TUPE TRANSFERS IN THE PUBLIC SECTOR by hedongchenchen

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									Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector


Contents

1   Introduction ..................................................................................................................... 2
2   Background ..................................................................................................................... 2
3   The Code of Practice on Workforce Matters in Local Authority Service Contracts 2003 . 3
4   Indemnity ........................................................................................................................ 3
5   Employment Changes ..................................................................................................... 4
6   Consultation .................................................................................................................... 5
7   Pensions ......................................................................................................................... 6
7.1 Local Govt. Pension Scheme exceptional arrangements ................................................ 7
8   Information That Must Be Disclosed To the Transferee (receiving employer) ................. 7
9   Payroll Requirements ...................................................................................................... 8
10 What is protected as part of a TUPE Transfer?............................................................... 9
11 Key Council TUPE Support Links.................................................................................... 9
12 Further Information:....................................................................................................... 10
Appendix A. ........................................................................................................................... 11




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Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector

1   Introduction

This guidance sets out information under the relevant key headings that need considering
when dealing with a Transfers of Undertaking (Protection of Employment) Regulations 2006
(TUPE) transfer.

It is supplemented separately by additional TUPE toolkit information in the form of template
letters and a project Gantt chart. The appendices contain simple process flow charts
outlining a transfer out of the Council and a transfer into the Council.

The aim is to provide managers information to enable them to feel confident in how to
approach a TUPE transfer and who to involve as key strategic supporting partners.

TUPE can be very simple or very complicated dependant on the service area and
employment variables involved. It is also heavily influenced by employment law cases in the
UK and Europe.

2   Background

The Transfers of Undertaking (Protection of Employment) Regulations 2006, commonly
referred to as TUPE. These regulations provide employment rights to employees when their
employer changes as a result of a transfer of undertaking.

The regulations apply:

      a) when a business or undertaking, or part of one, is transferred to a new employer;
         or

      b) when a service provision change takes place. (E.g. where a contractor takes on a
         contract to provide a service for a client from another contractor.)

The aim of the regulations is to preserve the continuity of employment and terms and
conditions for employees who are transferred to a new employer, excluding the public sector
pension rights liabilities.

The regulations contain specific provisions to protect employees from dismissal before and
after the relevant transfer.

Council recognised Union representatives have rights under TUPE to be informed about the
prospective transfer and must be consulted about any ‘measures’ associated with the
transfer which may be taken by the Council or the other employer.

The regulations apply irrespective of the size and numbers of employees involved in the
transfer.

A relevant transfer does not take place in stages. It can occur on only one particular date -
that is when the transferee assumes responsibility for carrying on the business transferred.
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Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector

All contracts of employment and employment relationships existing between the transferor
and the employees assigned to the unit are deemed to be handed over on that date,
regardless of what has been agreed by the parties.

3   The Code of Practice on Workforce Matters in Local Authority Service Contracts 2003

The above applies when a local authority transfers employees to a private or voluntary
sector contractor (or when such a contract subsequently transfers to another contractor).
The primary focus of the code is to ensure that, where the provision of a local authority
service is transferred to a private or voluntary sector contractor, any new staff are
recruited/employed on terms and conditions which are, overall, no less favourable than those
of the transferred employees.

The Code of Practice on Workforce Matters in Public Sector Service Contracts 2005 which
extended these provisions to the wider public sector was withdrawn by the Government with
effect from 13 December 2010.

However, the Local Government Code remains in place and therefore local authorities
should continue to apply this, as appropriate.

4   Indemnity

The Council does not provide or arrange to indemnify the organisation accepting our
employees against any employment claims or legal action. Nor do we claim any indemnity
from other public sector organisations transferring people into the County Council. The
Council does make claims from private sector organisations.

However, it is good practice to conduct a risk assessment exercise and calculate the
potential indemnity risks. We should also make the transferee (receiving employer) aware of
these risks. This would reduce any legal liability at an employment tribunal around failure to
consult.

Risks need to be categorised, the nature of the risk expressed clearly and costed out where
possible.

Pension scheme and contractual differences around pension schemes and/or retirement
rules may need additional legal counsel to assess potential risk and liabilities.

All identified risks need passing to the Council’s Risk and Insurance department for
consideration and adding to the Councils Risk Register where appropriate.




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Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector

A risk example is set out below

Risk area         Names of           Total      Action Taken         Potential       Financial
                  employees          number                          Risk            Costs/Ris
                  affected, job      affected                                        ks
                  titles, grades,
                  location
NCC Salary        Anne Smith         25         Reviewed NCC and     Grievance       Employee
Higher than       Joanne Bloggs                 transferees          and             totals
Transferees       Etc say up to 25              grade/salary         ultimately an   48,100
in private        people listed                 structures. NCC is   E.T.            hours per
sector            here                          25% higher than      Industrial      year @
                                                private sector       relations       £2.50 per
                                                company and they     unrest.         hour
                                                have indicated a     Potential       difference
                                                wish to long term    service         = £120,250
                                                harmonise T&C's      disruption.     per annum.
                                                                                     Service
                                                                                     disruption
                                                                                     cost £ ?
                                                                                     unknown.


5   Employment Changes

The regulations ensure that employees being transferred are not placed on inferior terms
and conditions of employment. The new employer must never vary terms and conditions of
employment where the sole or main reason is:

a) the transfer itself; or

b) reason connected with the transfer which is not an ‘economic, technical or organisational
(ETO) reason entailing changes in the workforce’.

This applies where the new employer changes terms and conditions of those employees
who will transfer in anticipation of a transfer occurring.

You can vary terms and conditions of employment before or after a transfer by agreement
between employee and employer when:

       a) the reason is unconnected with the transfer; or

       b) a reason connected with the transfer which is ‘an economic, technical or
          organisational (ETO) reason entailing changes in the workforce’.



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Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector

General employment law principles also apply, in so much that an employer can not impose
new terms and conditions of employment without the agreement of employees. Any changes
must be agreed with the employee’s union representatives.

It is possible to make employees redundant as part of a TUPE transfer, provided the
redundancy process is directly connected to an ‘ETO’ reason and the process has been
handled in accordance with general employment law principles and current union collective
agreements in place . E.g. the selection for redundancy was a fair process and not simply
that the person was a transferred employee.

6   Consultation

Current TUPE regulations do not define consultation timescales, but the Redundancy
legislation states the following:

20 - 99 people = at least 30 days consultation

more than 100 people = at least 90 days consultation.

Current practice is to try to get a 3 month lead in time to enable reasonable consultation
around any ‘measures’ that may need to be put in place. E.g. resolving pension provision.
Failing that, each TUPE should have sufficient and reasonable consultation time prior to the
transfer.

The transferor (transferring out of employment) has a responsibility to conduct a full and
meaningful consultation with the employees at the earliest practicable time. Failure to
conduct consultation will result in compensation payments of up to 13 weeks pay, per
individual. This liability can be applied to both transferee and transferor.

The transferee (the receiving employer) has no obligation to consult with the transferring
employees, but it is recognised as best practice to engage in some form of dialogue prior to
their transfer.

Consultations should be with recognised unions or elected employee representatives and
needs to allow sufficient time for meaningful dialogue.

TUPE Regulations 13 (7) requires representatives to be informed of the fact that there is a
transfer and the reasons why/dates/likely legal, economic and social consequences.

Both employers involved in a TUPE transfer must consult with their respective groups of staff
regarding any ‘measures’ that will be taken relating to the transfer, e.g. changes to working
patterns, restructures as a result of the TUPE.

TUPE Regulations Para 13 (8) also requires the employer to allow appropriate
representatives access to affected employees and to afford them suitable accommodations
and facilities as may be required to enable them to consult with the affected employees.

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Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector

Council practice is that once initial consultation with employee representatives has been
completed, consultative engagement with all employees affected is undertaken, e.g. Open
meetings with senior managers, with information clearly presented relating to the transfer. In
addition to that, a timetable of appropriate consultation meetings is agreed with the
employee representatives prior to the effective date of transfer. Where possible joint
consultation meetings involving management representatives from both the transferor and
the transferee, will strengthen the consultation process and add to a more meaningful
dialogue.

We recommend that formal notes are kept of all consultation meetings, in case of a legal
challenge relating to the ‘failure to consult’. These should include the date, time of meeting,
names of those present, the topics discussed and a record of any questions and answers.

All employees affected include permanent employees, casual/relief employees, part time
employees and employees absent due to ill health and maternity leave.

7   Pensions

Under the Govt Code of Practice on Workforce Matters in Public Sector Service Contracts,
we are obliged to protect the pensions of transferees. Transferring staff should be offered
membership of a pension scheme, which is broadly comparable to the public service pension
scheme, which they are leaving.

The pension’s aspect of a TUPE transfer represents the biggest area of concern and should
be given priority in getting all the relevant information together. It is advisable as soon as you
know you have a potential TUPE transfer to contact LGPS Pensions to establish what the
Council’s liabilities could be. E.g. transferring out to a private contractor could result in a
large legal pension indemnity provision being built into the TUPE transfer that would need
chief officer and finance agreement before progressing.

Para 10 states: ' the service provider will be required to offer new recruits taken on to work
on the contract besides transferees one of the following pension provision arrangements:
Membership of a good quality employer pension scheme, either being contracted out, final
salary based defined benefit scheme, or a defined contribution scheme. For defined
contribution schemes the employer must match employee contributions up to 6%, although
either could pay more if they wished;

       “A stakeholder pension scheme, under which the employer will match employee
       contributions up to 6%, although either could pay more if they wished."

The TUPE regs state that 'the scheme offered will not have to be the same arrangement as
the previous employer but will have to be of a certain minimum standard.' The regulations
apply to money purchase schemes as well as final salary schemes.

If a money purchase scheme is in operation the transferee is required to make the relevant
contributions the stakeholder pension scheme of which the employee is a member, from the
relevant point of transfer.
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Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector


If in a case where the pension scheme is not a money purchase scheme, as from the
relevant time of transfer, the scheme must;

        a) satisfy the statutory standard referred to in section 12A of the Pension Schemes
           Act 1993 (c. 48), or

        b) if regulations so provide, complies with such other requirements as may be
           prescribed.

        An example - NP Law provided this example.

        If a Primary Care Trust (PCT) were transferring staff to NCC and have a defined
        benefits scheme with the right to retire at 55 with enhancements. NCC would have to
        find a way of honouring this arrangement within the NCC pension.

        The TUPE arrangements include an Opt -Out provision. Which means the employee
        and the new owner are free to agree whatever Pension terms (or none) they want at
        any time after the time when the new owner employs the employee.


7.1    Local Govt. Pension Scheme exceptional arrangements

Where employees are transferring between government employers, there are in exceptional
circumstances, options to admit the receiving employer to the LGPS pension scheme as an
‘Admitted body’. This enables the receiving employer to pay the employer contributions of
the transferring employees and for them to remain in their existing LGPS pension scheme
and rights and rules associated with that scheme.

If this option is to be taken up, LGPS Pensions department and Finance Department must be
involved and grant permission. The Employee Service Centre Payroll team also need to be
fully informed.

8     Information That Must Be Disclosed To the Transferee (receiving employer)

If we are receiving employees or transferring employees out there is a minimum standard of
employee data that must be shared securely, in line with the Council’s Data Protection Policy
and Procedures. This is often referred to as ‘due diligence information’.

Therefore it it’s advisable to establish exactly who may transfer at a very early stage of your
TUPE transfer.

In summary this information is:
 the identity of the employees transferring
 the age of those employees
 the information contained in the statement of employment particulars for those
    employees
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Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector

   the information relating to any collective agreements which apply to those employees
   instances of disciplinary action taken by the employer against any of those employees in
    the preceding 2 years
   instances of grievances raised by any of the transferring employees in the preceding 2
    years
   instances of any legal action taken by any of the transferring employees against the
    employer in the preceding 2 years.

If any of the specified information changes prior to the transfer, the transferor is required to
provide updated information.

All information should be supplied in a written format that is accessible to the receiving
employer. E.g. A document that contains an electronic web link to peoplenet and a set of the
web links for each relevant Council policy that is applicable to the terms and conditions of
transferring employees.

The information must be provided at least 2 weeks prior to the transfer date.

To assist managers, we have produced a Due Diligence Form in the TUPE Toolkit that can
be used to collect and supply information. This form goes beyond the statutory minimum but
makes sure we have sufficient detailed information to ensure a smooth handover.

9   Payroll Requirements

NCC’s HR Shared Service (HR SS) is responsible for ensuring that employees transferring
in and out of the Council’s employ are paid correctly. The HR SS need informing at the
earliest stage possible of any potential TUPE situation and the details of the employees
affected.

HR SS will need to have an early understanding of payroll requirements so they can assess
the system configuration needed and forward to the Oracle Management Board as a change
request on the agreed programme of work.

The sort of information they will need is:

   number and type of staff
   methodology for calculating pay
   pay frequency (monthly / weekly)
   pay date
   pay items - salary and allowances needed
   how these staff will be accommodated into the ASSD structure - what positions, reporting
    relationships, what organisations (will the staff sit within existing teams or will there be
    new structural units created) and how the organisations relate in hierarchical terms
   timescale for the availability of personal and payroll data
   how the contact between their existing payroll provider and the ESC will be managed


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Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector

10 What is protected as part of a TUPE Transfer?

The table below represented an outline of the areas are protected and what is out of scope:

        Contractual terms and conditions        Protected
        Length of Service                       Protected
        Pay                                     Protected
        Benefits such as annual leave, sick     Protected
        pay
        No. of Hours of work                    Protected
        Flex-time                               Out of scope
        Collective Agreements (such as          Protected
        MRS)
        Pensions                                Pensions are normally not covered.
                                                However special arrangements exist
                                                for Local Government. As Norfolk
                                                County Council provides a pension
                                                scheme the transferee (new
                                                employer) will need to arrange to
                                                provide a comparable pension
                                                scheme to the minimum standards
                                                under the Pensions Act.
        Retaining union membership              Protected
        Overtime                                Out of scope
        Lease car                               Protected
        Mileage rates                           Protected
        Car Loan                                Protected
        Training                                Out of scope
        Work base                               Out of scope


11 Key Council TUPE Support Links

Whenever you are faced with a TUPE transfer it is advisable to contact the following support
teams before you embark on the process:

   HR – Your designated HR Business Partner who will offer strategic advice on completing
    the TUPE transfer and establish contact with the key HR Shared Service teams such as
    HR Direct, Employee Relations Centre of Expertise and Payroll. This will ensure you
    have the right information provided to ensure a smooth transfer.

   NP Law to establish who will draw up the transfer agreement (if appropriate) and if there
    are any special legal clauses that need addressing and who can sign off the transfer. E.g.
    Transfers to a Social Enterprise and ongoing service supply agreements without
    breaching European procurement legislation that applies to public bodies.


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Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
Transfers in the Public Sector

   LGPS Pensions – to establish what information and liability costs could be incurred
    relating to pensions, plus any special measures that could be actioned. E.g. admitted
    body status.

   Finance - Your designated Finance Business Partner who will offer you strategic advice
    on the financial and budgetary considerations associated with the Transfer, and establish
    key contacts who will provide financial information to support the TUPE process and
    ensure a smooth transfer.

If it is a large TUPE transfer involving a significant number of employees it is advisable that a
formal project team is set up, with identifiable work streams. This may be actioned through
either the Corporate Transformation Programme and/or your departmental transformation
programme team.


12 Further Information:

For further information please see P316 Redeployment Policy and P318 Staffing Adjustment
Policy.

Pension References:
Transfer of Employment (Pension Protection) Regulations 2005 SI 2005/649.
The Pensions Act 2004 S.258




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     Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
     Transfers in the Public Sector

     Appendix A - Transfer of Undertakings Regulations Key Stages Process Flow Chart
                                – Transfers Out of Norfolk County Council
     This is a simplified version of the process; please also refer to the TUPE Gantt chart for
     detailed activity.
      Establish if it is a TUPE                        Establish provisional                Contact key service support areas
      transfer out of NCC?                 Yes         transfer timescales and              for relevant TUPE advice and
                                                       a transfer date with the             support in their area of expertise:
                                                       receiving employer                   HR Business Partner (HRBP),
                                                                                            NP Law and
                                                                                            Pensions Service (LGPS)




  Explore and establish what                 Inform recognised Trade              Where the transfer affects more than 20 people
  pension arrangements can be                Union you have a potential           consider setting up a small project team
  made for affected employees.               TUPE transfer out and                consisting of key service managers, HR,
  NB: This may delay the final               which area/employees it is           recognised Trade Union(s), NP Law, and
  transfer date.                             anticipated may be                   Finance.
                                             affected.


  Identify the employees
  affected by the TUPE                   Provide employee data                    Ensure any cost implications
  transfer. Liaise with HR to            required to Pension Service              associated with the TUPE transfer e.g.
  collate all required employee          in order that any pension                pension liabilities are approved by your
  information for due diligence.         liability may be calculated.             Chief Officer, Finance Shared Service
  Identify key contact within                                                     and NP Law as appropriate at the
  HR shared service and                                                           earliest opportunity to minimise delays
  ensure up to date list                                                          to the potential transfer date.
  maintained.



Agree TUPE transfer contract               Consult with affected employees in         Undertake a complete due
documentation(if appropriate) with         conjunction with the transferee            diligence exercise, using the
NP Law and Chief Officer. Ensure           employer and recognised Trade              TUPE checklist to provide full
any indemnities or specific clauses        Unions to include full implications        information to the receiving
are incorporated, relevant to your         and proposed timescales of                 employer.
service area. Most transfers can           transfer. Where timescales allow
happen without a ‘Memorandum of            consultation period may be up to
Agreement’                                 90 days for 100+ employees
                                           transferring and a minimum of 30
                                           days for all other transfers.
Send due diligence information
securely to transferee employer


Finalise and agree the transfer                                                                 Employees transfer to
date                                                                                            new employer on agreed
                                                                                                transfer date.


Consult with Unions and employees
                                                 Update due diligence data and              Sign TUPE transfer
about final transfer date. Provide
                                                 send to receiving employer.                contract/agreement
written confirmation of transfer using
TUPE Transfer template letter to each                                                               Version Number:20
employee.                                                                                       Date: 02 February 2011
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    Guidance for Transfers of Undertaking (Protection of Employment) Regulations 2006 (TUPE)
    Transfers in the Public Sector

    Appendix B - Transfer of Undertakings Regulations Key Stages Process Flow Chart
                                – Transfers into Norfolk County Council
    This is a simplified version of the process; please also refer to the TUPE Gantt chart for
    detailed activity.

       Establish if it is a TUPE                         Establish provisional                Contact key service support areas
       transfer into NCC?                    Yes         transfer timescales and              for relevant TUPE advice and
                                                         a transfer date with the             support in their area of expertise:
                                                         transferring employer                HR Business Partner (HRBP),
                                                                                              NP Law and
                                                                                              Pensions Service (LGPS)




   Explore and establish what                  Inform recognised Trade              Where the transfer affects more than 20 people
   pension arrangements can be                 Union you have a potential           consider setting up a small project team
   made for affected employees.                TUPE transfer out and                consisting of key service managers, HR,
   NB: This may delay the final                which area/employees it is           recognised Trade Union(s), NP Law, and
   transfer date.                              anticipated may be                   Finance.
                                               affected.


   Request due diligence
   information relating to all             Provide employee data                    Ensure any cost implications
   transferring employees from             required to LGPS Pensions                associated with the TUPE transfer e.g.
   the transferring employer.              in order that any pension                pension liabilities are approved by your
                                           liability may be calculated.             Chief Officer, Finance Shared Service
                                                                                    and NP Law as appropriate at the
                                                                                    earliest opportunity to minimise delays
                                                                                    to the potential transfer date.

 Agree TUPE transfer contract
 documentation (if appropriate) with
 NP Law and Chief Officer. Ensure
 any indemnities or specific clauses         Participate in consultations with          Review due diligence provided
 are incorporated, relevant to your          affected employees in conjunction          by the transferring employer.
 service area. Most transfers can            with the transferring employer and         Ensure pensions and payroll
 happen without a ‘Memorandum of             recognised Trade Unions to                 have sufficient information to
 Agreement’                                  include full implications and              enable transfer
                                             proposed timescales of transfer.
                                             Where timescales allow
                                             consultation period may be up to
                                             90 days for 100+ employees
 Review final due diligence                  transferring and a minimum of 30
 information received. Share with            days for all other transfers.
 pensions and payroll
                                                                                                  Employees transfer to
                                                                                                  NCC on agreed transfer
                                                                                                  date. Send all
 Finalise and agree the transfer                                                                  employees a welcome
 date                                                                                             letter.


                                                                                            Sign TUPE transfer
Participate in consultations with Unions           Review updated due diligence             contract/agreement
and employees about final transfer                 data and sent by transferring
date.                                                                                              Version Number:20
                                                   employer.
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