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TUPE in the Third Sector

Given the current economic climate, more and more third sector organisations are seeking sustainability by merging, while the public sector continues to outsource services to drive costs down.

The TUPE legislation relevant to these scenarios is a notoriously complex area of law and an increasing number of third sector and not-for-profit organisations are now finding that they urgently need to get to grips with its complexities.

 

What is TUPE and when does it apply?

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) protects employees’ terms and conditions of employment when a organisation or service provision is transferred from one owner to another.

When an organisation changes hands or the service provision is taken on by another provider, those working for that service or organisation automatically become employees of the new owner on the same terms and conditions: it is as if their employment contracts had originally been made with the new employer. Their continuity of service and any contractual rights are all preserved.

This is an important factor to consider when tendering for a service or merging an organisation, as incoming employees’ existing salaries, pension provisions and other benefits such as sick pay, holiday and redundancy entitlements must be maintained.  This can have a major impact on the viability of a transfer, especially for small organisations, so should be considered carefully from the outset.  

However, it is important to remember that TUPE protects the rights of ‘employees’ and not other types of workers such as self employed contractors and volunteers.

 

Obligations under TUPE

The term used for the outgoing organisation which transfer their employee’s to a new employer is the 'Transferor' and the employer who receives the transferred employees is the 'Transferee'. Both the Transferor and the Transferee have key obligations during a TUPE transfer. 

Where there is to be a transfer of an undertaking, the Transferor has an obligation to inform and consult with affected employees via either trades union representatives or workforce representatives. They need to let them know that the transfer is happening and why, and explain how it will affect them.

Equally, the Transferee must inform (and possibly consult with) its own affected employees prior to the transfer.

The Transferee may also participate in the consultation meetings with the Transferor’s employees, although this is not mandatory.

The Transferor has an obligation to send to the Transferee Employee Liability Information (ELI) in respect of each transferring employee. This is information about the terms and conditions of the individual employees being transferred.

Equally, the Transferee has an obligation, having received the ELI information from the Transferor, to send to the Transferor a letter detailing any ‘measures’ which it envisages that it will take in relation to the transferring employees following completion of the transfer. These might include details of proposed restructures and potential redundancies. It is the transferor’s obligations to consult with their outgoing employees about the measures and how they are likely to affect them.

 

After the Transfer

After the transfer has taken place there may be a surplus of employees or a restructure is required to manage the new operations. This may result in redundancies and it is important to manage any dismissals in line with the TUPE regulations. If an employee is dismissed either because of the transfer or a reason connected with it, their dismissal is automatically unfair. However, the dismissal will not be unfair if the employer can show an ‘economic, technical or organisational’ (ETO) reason entailing a change in the workforce.

Equally, for a business that has transferred a service provision out while some employees remain, there may be redundancies due to restructure or closure which must be managed in line with statutory requirements.

 

How Charity Backroom HR can help.

Before committing to a TUPE scenario it is recommended that an organisation should seek legal advice to manage this complex area of law. Many charities cannot meet the costs of liaison directly with solicitors and this is where Charity Backroom offers a solution that provides real value for money.

Our  CIPD qualified HR Consultants are experienced in personally guiding clients through the TUPE process, step by step, and giving practical advice to suit the needs of each individual organisation. Services we can provide are:

  • One-to-one advice & support covering all areas of HR Implementation including TUPE, Redundancy, Restructure, Contracts of employment and Induction – by telephone and face to face
  • Employment Law advice from a qualified Employment Lawyer
  • Template and bespoke letters and documents
  • Line Manager Training
  • Policy Review

 

For more information about Charity Backroom’s HR Consultancy Service, contact us on 01603 883866 / 01603 883850.

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