TUPE consultation is key to contracting out successfully

November 10, 2021

In the 5th instalment of UKWA’s series of Bitesize Briefings, Michael Redston, Employment Law solicitor at Aaron & Partners examined TUPE, an important area in logistics when outsourcing, and one that should not be regarded as just an HR function.

Focusing on when TUPE applies in the event of a service provision change between the transferor and transferee organisations, Michael explained the ramifications of failing to properly assess whether or not there will be a relevant transfer when either outsourcing, insourcing or changing 3PL contractors, citing a major logistics provider subject to a group claim after incorrectly telling its employees they would transfer.

“Employers must inform affected employees in ‘good time’ and consult with employee or union representatives on any measures the transferee business envisages it has to take.   The transferee inherits the rights, duties, powers and liabilities from the transferor and the transferring employees’ contract of employment terms remain the same.

“The parties don’t need to reach an agreement over the changes but a failure to consult can incur penalties such as 13 weeks uncapped pay.

“During the pre-transfer process, the transferee should obtain information on affected employees including any liabilities, warranties & indemnities.  It is also necessary to inform outgoing employees of any measures you propose and identify any new contractual benefits they will have.

Michael also discussed the types of claims that can arise in relation to TUPE, and comments: “Throughout the process I would recommend it is important to maintain good communications with affected employees as ultimately employers need to be aware in any new contract what are the risks and liabilities, and crucially will the new people fit in? There are therefore a number of commercial as well as HR factors to consider.

“TUPE often works well. If you gain a new contract, transferring in employees who know the customer really well and the job really well, will be an advantage to the client as there will be no need to train anyone up on the contract.

“A seriously good consultation is key to engagement, so that when the new workforce turns up, employers know what to expect while an outgoing workforce won’t lose focus on what they are doing until the transfer date and can transfer on good terms.”

Members contemplating TUPE can obtain advice via the Aaron & Partners legal helpline.