Guide to transferring staff IN on TUPE

STEP 1

Determine whether TUPE applies

As soon as you become aware that there is a potential for part of the operations of an external organisation to be transferred into your organisation, irrespective of the number of employees involved, you will need to assess whether the transfer will be covered by the TUPE regulations.

This will need to be established early, not only to ensure that all legal duties arising from TUPE are actioned in advance of the transfer taking place, but also to ensure that you gain the confidence and co-operation of the staff that may be transferring.

Seek professional legal advice at this point.

STEP 2

Establish which employees are likely to be transferred

As the new employer, immediately prior to the transfer it will be your duty to take over the contracts of employment of all employees that will transfer. In order to comply with this requirement, you will need to reach agreement with the old employer as to which employees will transfer.

The old employer should provide you with a definitive list of staff that are considered to be affected by the transfer.

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Since April 2006, the old employer has had a duty to provide the new employer with written details of the transferring employees (including identity, age, particulars of employment, disciplinary and grievance records, employee claims and collective agreements) together with all associated rights and liabilities that will transfer. This information must be passed not less than 14 days before the transfer, although in practice the new employer will aim to attain this information much earlier.

If there is a failure to comply with this duty by the old employer, the new employer can apply to the Tribunal for compensation which will be assessed with regard to the losses suffered. The maximum amount of compensation which can be awarded for a failure to inform or consult over a TUPE transfer is 13 weeks' gross pay (regulation 16(3), TUPE 2006). There is no minimum award.

A failure to comply with TUPE could therefore expose employers to claims large enough to undermine the entire transaction.

STEP 3

Consult with representatives

Employers involved in a business transfer must inform and consult with appropriate representatives of the affected employees about the transfer and any measures proposed. Certain specified information must be provided to the representatives long enough before the transfer to enable the outgoing employer to consult with them about it.

The old employer must provide the following information to the affected staff and their representatives so you should ensure that this information will be available:

1. Reasons why the transfer is taking place along with the timescale of the transfer.
2. The legal, economic and social implications of the transfer of employees. Legal implications will include an explanation of the effect of the transfer on employment contracts, statutory rights, and collective agreements. Economic implications will include any effect on an employees pay and other employment benefits. Social implications will include matters such as whether there is a likely to be a need to relocate, or a change in working hours.
3. Any measures you might take that might affect the employees. Although this obligation falls to the old employer, you will play a significant role in ensuring that this information is accurate and delivered in a timely manner. The old employer will want to consult with its employees in good time to allow their employees to make any representations. You will, in particular, need to make sure that you inform the existing employer of any measure with implications for the affected employees; these could include for example a change in the place of work or change in the working pattern.
4. There is also a duty on you to consult with your own employees representatives in respect of employees whose employment or conditions of employment may be affected by the transfer. So, if the transfer is likely to impact in any way on staff currently working for you, you should consult with staff and their appropriate representatives.
5. As the new employer, you will inherit the recognition agreements with any trade unions recognised by the old employer, including, where this is contractually required, the application of pay rises subsequently agreed with those unions.

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If there are any changes or proposals for changes following the transfer, these measures will have to be discussed with the representatives of the affected employees. The new employer is required to provide the old employer with information on proposed measures to allow the old employer to comply with their duty to inform and consult.

There is no set timetable for consultation, but the larger the transaction and the more staff affected, the longer the timetable will need to be.

STEP 4

Inform and consult affected staff

The responsibility for consulting and informing affected staff rests with the old employer but you will be required to participate in the consultation exercise being led by that employer.

1. Provide the information detailed in Step 3 above and you will want to ensure that this information is accurate.
2. Meet with the employees who are to transfer at some stage to introduce you as an employer and to respond to any queries or concerns that these staff may have, providing written information as necessary.
3. Inform and consult affected staff of any plans or proposals, which might have implications for the new employees, such as a planned change in work location, or a change in working patterns. Failure to do this could lead to difficulties once the employees have transferred and could be interpreted as a breach of the terms of a TUPE transfer.
4. It is also recommended that in preparation for the receipt of staff into the company, you meet with the appropriate existing staff / departments to explain the transfer and the provisions made to accommodate the additional staff and the associated operations.
5. Give new employee representatives paid time off for representation duties and TUPE training.

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If there is a failure to inform and consult, a complaint can be made to the Employment Tribunal. If successful, the Tribunal can award whatever compensation it considers just and equitable having regard to the seriousness of the employers failure up to a maximum of 13 weeks pay per affected employee.

Information and consultation failures can now result in joint and several liability between the outgoing and incoming employers, unless the contract governing the transfer clearly caters for apportionment of liability here.

STEP 5

Confirm the transfer

The old employer will be responsible for confirming the details of the transfer to affected staff and their representatives.

TUPE transfer confirmation (to rep) - model letter.

TUPE transfer confirmation (to employee) - model letter.

You should write to the transferring employees to welcome them to the company.

TUPE welcome - model letter.

STEP 6

Exchange employee data

As the new employer you must receive the contractual and supporting information relevant to all the new staff that will be transferring to you from the old employer.

You should undertake a comprehensive check of all terms and conditions of the transferring employees including salaries, hours of work, holidays, sick pay schemes, redundancy arrangements, collective agreements, and disciplinary and other personnel procedures. These may be unfamiliar and require significant explanation by the old employer, which is best achieved with the help of HR in advance of the transfer.

This is particularly important where large numbers of staff are transferring and the terms and conditions of individuals may vary within the transferring group. In addition you must check other possible contractual terms which transferring employees might retain such as place of work, duties undertaken, and working patterns.

You should request these details in writing from the old employer, which may be used as a checklist to ensure that we have requested and subsequently received all the relevant information needed to employ the transferring staff from the relevant date.

Other Steps

Indemnity

You should also seek an indemnity from the old employer to cover possible liabilities such as those which might arise from outstanding complaints under employment law, for example should disclosed information about transferring employees be inaccurate, or from claims arising from the failure of the old employer to consult the affected employees about the transfer.

You may also need to resolve individual personnel issues such as untaken holiday or outstanding expenses claims.

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Although there is nothing anyone can do to prevent TUPE applying (it is not possible to contract out of TUPE), there are steps which both the outgoing and incoming employers can take to divide up TUPE liabilities contractually between them.

Whilst under TUPE employment liabilities connected to the transferring employees will always transfer to the new employer (so employee claims should always be made against the new employer), the parties can still agree contractually to divide up the liabilities between them in a different way. This ought to be done by means of contractual indemnities.

Preparation

In preparation for the first day of employment you will need a detailed list of payroll information. Arrangements should also be made for individuals to complete your usual starter process so they can be entered onto the payroll, preferably in sufficient time for the transferred employees to be paid at the next available pay date.

You may also need to obtain individual permission from the employees to make deductions of salary in respect of pension together with any other deductions that have previously been made from salary. (Where transferring employees are members of trade unions and their subscriptions are being deducted from salary by the old employer, you should explain to the old employer that this facility is not available at this company, and ensure that transferring employees are told that they will have to make alternative payment arrangements.)

Induction

Although transferring employers retain their pre-existing terms and conditions of employment, it will be important that they are given the benefit of normal induction, including provision of the relevant staff handbook drawing attention to those aspects, such as company policies, which apply.

Induction - model programme.

Harmonising terms and conditions.

A desire to harmonise the terms and conditions of existing and newly-transferred staff is NOT a legitimate ground for changing terms and conditions.

If there is a need to change the terms and conditions of employees for a reason related to the transfer, this is only possible if there is an economic, technical or organisational (ETO) reason that also entails changes to the workforce. The change might be a change to the numbers of employees employed or their functions. For example, a functional change might be a new requirement on an employee who held a managerial position to move to a non-managerial position. This may be considered to be a valid ETO reason justifying the change of terms and conditions.

Even if there is a valid ETO reason, the employee's agreement to changing the terms and conditions still needs to be gained. The employment contract, as with other contracts, is between two parties and agreement must be reached for the change to be made. In practice, an employee may only agree to a change in terms and conditions if the new terms are equal to, or better than, his/her existing terms. If we are contemplating changing terms and conditions for an ETO reason as outlined above, then we will need to consult with the employee and gain agreement to the change.

Change to terms and conditions - model letter.