A single, simple step to avoid “s-TUPE-fication”

If you don’t know (or don’t care) what TUPE is, this post probably isn’t for you. Move on. Consider yourself blessed. Trust me when I say this.

If you are reading on, unfortunately that makes you one of those cursed by TUPE – forced to walk the earth in a state of bafflement and bewilderment. Let me try to ease your pain.

I won’t be attempting to explain TUPE in any detail. Instead, I’ll be seeking out a practical strategy. However, we need to start by travelling together to a dank, dark place, before seeing if we can navigate a way out.

TUPE can be simple ....

Basically, under TUPE – in its full glory, The Transfer of Undertakings (Protection of Employment) Regulations 2006 – employment liabilities and contracts automatically pass from one employer to another with the transfer of a business or undertaking. That sounds simple enough. Sometimes it actually is simple, particularly where there is a business transfer agreement and everyone involved is properly advised about the implications of TUPE.

... but often isn't.

The most irksome difficulties arise when it comes to so-called service provision changes. These most commonly occur in relation to out-sourced services. Essentially, service provision changes take place where (1) an “organised group of employees” has (as its main purpose) the carrying out of “activities” for an internal or external “client”; and (2) the client transfers those activities to a different service provider or providers. Under TUPE, the employment liabilities and contracts of the organised group automatically pass to the new service provider or providers.

Opposing interests and bad blood

Very often, there is no agreement about this between the outgoing and incoming service providers. The incoming service provider has an interest in arguing that TUPE does not apply, so that it can avoid the imposition of the employment liabilities and contracts.

The outgoing service provider has a converse interest in arguing that TUPE does apply, so that it can avoid redundancy and other termination-related liabilities.

To make things worse, there may well be bad blood between the incoming and outgoing service providers – after all, the outgoing contractor may have just lost a lucrative contract to a rival.

Welcome to s-TUPE-fication

In practice, the factors determining whether or not a service provision change takes place (or not) are extraordinarily complex and difficult to delineate. For example:

working out whether a group of employees is “organised” or not can be difficult enough;
then, trying to work out whether the main purpose of that group is carrying out specific activities for the client is even harder;
add in major changes to the activities at the same time as the change of contractors and the tiny cogs in your brain start to jam;
then fragment the activities amongst different contractors and subcontractors and the cogs come pinging off altogether.

Welcome to s-TUPE-fication.

The employees are often kept in the dark while the employers exchange blows about whether TUPE applies or not. The “client” often sits on the side lines, trying (and failing) to wash its hands of the problem.

To make things just a little worse, in practice both employers and employees are often fighting blind - without access to the information that might give them a chance of reaching some kind of half-sensible view.

The big day comes ....

The date for the change of contractors may arrive without any agreement having been reached on whether (or not) TUPE applies. This leaves the employees in limbo. Their pre-existing employer refuses to make any redundancy or contractual payments to them on the basis that TUPE applies. The new contractor(s) refuse to take them on.

The employees have little choice but to bring legal proceedings against both their pre-existing employer and the new contractor(s), on the basis that one of them must be liable. Everybody gets expensively lawyered up ….

A dank, dark place

I promised you a dank, dark place and this is it. Some of the saddest and most troubling aspects are that many of the organisations which typically outsource services (such as local authorities and NHS bodies) are publicly funded, the contractors are often charities and the employees are often low-paid.

Aaaargh: no escape!

As in all the best sagas, there is no easy way out. The best advice is: don’t start from here.

But, wait a minute, what if .....

However, let’s use a little imagination to wind back a bit:

• What if there was a way in which, at an early stage, the interested parties could have a series of meetings in a safe environment – where they could exchange information, views and proposals without fear that anything they said could be taken down and used in evidence against them?

• What if the legal question of whether or not TUPE applies could just be part of the background to the discussions?

• What if the focus of the discussions could be reaching a sensible and balanced outcome that, as far as possible, looks after everyone’s interests?

• And what if those discussions could be facilitated by a trained, neutral professional facilitator with experience of TUPE issues?

If those “what-ifs” are made possible, creative solutions start to emerge. Maybe the outgoing service provider wants to retain some of the employees for other work. Or there could be scope for commercial collaboration between the outgoing and incoming service providers. Maybe the incoming service provider wants to take on the employees, but is worried about changing terms of employment. Maybe some of the employees would prefer to take a redundancy package and others would prefer to be redeployed into other roles.

The single step

And what single step could make all those what-ifs much more likely to come true ....?

A simple mediation clause in every out-sourced services contract:

on a change of service providers, requiring both outgoing and incoming service providers (and the client) to engage in mediation at an early stage
requiring them to offer to include employee representatives in the mediation.

That’s all.

It isn't a magic wand. But it might be the nearest thing we have.

[Photo credit: By Chanut is industries, TH - https://thenounproject.com/term/dizziness/2017370, CC BY 4.0, https://commons.wikimedia.org/w/index.php?curid=93243616]