TUPE: annual #KLHRforum DAVID WILLIAMS KATHRYN DOOKS AMY DOUTHWAITE SEPTEMBER 2016

Transcription

1 TUPE: annual update DAVID WILLIAMS KATHRYN DOOKS AMY DOUTHWAITE SEPTEMBER 2016

2 Today s session Will TUPE apply? Who and what will transfer? Information and consultation obligations Can we change terms and conditions and dismiss? Managing outsourcing arrangements What happens when one party is based offshore? Commercial tips to best protect the business The likely implications of Brexit on existing UK legislation and practice _2

3 Implications of TUPE - refresher

4 Implications of TUPE Staff transfer on same terms Rights, duties, powers and liabilities transfer No contracting out - right of objection relevant transfer Information and consultation 4 Changes to terms and conditions at risk of being void Dismissals automatically unfair in certain circumstances Notification of employee liability information

5 Will TUPE apply?

6 The critical question TUPE or no TUPE? 1. Standard business transfer test 2. Service provision change _6

7 Standard business transfer test Buildings or Staff taken over moveable buildings or moveable property property similarity between the activities Customers staff taken over taken over value of intangible assets relevant transfer Value of intangible assets customers taken over 7 A transfer of a stable economic undertaking which retains its identity

8 Service provision changes 1 Client Contractor Client 2 a b Contractor Subsequent contractor 8 3 Client Contractor

9 Essential ingredients of a service provision change 1. Activities must be fundamentally the same 2. The client must remain unchanged 3. Immediately before the transfer: (a)there must be an organised grouping of employees situated in Great Britain; and (b)the client intends that the activities will be carried out by the transferee other than in connection with a single event or task of short term duration 9

10 Are the activities fundamentally the same? OCS Group UK Ltd v Jones and another UKEAT/0038/09 Enterprise Management Services Ltd v Connect-Up UKEAT/0462/10 Nottinghamshire Healthcare NHS Trust v Hamshaw and others UKEAT/0037/11 Ward Hadaway Solicitors v Love and others UKEAT/0471/09 the EAT 10

11 Same client - typical sole-sourcing model 1 st generation 2 nd generation Client Client Employees on entry Prime contractor Employees on exit Prime contractor Subcontractor Subcontractor Subcontractor Subcontractor Subcontractor Subcontractor 11 Employees on exit

12 Same client: moving from sole-sourcing to multi-sourcing model 1 st generation sole-sourcing 2 nd generation multi-sourced Client Client Prime contractor Employees on exit Supplier Supplier Supplier Supplier Client _12 Subcontractor Subcontractor Subcontractor

13 Same client recent cases McCarrick v Hunter [2012] EWCA Civ 1399 COA held no SPC where the relevant activities carried out by different contractors before and after the change are on behalf of different clients Jinks v London Borough of Havering UKEAT/0157/14 London Borough of Havering owns a site comprising ice rink and car park Saturn managed the site, which was sub-contracted to Regent Car park taken over by NHS, who managed it internally Ottimo Property Services Ltd v Duncan and another [2015] UKEAT 0321/14 SPC can cover clients in the plural _13

14 Fragmentation transfers to more than one client Kimberley Group Housing Ltd v Hambley and others UKEAT/0488/07 - the assignment test set out by the ECJ in Botzen v Rotterdamsche Droogdok Maatschappij BV [1985] ECR 519 should be applied. True fragmentation: Thomas-James and others v Cornwall County Council and others ET/ not possible to work out which of the 17 new contractors had taken over the work Clearsprings Management Ltd v Ankers and others UKEAT/0054/08 no discernible pattern of reallocation _14

15 Organised grouping of employees Eddie Stobart Ltd v Moreman and others [2012] IRLR 356 employees must be (deliberately) organised by reference to requirements of the client; & be identifiable as members of that client s team Rynda (UK) Ltd v Rhijnsburger [2015] EWCA Civ 7 COA approved Stobbard case Amaryllis Ltd (Formerly of Montrose Road Chelmsford Essex) v McLeod and others UKEAT/0273/15 _15

16 Client intends: not single event or task of short term duration ICTS UK Ltd v Mahdi and others UKEAT/0133/15 Horizon Security Services Ltd v Ndeze and another UKEAT/0071/14 _16

17 Practical consideration - temporary cessation of activities Inex Home Improvements Ltd v Hodgkins and others UKEAT/0329/14 Mustafa and another v Trek Highways Services Ltd and another UKEAT/0063/15 _17

18 Who will transfer?

19 Assignment Transfer persons employed and assigned to the organised grouping immediately before the transfer Employed..or would have been employed had they not been automatically unfairly dismissed under Reg 7(1) Salmon v (1) Castlebeck Care and (2) Danshell Healthcare appeal revives employment contract Assigned Question of fact, looking at all factors not just % of time Costain v Armitage project managers Jakowlew v Nestor Primecare Services instruction to remove from services _19 BT Managed Services v Edwards long term sickness absence

20 What transfers?

21 What transfers? Transferring rights and liabilities: What does What doesn t Breach of contract Criminal liabilities Health & safety claims Share option schemes but transferee must offer substantially equivalent scheme Tortious liability for personal injury together with the benefit of the transferor s employers liability insurance policy Liability for acts of discrimination or misrepresentation, including equal pay claims Terms of collective agreements and union recognition Restrictive Covenants (note interpretation issues) Pension liabilities (note exclusion does not cover early retirement benefits see next slide) _21

22 What transfers cntd: Pensions Transferring pension rights and liabilities: What does What doesn t Early retirement schemes DC occupational pension schemes* Redundancy schemes DB occupational pension schemes* Death benefit only schemes Personal pension schemes * However a certain level of employer contribution does transfer. _22

23 Information and Consultation

24 Information and consultation INFORM Inform and, if appropriate, consult appropriate representatives of affected employees. Businesses with fewer than 10 employees can inform and consult directly with affected employees. CONSULT Consultation required if the employer envisages taking measures in relation to the transfer. REQUIRED INFORMATION FAILURE TO COMPLY _24 Fact of the transfer, the date of the transfer and the reasons for the transfer. The legal, economic and social implications of the transfer for the affected employees Any measures the employer envisages and/or transferee envisages Award of up to 13 weeks pay for failure to comply with information and consultation obligations: Quantum? (GMB v Susie Radin, Todd v Strain, Shields Automotive v Langdon) Joint and several liability

25 Employee Liability Information Information has to be provided in writing or in another readily accessible form: Identity and age of employee Particulars of employment under s.1 Information of any disciplinary taken against employee and grievances raised by employee within 2 years Information of any court or tribunal claim brought by employee within previous 2 years or that the employer has reasonable grounds to believe an employee may bring against the transferee Information of collective agreements will apply after the transfer Provide at least 28 days before the transfer and update it Failure to comply: _25 Just and equitable penalty having regard to any loss suffered by the transferee (normally no less than 500 per employee): Profile Security Services v Charter Security - 40,331 compensation Eville & Jones v Grants Veterinary Services

26 Coffee break

27 Dismissals and changes to terms and conditions of employment

28 Dismissals and TUPE transfers Dismissals are AUTOMATICALLY UNFAIR if: the sole or principal reason is the transfer unless it is an ETO reason. _28

29 Where does the risk lie? Transferor s employees Those in scope Transferee s employees _29

30 Entailing changes in the workforce ETO reason Economic Technical Organisational _30

31 Dismissals practical considerations Collective consultation: _31

32 Changing terms and conditions and TUPE transfers Changes are VOID if: the sole or principal reason is the transfer unless it is an ETO reason. _32

33 When are changes permitted? Permitted ETO Unrelated by reason to transfer contract Collective Entirely Insolvent _33 agt beneficial

34 Practical solutions 1. Delay the change 2. Find another reason 3. Settlement agreements _34

35 Managing outsourcing arrangements

36 Transfer date Transfer date Splitting liabilities the standard approach On Entry On termination/expiry Client / Client Supplier Supplier replacement supplier _36

37 Splitting liabilities the blanket indemnity Entry If anyone transfers: Supplier can terminate Exit If anyone transfers: Client (or incoming supplier) can terminate Client will indemnify for all liabilities Supplier will indemnify client (for benefit of incoming supplier) for all liabilities Client/outgoing supplier can offer employment before Supplier terminates Supplier can offer employment before Client (or incoming supplier) terminates _37

38 What happens when one of the parties is offshore? _38

39 Implications of Brexit on UK legislation and practice

40 Brexit: Impact on TUPE _40

41 If you are currently negotiating an outsourcing? Supplier Client THINK NOW ABOUT WHAT WOULD HAPPEN ON EXIT IF TUPE WAS REPEALED Left with redundancy costs Seek indemnity from client? Build into contract price? Is it an exclusive team? Are they assigned? How much control does Supplier have? The new normal push Supplier to take the liability as a new cost of doing business? Will end up bearing the cost anyway? _41

42 Learning points Don t forget that there are two tests as to whether TUPE applies Be conscious that it is possible to change services to prevent an SPC Watch out for changes to clients in outsourcing arrangements Be prepared for the implications of TUPE being less likely to apply Remember that who transfers is not just a question of percentage of time Bear in mind that penalties for failure to comply with information and consultation obligations and provide Employee Liability Information can be significant. Dismissal/changing t&cs whose ETO is it? Remember you can now conduct collective redundancy consultation pre-transfer TUPE does apply if you are off-shoring Consider the impact of Brexit and the possibility that TUPE might be repealed _42

43 HR Bytes Don t forget our online web portal, HR Bytes which can be accessed at: Leave a card with a member of the team if you would like to receive updates and invitations to our events CPD Code: 4066/KELI _43

44 Contact info KEMP LITTLE Cheapside House 138 Cheapside London EC2V 6BJ TEL +44 (0) FAX +44 (0) kemplittle.com Kemp Little LLP is a limited liability partnership registered in England and Wales (registered number: OC300242) and is authorised and regulated by the Solicitors Regulation Authority. Its registered office is Cheapside House, 138 Cheapside, London EC2V 6BJ. A list of members is open to inspection at the registered office. _44