TUPE Traps

For decades now the very acronym “TUPE” has struck fear into the hearts of otherwise bold employers.

Now a review of TUPE (the Transfer of Undertaking Protection of Employment) Regulations has been promised. But, in the meantime, there is still much to be wary of in relation to TUPE.

The first thing is to remember that the basic principle is: “Employees follow the work”. A client who thinks they can take the work (that your company does for them) back “in house” and leave you to deal with the employees, simply has it wrong. If the work your employees do is primarily for your client, then the employees follow that work whether it goes in-house or to a competitor. Don’t be fooled into thinking it is somehow your problem.

Of course, conversely, that means if you bid for and get the work then you get the employees too! It can be a cunning way for unscrupulous clients to unload employees they wish they’d never had – and you might end up wishing so too.

Remember as well that you take on all those employees’ rights, terms and conditions and entitlements; including all the ones you were not told about. Bonus entitlements, special sick pay terms and holiday enhancements can be “coming out of the woodwork” for months. Failure to provide Employment Liability Information in a timely fashion can entitle you to make a claim against the “transferor” who left you with the employees. But that is limited to £500 per employee, for just a few employees it might not be worth making the claim.

Even worse, you might be liable for Employment Tribunal claims already made by employees arising from their treatment by the previous employer.

So it is worth making sure you have warranties and indemnities to cover undisclosed terms and conditions and all outstanding claims or potential claims to Employment Tribunals. You want also to make sure that all the necessary information and consultations have been carried out by the person giving you the work (and hence giving you the employees).In an adversarial situation that could be tricky but it is best to make as much effort as possible to reduce risk.

Once you have the employees their terms and conditions continue indefinitely and you cannot reduce the benefits (even if there are compensatory improved benefits). Beware of those who seek to persuade you that changes can be made after 3 months, 6 months or a year or more. There may be ways and means but they carry risks and they could involve dismissing employees – which is always a risk.

These are necessarily general guidelines; advice needs to be specific to circumstances. But however bold you feel, tread carefully!

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