respect of those information and consultation rights, they're collective rights. So you need to be a little bit more creative if you want to settle those as well or at least protect yourself against them. So sometimes we see a payment delayed until the time limit for bringing those claims has expired or payment conditional on not bringing those claims, but otherwise for unfair dismissal or discrimination arising out of dismissals then settlement agreements should work. You're probably going to want to have them on a tripartite basis to make sure that, you know, you don't settle just you and the employee and then find that they claim against the other party and you get dragged into that litigation, but obviously then that means a little bit of extra level of negotiating because you're going to have three parties so you'll all need to be comfortable with the settlement agreement. And there are also practicalities, so depending on the numbers it may be that given as the employer you're going to have to pay for some level of independent legal advice but the scale of the exercise is prohibitive so there's some practicalities to think about. And if somebody continues in employment and they don't actually leave, there's surprisingly little case law around this, but what we have indicates that they can't really be used to change terms and conditions going forward and, as Hannah mentioned earlier, in the context of somebody being reallocated, if somebody does stay on and puts a settlement agreement in place to draw a line under previous claims but they continue to be employed, you can't use a settlement agreement to break their continuous employment, that will be preserved anyway. So I hope that answers your question, whoever asked it.
Siobhan: Thank you, thank you Jane. So we'll move on now to the next question which Louise will be looking at, which is what are the issues with fragmentation as highlighted in the recent case London Care Limited v Henry.
Louise: Thank you Siobhan. So, before I comment on the case itself, let me just say a word or two about what fragmentation is actually all about.
So, the language of fragmentation is used most typically in situations where we've got, we're looking at the service provision change test. And the crux of the service provision change test is where you have a set of activities provided before transfer which one provider ceases to deliver and then a new provider or providers starting to provide services which are fundamentally the same.
And the word fragmentation effectively describes what happens when activities are split up on the end of a contract and in some cases if the fragmentation is very material then that can mean that TUPE doesn't apply because the new activities can't be said to be fundamentally the same. It's important to say that not all fragmentation will actually defeat a TUPE transfer. We've had quite a lot of case law on fragmentation generally and it is clear that you can have more than one transferee in a TUPE situation, so for example, we've seen cases where a sole provider has been replaced by multiple providers but one of those has taken on the majority of the work. Equally, you can have a situation with the transfer of part of a service so the Arch Initiative case was all about a situation where you had a split amongst functional lines and the service was comprised of two distinct subset services and, you know, we've seen that TUPE can still apply in those services as well.
Where fragmentation becomes an issue is where you're not able to identify what the case law refers to as a discernible pattern of allocation or reallocation post transfer. Essentially what that means is you can't actually identify where the activities are ending up. In the case of London Care v Henry, there was a situation where you had a sole provider delivering adult care packages on behalf of Haringey Council and when they ceased providing services they were replaced by four main new providers who started to provide care packages for the same service users albeit that the way in which work was allocated with these providers was slightly different to the way it had been beforehand. And in this case, there was no evidence that one particular contractor took on the majority of the work. Now, the reason this ended up in the Employment Appeal Tribunal is that the Tribunal had found, at first instance, that the activity, first of all consisted of the provision of care packages to certain users, it didn't specify whether that mean all of the users of Haringey or a certain subset, and it then went on to say that the activities remained the same after the transfer but crucially they didn't consider the issue of fragmentation in reaching that conclusion.
So the case really doesn't tell us anything new, it doesn't change the law, but it does remind us that, as always, the first question is the what are the relevant activities, but then when you come to the second question of identifying whether those activities remains fundamentally or essentially the same, you've got to consider as part of that whether there has, in fact, been any fragmentation.
So, if you are involved in contracting service, whether on supplier or customer side, and those activities are susceptible to fragmentation then you might want to think how fragmentation needs to be managed within the organisation. So, if you're on the supplier side, for example, you might need to think about how it feeds into workforce planning, so do you need to be looking at aligning staff and staffing groups to different aspects of services that could possibly be tendered separately or alternatively do you need to be looking at potential redundancy protection at the end of a contract if TUPE doesn't apply because of fragmentation? And if you're customer side, obviously when you're looking to retender the services, you'll be thinking about how the activity is allocated and how fragmentation will feed into that for you to achieve your overall objective.
Siobhan: Thanks Louise, and now I'm going to pass over to Hannah who's going to pick up one of the questions that has come in from the audience today.
Hannah: Thanks Siobhan, the question that I'm picking up is how long do you have to wait before you can harmonise terms and conditions following a transfer and this is a question I do get asked a lot, day to day. So, I think first of all importantly it's you need to be clear that harmonising terms is generally not going to be valid. What we have under TUPE is a restriction on changing terms and conditions and so any change to a contract is void if the sole and principal reason is the transfer unless you've got an ETO, an economic technical or organisational reason entailing changes in the workforce and the employee agrees to the change, or the employee's contract actually permits that change within its terms.
So the length of time that passes after the transfer doesn't actually change that position, it might help to a certain extent because the longer away you are from a transfer it makes it look less likely that the reason is, the reason for the change is connected to that transfer, or that people connect the two together but it's not actually going to be enough in itself.
So what's the risk if you're going to harmonise terms? Well, employees could react at the time that the employer is trying to implement the change, they could bring claims so if they decide to resign on the back of it, they can claim constructive unfair dismissal or they could claim breach of contract, or sometimes, which is more difficult for the employer to manage, is if they don't actually bring the claim straight away but they carry on working but they make it clear that they don't accept that change and then the employer doesn't realise that it's an issue until that change becomes relevant, So that might be more the case if you've got a change in redundancy terms or restrictive covenants because they're not going to take effect straight away like a change in holiday entitlement or working hours, and then at the point that the employer wants to make redundancies or enforce those restrictive covenants the employee then takes issue with it and won't agree and then makes a claim at that point.
There are ways to change terms and conditions validly under TUPE but it does put some extra obstacles and hoops for the employer to jump through. I won't go into them all here but just to summarise this could be finding a reason that's unconnected with the transfer or may be if you need certainty around a change dismissing and re-engaging the employees, as Jane mentioned, earlier you can't change terms and conditions under a settlement agreement, but each of these processes does have risks attached so you've got to consider each carefully at the time.
Siobhan: Perfect, thank you Hannah. So we're now going to pass over to Louise again who's going to deal with a sickness question which is what comeback, if any, is there to the transferring employer when an employee is transferred with extensive historical ill health issues that are not disclosed at the time of the transfer?
Louise: Thank you Siobhan.
Well, as we know TUPE transfers, most although not all, employment rights, duties and liabilities, even where these have accrued before the transfer. So if you are the transferee coming into a situation where somebody has had historical absence and may be still be on sick leave, then you need to bear in mind that you inherit that person as you find them essentially. So you will be responsible for managing the future sickness absence, you can't rely on errors that have happened before to try and avoid your responsibilities going forward. So, that's the first thing to bear in mind. So, for that reason the onus is essentially on the transferee to do what it can before the transfer to identify any circumstances in which you might have these sickness related issues. You would typically do that through a process of due diligence but of course in a business transfer situation you're going to have much more, a much more sophisticated approach to due diligence than you would typically have in a service provision transfer so there may be less opportunity in a service provision change case but nevertheless you should do what you can to get as much information as possible out of the transferor or the existing HR team about any issues like this that might be, that might exist.
Now, there are obviously some duties on the outgoing employer in relation to employee information so we've talked earlier about employee liability information. That won't necessarily be too helpful in this context because unless a sickness issue has manifested itself either in a disciplinary or grievance process or there has been an actual claim, then it won't necessarily be caught by the ELI obligations but that's going to be the starting point.
You may have more helpful provisions in a contract so that might be the contract with a customer or between buyer and seller or there might even be third party rights it can rely on in the transferor contract with the customer, and the type of provisions that you might be looking for are, you know, any indemnities relating to sickness issues, possible warranties, so for example we quite often see warranties about the new employee is off sick or there were no outstanding obligations to make reasonable adjustments and that type of thing so they may be a way of flushing out information too.
In terms of remedy, if there is a breach of ELI, then that gives the transferee a direct claim against the transferor for compensation and that compensation will be a minimum of £500 per employee. In terms of contractual claims, then the normal contractual remedies would apply so if we're talking about a breach of warranty or indemnity for inaccurate information then you'd be looking to establish that there'd been some loss arising from that for which you could claim. In certain circumstances, if there has been some cause of action that's pre-transfer, so perhaps a failure to make reasonable adjustments by the transferor then there might be a specific indemnity or you might be caught by the standard indemnity you'd expect in a TUPE situation for pre transfer acts and omissions, so it's worth checking that out too.
Just one final point on assignment and how that works with sickness absence, in the majority of cases if you've got an employee who's off sick or even on PHI, that's not going to mean that that employee isn't assigned to the relevant undertaking. But the case on the slide there was an example where an employee was held not to be assigned because they were on PHI in circumstances where it was acknowledged that that individual was never returning to work and in that sort of situation the individual didn't transfer. So that is worth bearing in mind as well as a potential option to pursue.
Siobhan: Thank you Louise.
It's now time for another live question. There's still time for you to submit questions, using the ask a question tab, but in the meantime Jane's going to pick up one of the questions.
Jane: Yeah, there's actually a couple that have come in as a follow up on ELI so I might take two of those because one's very quick.
One is what's the employee information that gets transferred to the new employer? That is the employee liability information which we mentioned earlier so there is a download that details all of that, the list of that.
The second one is what happens, or to what extent are you liable if you don't have a written contract but you do pass on to the transferee the relevant details that you've been working to, so you give the hours of work, the employment status, the pay, etc., so you give all of the information, it's just not in a contract. If the new employer sort of reneges on that and puts somebody onto a zero hours contract, changes their terms, to what extent are you as the transferor liable? Well under TUPE, if you've given the information, it doesn't say that ELI has to be given in a particular contract, as long as you've given the information that relates to the terms, then you should be OK. Obviously it may be that you have accepted contractual liability for something that goes wider than ELI, so you would need to check any contractual provisions you had in place. But the key thing to remember from an ELI perspective is you don't have to give a contract of employment as such although it's usually the easier way to do it, if you've complied with your obligation to give the information then you should be OK from an ELI perspective.
Siobhan: Thank you Jane. So now back to Hannah who's going to deal with the question about someone who remains on their existing terms and conditions but their previous employer also remains trading, the question is do those terms and conditions stay as per the day that they transferred or if the previous employer changes their policies does this automatically update what the transferred employee should get?
Hannah: Thank you Siobhan. OK well, first of all, as a reminder an employee is going to transfer with all of their rights, duties and liabilities under or connected with the contract of employment and that's as at the date of the transfer. And at that point of transfer the new employer steps into the shoes of the previous employer and the employment relationship with the outgoing employer comes to an end.
So, what transfers there includes all contractual and discretionary or non-contractual terms. It's important to remember that some terms which were originally intended to be discretionary in nature can become implied into the contract of employment by reason of custom and practice, so in other words if a term is regularly adopted and becomes customary in a particular company or at a particular workplace, then it can in fact become part of the contract of employment. And this distinction is important in the context of TUPE because TUPE makes it harder for an employer to change terms and conditions of employment where the change is connected with the transfer, but the new employer has got the same right as the previous employer to make changes if it wants to to non-contractual benefits or provisions. After the transfer date, in general and I'll talk about a couple of exceptions in a moment, it's up to the new employer to decide whether to change the transferring employee's terms and conditions of employment and policies that they work under. The old employer's relationship with the transferring employees has now ended at this point so to answer the question, changes made to a policy post transfer, for example the outgoing employer's disciplinary policy by the previous employer will not automatically apply to the transferring employees.
I've mentioned two exceptions, the first is known as TUPE Plus which is where the incoming employer is contractually required to mirror the terms of the old employer, so this could mean that changes put in place by the old employer after the transfer will affect the transferring employees because the new employer is contractually required to put them into effect, but this is more common in public sector outsourcings.
The second is where the transferring employees are covered by an applicable collective agreement and there's been a question mark over how terms in a collective agreement which has been agreed between the old employer and a third party, like a trade union, would affect the new employer and the employment of the transferring employees after the transfer, but this has now been resolved. So TUPE now provides that the static interpretation is the right one and I'll explain what that means.
So, where a contract of employment incorporates a provision of a collective agreement as agreed from time to time, this provision won't actually transfer under TUPE if it's agreed after the date of the transfer and also if the new employer doesn't take part in the collective bargaining for that provision, so if the new employer doesn't actually have any collective negotiations with the union, for example.
However, it's important to be aware that there is a difference between types of provisions in a collective agreement. So the first type involves terms that have already been agreed at the point of transfer but they provide for future changes in a contract. So, for example a term might provide for an incremental increase in pay for all the employees or for a particular grade of employee over say a two or three year period. So if this is still within that two or three year period that going's to be binding on an incoming employer.
The other involves new terms agreed between the union and the old employer post transfer, so these won't bind the new employer. Therefore, for example, following a transfer the terms and conditions of the transferring employees are probably going to gradually diverge from any terms and conditions of the retained employees who have not transferred.
Siobhan: Great, thank you Hannah.
We've now got time for another question that's been submitted, they're flowing in. Louise is going to deal with the next one.
Louise: Thank you Siobhan.
We've got a question here about the best way to avoid the risk of tribunal if the transferring business that does not agree that TUPE applies.
I think I'll probably start with the least attractive way to deal with that situation which is to do nothing and just let people turn up with the transferring employer. I've seen it happen but it's certainly very much a last resort and will almost certainly lead to some kind of proceedings. So, the do nothing option is very much the least attractive.
In terms of steps that you should be looking to take, I think the starting point is actually do you have other roles for these people, can you redeploy them and all the issues that Hannah's already talked about there would be relevant. Assuming that that's not an option, then you'd need to get into quite a detailed dialogue potentially with the transferee about why they think TUPE doesn't apply and why you think it does. I have seen a number of these situations resolved where parties have been prepared to get round a table with their advisers and actually thrash out the issues and you do sometimes get a meeting of minds where it becomes apparent to one party or the other that their position is not sustainable.
If you can't get agreement by direct contact with the other party to the transfer then consider whether, if this is an issue between two providers, consider whether you can bring in the customer to try to bring some common sense to the situation. It may be that they don't want to face it entirely but in a lot of situations it will be in their interest to reach an amicable solution too, so that's another option.
I think the final thing would be, failing all of that, what can you achieve through a contractual solution? So it might be that if you were to agree, for example, with the transferee that if they were to take on employees, you will share the redundancy costs, that's something that may become more attractive to them, because equally both parties in a transfer have got to weigh up, you know, the risks and benefits to them so nobody will be absolutely confident in any given scenario that TUPE will apply because it comes in lots of shades of grey, so if you can present an option to the other side which is sufficiently attractive then you might be able to achieve some kind of solution by contractual means.
Siobhan: Thank you Louise.
Moving on to Jane now who's dealing with a question about reasonable travel distance and how is this assessed when a TUPE transfer involves a change of location?
Jane: Thanks Siobhan.
So reasonableness in this sort of situation where the transferee is planning to operate out of a different location comes up in a number of ways. So, your starting point is going to be to look at the contract, have you got a mobility clause that you might be able to rely on? But obviously you need to work out whether it's enforceable so does it, for example refer to a historic work place which is no longer relevant, and the contract hasn't caught up with the reality which means that you can't rely on it. You also need to think about trust and confidence. Are you going to be exercising an otherwise valid mobility clause reasonably or is the way you plan to operate it actually going to cut across the underlying trust and confidence with the employee?
So, assuming you do have a valid contractual mobility clause and you intend to rely on it, that again is only the starting point, it's not necessarily the end of the matter because the employee may, notwithstanding the fact they've signed up to this mobility clause, rely on regulation 4(9) under TUPE which says that if the proposed change is a substantial change to their working conditions and it's to their material detriment, then they can resign and claim wrongful dismissal. And a bit of sting in the tail here is if you're the transferor you're not the person or the entity suggesting this change, that's the transferee, if the individual also objects as well as resigning then that blocks the claim transferring to the transferee and you are stuck with it as the transferor so that's why we always recommend a transferor has tried to get protection against that sort of claim.
So substantial change, material detriment, what do they mean? Well substantial change is an objective test; it's a question of fact and degree. For material detriment it has to be more than minor or trivial but again it's going to be heavily fact dependent and that is in fact a subjective test because it's looking at the particular circumstances of the employee in question. We don't have time to go into the case law on this but there is a download again which lists a few of the cases which have dealt with this issue and it shows the sort of geographies that we're talking about and the extent of the move and why the employees objected.
And then if you have no valid mobility clause you're likely to be treating it as a geographical redundancy, that is a potentially fair reason for dismissal, it's relocation is now an ETO under TUPE, but reasonableness does come in in terms of the redundancy payment. So even if the geography was such that you could argue offering employment in a new location was suitable alternative employment it may nonetheless be reasonable for the employee to refuse that and therefore preserve their right to a statutory redundancy payment because of their particular personal circumstances. So it may be, similar to the detriment situation, it may be that the geography isn't great but it means they are driving in a different direction which means it's hard to drop off, do the school run. So, reasonableness in a redundancy context and a TUPE context can end up being very fact specific.
Siobhan: Thank you Jane and thank you to everybody who's participated so enthusiastically today.
We are just about out of time, so it just falls to me to thank everybody for sending their questions in and thank you to the speakers. I hope we've demonstrated that there is no such thing as a silly question when it comes to TUPE and the answers show the various complexities and angles that you need to consider in response to each one.
I hope you found the questions interesting, I hope the approach has worked for you. Please do let us know on the feedback form if you have time that would be really appreciated, and again if there's anything you want to go over we will have the transcript and audio available and will let you know when they are.
Thank you very much.
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