Most schools and academies are very familiar with the term ‘TUPE’, which is shorthand for the Transfer of Undertakings (Protection of Employment) Regulations 2006. Staff may have “TUPE’d” on a conversion from a maintained school to an academy; staff in academies joining a new multi-academy trust will TUPE across to the MAT; schools and academies who provide services in-house and decide to outsource may see their staff transfer under TUPE to the new provider; equally, schools and academies may inherit staff from a supplier where such supplier may cease to provide the services and the school or academy take them in-house instead. These are just some examples of the way in which TUPE may apply to protect the employment of staff where, in commercial terms, a business is sold, or the provision of a service is changed.
What is a Service Provision Change?
We are most often instructed to assist our school and academy clients where there is to be a ‘service provision change’. This means one of three things is happening:
- a service currently provided by the school/academy is to be provided by a third-party supplier – this is what is commonly known as ‘outsourcing’; or
- a service currently provided by a third-party supplier is to be provided by the school/academy – referred to as ‘insourcing’; or
- a service currently provided by a third-party supplier is to be provided by a different third-party supplier – referred to as ‘contractor to contractor’ or ‘new contractor’ service provision changes.
Whether a service provision change, or ‘SPC’, triggers TUPE is a matter of fact and legal analysis but broadly speaking, the following conditions must be met:
- the activities being carried out by the outgoing supplier are ‘fundamentally the same’ as the services to be carried out by the new supplier;
- immediately before the change in service provider there must be:
- An organised grouping of employees which has, as its principal purpose, the carrying out of the relevant activities;
- An intention by the entity receiving the services that the activities will be carried out by someone other than the existing supplier
- the change to the services is not limited to a single specific event or task of short duration; and
- the activities are not limited to the supply of goods.
Effect of TUPE on a Service Provision Change
Where these conditions have been satisfied TUPE will likely apply so that:
- the employees assigned to the service will automatically transfer to the new supplier’s employment (or the school / academy trust’s employment if the service is being brought in-house);
- their existing contracts of employment and all of the outgoing employer’s rights, powers, duties and liabilities in connection with those contracts will transfer to the new provider on the transfer date;
- any acts or omissions, meaning anything that the outgoing employer should have done but didn’t, in relation to those contracts will also transfer to the new provider;
- the new employer will inherit any collective terms negotiated and agreed by the national/local trade unions before the transfer date.
The Process
In practical terms this means that for a school or trust who decide to, for example, take a cleaning contract or a catering contract in-house, where the above conditions for a SPC are met, TUPE will be triggered. This then kickstarts a process which includes obligations on both the school, as the new employer, and the outgoing supplier who currently provides the service. It is important for both parties to comply with their obligations to ensure a smooth transition for the affected employees, and equally important, to ensure that the school, as the new provider in this example, has adequate protection by way of warranties and indemnities from the outgoing supplier in the contract which governs the transfer of the services.
In all TUPE transfers there is an obligation to inform employees who may be affected by the transfer as well as recognised trade unions and, where any ‘measures’ are proposed, to consult with those affected employees. In certain cases, strict time limits apply. Failure to comply with these legal obligations can result in the new supplier and/or outgoing supplier facing Employment Tribunal claims for failure to inform and consult, the remedy for which is up to 13 weeks’ uncapped pay for each employee. It must be kept in mind that ‘affected employees’ are not only those that are due to transfer from the outgoing supplier to the new supplier, but also anyone within both organisations whose job may be affected by the transfer. In reality, the impact of TUPE can be wider than anticipated at first glance.
As part of the transfer, the outgoing employer is required to provide certain information in relation to the transferring employees. Legally, this information, known as Employee Liability Information, or ELI, must be provided not less than 28 days before the proposed transfer date. However, it is good practice to ensure that information is shared in good time, as part of the wider obligations relating to due diligence, to enable the new supplier to identify any areas of risk and to put in place adequate protections to cover those risks, if possible. We would always encourage clients to ensure they have as much detail as possible about any formal HR processes which are ongoing, or which have been completed in the last 6 months. This would include any matters involving any disciplinary, absence management process, capability, grievance, complaints, whistleblowing, safeguarding etc.
There are some additional steps the new supplier must take after the transfer date including notifying the new employees of certain matters and also updating Right to Work checks and DBS checks as may be appropriate.
Contract Variations and Dismissals in the context of TUPE
As part of the consultation process, any measures that are being considered need to be notified to the affected employees and this could include changes to their contracts of employment that go beyond purely administrative changes. For example, if we consider the example of cleaning being brought in-house, a school or trust may already have some directly hired cleaners and so, with the new employees coming across from the outgoing supplier, they may have more cleaners than needed to do the work. Therefore, they may need to restructure and/or make redundancies. In such a case, if the school or trust proposes to dismiss an affected employee and/or vary any of their contractual terms, and the reason for dismissal/variation is solely or principally because of the transfer, this will be automatically unfair unless there is an Economic, Technical or Organisational reason (an ETO reason) entailing changes in the workforce. It is advisable to seek legal advice where there is an intention to vary contracts and/or dismiss affected employees to assess whether an ETO reason is applicable and, if not, the risks associated with the course of action and how any such risks can be minimised/addressed.
Further Information
TUPE can be a complex area of the law and it is advisable for schools and academies whose activities may trigger the application of TUPE to be aware of the implications for them and to ensure that, as part of the negotiation relating to a contract for services, whether the service is being outsourced, insourced or transferred from one contractor to another, they have adequate protection in place against liabilities arising from the transfer.
Our dedicated Schools HR and School Support Service teams of lawyers work together to ensure our clients have tailored legal advice where services are changing including advising on the TUPE and associated pensions aspects of a transaction and negotiating warranties and indemnities to best protect them now and in the future. For further information, please contact: schoolshr@wslaw.co.uk