Employers pick up the tab for TUPE indecision

first_img Comments are closed. Previous Article Next Article Research released exclusively to Personnel Today by Pinsents finds employersare meeting the costs of the Government’s failure to get to grips with TUPEstaff transfers. As the DTI drags its feet over producing a workable reform ofthe legislation, firms struggle to pick their way through muddled regulationsand have to test TUPE case law in the courtsEmployers are wasting time and resources because of the Government’s failureto reform legislation protecting staff terms and conditions when transferringfrom one organisation to another. Research released exclusively to Personnel Today by law firm Pinsents revealsthat employers have been left facing a legal minefield because of lack ofclarity over the Transfer of Undertakings (Protection of Employment)regulations (TUPE). Organisations have to take account of TUPE when enteringinto agreements over outsourcing, Public Private Partnerships (PPPs), PrivateFinance Initiatives (PFIs), as well as buying and selling a business. Employers have been waiting for TUPE reforms in the UK since 1998 when a newEU directive superseded the original Acquired Rights Directive of 1977 on whichthe current regulations are based. Trade and industry secretary Patricia Hewitt announced in February this yearthat the new TUPE regulations would be published in draft form during the firsthalf of 2003 with a view to placing them before Parliament in the autumn. The Pinsents study, based on responses from 262 HR directors, finds thatalmost 60 per cent of respondents consider TUPE to have increased the cost of atransaction as a result of the confusion. A similar proportion indicate thatTUPE had slowed down the process of sale or purchase of businesses oroutsourcing. More than a third indicate that the existence of TUPE made them think ofalternative ways of structuring their transactions, while 12.7 per centconsider TUPE has actually stopped a transaction going through. Even more surprising, the survey highlights that three-quarters of employersface uncertainty over whether TUPE actually applies. Only 16.8 per cent reportthey have never experienced problems with the issue. John McMullen, national head of employment law at Pinsents, said the surveyshows the Government needs to produce a much less ambiguous definition thatcannot be challenged by the courts. “In practice there is a directrelationship in how cases are decided by the European courts and UKtribunals,” he said. “If you get a shift in case law at the European courts there is acorresponding hike in the incidence of tribunals and difficulty in decidingwhen TUPE applies. Confusion “The period between 1994 and 1997 was one of relative certainty,particularly regarding outsourcing. The European courts seemed to give a broad interpretationthat all cases of outsourcing were covered by TUPE. Then, in 1997, a Europeancourt case found there was scope for non-TUPE bids – that it need not alwaysapply. As a result, there has been particular difficulty in applying TUPE overthe past five years,” said McMullen. The study reveals that as a result of this confusion, 77 per cent ofrespondents are concerned over inheriting unsuitable terms and conditions ofemployment through the application of TUPE. More than 80 per cent cite difficultieswith changing terms and conditions. Nearly one third of respondents express concern about inheritance ofcollective agreements and almost 30 per cent highlight problems overinformation and consultation with employee representatives. Concerns over implementingredundancies are reported by 14.1 per cent of those polled. A fifth are concerned that a takeover of groups of employees onTUPE-protected terms might trigger equal pay claims. McMullen believes that the new equal pay questionnaires giving people theright to request salary information on a comparable worker of the opposite sexwill complicate matters further. “The issue of equal pay could be a sleeping lion,” he said.”I have heard people say that if the equal pay argument took off, forexample, they would think very differently about tendering for certaincontracts because the net result would be to equalise pay and conditions acrosstheir entire workforce.” Pensions is another area of major concern. More than half of those surveyedrecount difficulties in applying TUPE over pensions. Although currently notcovered under TUPE, there is increasing pressure on the Government to clarifylegislation in this area. McMullen said the Government is to consider coverage of pension rights underTUPE separately, and to a longer timescale, as part of the pensions reviewbeing taken forward by the Pensions in the Workplace Green Paper. Further complications The issue of pensions and TUPE was further complicated by February’spublication of the code of practice on local authority transfers of employees.This ensures transferring local government employees are offered new terms andconditions that are no less favourable – including the right to ongoing accessto the local government pension scheme or to an alternative good qualitypension scheme. The code also applies to new joiners, ensuring their terms and conditionsare no less favourable than those of transferred staff. Unions such as Unisonare calling for all public sector workers to be given the same protection. The study reveals the main contact with TUPE arose from outsourcing (52.7per cent of respondents) and buying or selling a business (30.5 per cent). Justunder 10 per cent of respondents came into contact with TUPE over PPP and 6.8per cent over PFI. More than a fifth of those polled had been involved in an employmenttribunal over a TUPE transfer or alleged transfer. In all, 85.1 per cent ofrespondents always take advice on whether TUPE applied. McMullen said the challenge for the DTI was to make reforms that would cutout much of the ambiguity and legal challenges. “It would be easier to go back to the position we had in 1994 whenthere was an assumption that most cases were going to be covered [byTUPE],” he said. “I think the DTI will be attracted to this solution,but the challenge is to find the right wording that is going to survive thecourts’ scrutiny. HR directors want a definition that is quibble proof.” View from the professionTardiness over TUPE leads to clogging up of tribunal systemMike Taylor, group HR director at Lorne Stewart, who leads theTUPE working party for the Heating and Ventilating Contractors Association, wasnot surprised by the survey’s findings. “The date for new TUPE regulationsjust keeps going back and back,” he said.”Pensions are a particular problem. Although they don’ttransfer under TUPE, most enlightened clients expect us to offer comparablepensions.”In terms of outsourcing, the biggest problems are thenear impossibility of changing terms and conditions.”When talking about these, the unions claim you are tryingto lower them, but it is about harmonisation so you don’t have people workingalongside each other who are on different terms. This uncertainty over TUPE hasa massive impact on PFI and PPP schemes. I think the European approach wouldmake sense where TUPE only applies if someone is doing exactly the same job asthey were doing under the old contract.”The regulations need to be sorted out because they arecausing a great waste of time and resources, as well as clogging up thetribunal system.” Related posts:No related photos. Employers pick up the tab for TUPE indecisionOn 27 May 2003 in Personnel Todaylast_img read more