TUPE Regulations PDF

**Week 9: TUPE Readings** - TUPE affords protection to employees and by definition, probably also workers too - The Transfer of Undertakings (Protection and Employment) 2006 'Regulations' can apply regardless of the size of the transferred business [Applicability (and their limita...

**Week 9: TUPE Readings** - TUPE affords protection to employees and by definition, probably also workers too - The Transfer of Undertakings (Protection and Employment) 2006 'Regulations' can apply regardless of the size of the transferred business [Applicability (and their limitations)] - Must be a transfer from one person to another - There must not be a change in employer, not merely just ownership - Hence, 2006 regs don't apply to share sale transfers or where a purchaser buys a majority shareholding in a company, thereby gaining control - Regulations can apply where the ownership of a company is transferred to a company operating outside of the EU - Regs 8 and 9 -- where there are bankruptcy proceedings (but not administrations proceedings), contracts of employment will not be automatically transferred - Reg 4 -- automatic transfer of contract of employment together with all rights and liabilities - Doesn't apply to rights under/connected with an occupational pension scheme (reg 10) - Also doesn't transfer any criminal liability - Reg 7 -- dismissals connected to the transfer are automatically unfair unless economic, etc reason - Applies only to employees who satisfy the usual qualifying conditions for unfair dismissal protection e.g., 2 years continuous employment - 2006 Regs apply to England, Wales, Scotland and Northern Ireland - 2014 Ammendment Regs do not apply to Norther Ireland - When determining if a transfer has occurred, the court will look at the substance and not the form of transfer - If either party fails to comply with consultation and notification requirements (in notes below), this does not mean that the transfer did not occur (Medical Ltd v Mahon) [Relevant Transfer -- Reg 3] 1. Business transfer -- 3(1)(a) 2. Service provision changes -- 3(1)(b) The 2006 Regulations apply only to relevant transfers, which include: - Some transfers may fall into both categories, but only **one** definition needs to be satisfied for the Regulations to apply. - Apply to public and private undertakings engaged in economic activities, whether or not they aim to make a profit. - Apply to cover cross-border transfers or service provision changes involving laws outside the UK or Great Britain, provided the undertaking is based in the UK or employees are part of a UK-based team before the transfer. - They apply even when employees working abroad are part of a UK-based team, but not if the entire team works abroad. - Business Transfers: - The Regulations apply as long as the undertaking (including premises, assets, fixtures, fittings, goodwill, and employees) is situated in the UK **before** the transfer. - Service Provision Changes: - The Regulations apply if there is an organized grouping of employees in the UK before the change. - Exclusions: - Administrative reorganizations or transfers of administrative functions between public authorities are excluded (Reg 3(5)). - However, other statutes, like the Local Government Act 2003, provide similar protections for such transfers. - A relevant transfer can involve a series of two or more transactions. - A relevant transfer does not require property to be transferred from the transferor to the transferee. [Business transfers] - Definition in notes - To qualify as a business transfer, the identity of the employer must change - Main question from Spijkers (case in notes) -- whether the economic entity in question retains its identify after the transfer? - 2006 regs might apply to a transfer from the UK to a non-UK country -- is there an economic entity and has it been transferred (Holis Metal Industries Ltd v GMB) [Economic entity?] Reg 3(2) defines 'economic entity': 'an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary' Cheeseman v R Brewer Contracts looked at the question was there an undertaking, EAT said: a. there needs to be found an economic entity, which is stable and discrete and whose activity is not limited to performing one specific works contract, an organised grouping of wage earners and assets enabling the exercise of an economic activity b. the entity must be sufficiently structured and autonomous but will not necessarily have significant assets c. in certain sectors the entity can essentially be based on manpower d. the identity of the entity emerges from factors such as its workforce, management staff, the way work is organised and operating methods. **Once it has been determined (using the above) that an entity exists, need to ask, 'has that entity been transferred?'** Spijkers factors -- has that entity transferred: a. the type of undertaking or business b. the transfer or otherwise of tangible assets such as building, equipment and stocks c. the value of intangible assets at the date of transfer (eg goodwill) d. whether the majority of the staff (in terms of numbers or skills) are being taken over by the new employer e. the transfer or otherwise of the circle of customers f. the degree of similarity between activities before and after the transfer g. the duration of any interruption in those activities. - Above factors cannot be examined independently of each other - EAT confirmed that: - Lack of assets transferred -- doesn't prevent a transfer Transfer relates to public authorities: 1. Need to see if there is a transfer of an economic entity or - 2. Administrative reorganisation of public administrative authorities or 3. The transfer of administrative functions between public administrative authorities 1 is a transfer of undertaking, but 2 and 3 are **not** [Service provision changes] ISS Facility Services NV v Govaerts: EU law an employee's contract could be split between different employers if the tasks they perform are divided in a way that is clear and does not negatively impact their rights or working conditions. This went against earlier UK cases, which typically said that employees could only transfer to one employer, or if their duties were too spread out, they wouldn\'t transfer at all. McTear Contracts Ltd v Bennett & ors: EAT applied the Govaert ruling to a situation where two companies were taking over services that were previously handled by one company. Amey, the original contractor, divided its workers into two teams based on geographical areas, matching these teams to the two new companies, McTear and Mitie. However, the two new companies did not take on all of Amey\'s workers, so the workers who were not taken on went to court. The tribunal initially decided that the workers should be split between the two new companies, but it ruled that each worker could only transfer to one company. The companies, McTear and Mitie, appealed, arguing that this decision ignored the Govaerts ruling, which said that employees could, in principle, have contracts with multiple employers. The EAT agreed with the companies, deciding that the \*Govaerts\* ruling should apply, even though the UK had different rules for service provision changes under TUPE. The EAT ruled that employees could indeed transfer to two employers as long as the work was clearly divided and identifiable. The case was sent back to the tribunal to reconsider the allocation of employees. **After Brexit, UK courts can choose to depart from the \*Govaerts\* ruling, but only the Court of Appeal or higher courts can make such a decision, unless the government changes the law. For now, employers involved in such transfers should ensure they have proper protections in place, as the \*Govaerts\* ruling could lead to unexpected outcomes.** [Analysis ] A service provision change will occur when a client who engages a contractor do work on its behalf is either: 1. Reassigning such a contract or 2. Bringing the work 'in house' Reg 2 provides that 'contractor' includes subcontractors -- however, there has been some contention regarding whether the 2006 regs protect the interests of the subcontractors A service provision change under the 2006 TUPE Regulations **will not occur** in the following circumstances: 1\. Supply of goods for client use: - If the contract is primarily for supplying goods for the client's use, it is not a service provision change. For example, a contractor supplying sandwiches to a canteen for resale would not qualify (see \*Pannu\*). 2\. Single events or short-term tasks: - Activities tied to a single specific event, or a short-term task are excluded from a service provision change - **Judgement in Swanbridge clarified the preferred position:** - **Exception applies:** - Short-term (even if it's not a one-off event); or - A one-off event (even if it's long in duration) 3\. Client continuity: - If the client changes, there is no service provision change (McCarrick v Hunter) - There cannot be a service provision change if the service provider changes, and so does the client **NB:** the above are exceptions to service provision changes, but may still apply to business transfer situations - Under reg 3(3)(a)(i), for there to be a service provision change, there does not have to be an 'economic entity, before the alleged transfer, so long as there is an organised grouping of employees, and the other tests are met - Organised grouping of employees best summarised by the word 'team' - However, a single employee can satisfy this test -- reg 2(1) - BIS Guidance -- exclude cases where there was no identifiable grouping of employees or where it just happens in practice that a group of employees works mostly for a particular client - This would be unclear which employees should transfer in the event of a change of contractor, if there was no such grouping [Would a service provision change occur?] 1. Identify the relevant activities carried out by the original contractor 2. Were the activities carried on by the subsequent contractor after the relevant date...fundamentally the same as those carried on by the original contractor -- minor differences can be disregarded 3. Where the division of services after the relevant date, known as fragmentation, amongst a number of different contractors means that the case falls outside the service provision change regime 4. Even where activities remain essentially the same and after the transfer date, a service provision change will only occur if: a. There is an organised grouping of employees in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client b. The client intends that the transferee post-service provision change will not carry out the activities in connection with a single event of short term duration c. Activities are not wholly or mainly the supply of goods rather than the services for the client's use 5. Reg (4)(1) -- ET must decide whether each claimant was assigned to the organised grouping of employees Fragmentation must be considered when deciding whether the activities taken on by the new contractors are essentially the same as those carried out by the previous contractor (London Care Ltd v Henry and Others) -- only then can you work out if there is an organised grouping of employees with the principle purpose of carrying out the activities Tuitt v London Borough of Richmond Thames \[2022\] -- a case of outsourcing to insourcing - In-house staff had a number of pre-existing duties before they were then given the additional duties that had just been in-sourced - And so held, in practice, they did very little of these activities prior to being undertaken - Activities being carried out where fundamentally different than those that were being outsourced [Time of transfer] In practice, if the transfer is a sale of a business, and there is a gap between exchange of contracts and completion of the sale of the business, it will be the date of completion which is the date of transfer for the purposes of reg 4. **Effect of relevant transfer** [Automatic transfer of contracts of employment] Reg 4(1): - Employment does not end by reason of the transfer -- the contract is transferred from the old employer to the new on the existing terms and conditions, and with the employee's existing continuity of service - Employers have the right to object to this transfer -- this includes workers too - Where there is a pre-transfer dismissal, that dismissal is effective and contracts do not then transfer - Liability for the dismissal may transfer Regulation 4(2) - Employees have the same rights against the transferee as they had against the transferor and their continuity of employment is not affected by the transfer Ponticelli UK Ltd v Gallagher \[2022\] - obligations under a share partnership agreement were obligations that arose 'in connection with a contract of employment for the purposes of Regulation 4(2)(a) of TUPE, even if those obligations did not arise "under" the contract' Explained below: Practical Meaning: The new employer (transferee) is responsible for all obligations that are either explicitly under the employment contract or are closely tied to it. Employers must carefully evaluate all agreements and obligations linked to employees when a TUPE transfer occurs, not just the terms written in the core employment contract. ChatGPT Example: If an employee is entitled to participate in a profit-sharing or share scheme as part of their role, even if it's set out in a separate agreement rather than their employment contract, those rights and obligations would still transfer to the new employer during a TUPE transfer.