TUPE rules can apply to public sector organisations to protect the rights of employees transferring to a new private sector employer.
Where a staff mutual is created as a result of a part of the parent public sector organisation breaking-off to create a new employer, TUPE regulations will likely apply.
In addition to TUPE, the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector (COSOP) may apply with important “Fair Deal” pensions considerations and wider “TUPE Plus” policy considerations.
The outgoing employer, in this case the parent public sector organisation, must provide information about transferring employees to the incoming employer, the staff mutual.
The following information must be provided:
The information must be accurate, up to date and secure, and must be provided no less than 28 days before the transfer.
The parent public sector organisation, as the outgoing employer, must inform/consult with employees through ‘appropriate’ representatives. These could be trade union representatives or, in the absence of a recognised trade union, formally elected employee representatives.
The information must be given in writing and include:
If an employee is dismissed before a transfer, and the sole or principal reason for the dismissal is the transfer, it will be automatically considered unfair. This is also true of dismissals made after the transfer, unless they are made for an economic, technical or organisational reason which entails changes in the workforce ie redundancy.
Where a transfer involves a substantial change in working conditions to the material detriment of transferring staff, those staff have the right to terminate their employment and claim constructive unfair dismissal at a tribunal. TUPE classifies these types of resignations as dismissals.
If a potential redundancy situation arises as a result of a transfer and the staff mutual, as incoming employer, is proposing to make 20 or more redundancies at one establishment within a 90-day period, it must first consult with a recognised trade union or if there is no recognised union with elected employee representatives. It must also consult directly with affected employees.
Where there are fewer than 20 employees being made redundant within a 90-day period, there is still a legal requirement to consult with employees individually but there are no prescribed time limits in which to do so.
Employees of the outgoing employer, in this case the parent public sector organisation, automatically become employees of the incoming employer, the staff mutual, at the point of transfer. They carry over their continuous service from the outgoing employer, and should continue to enjoy the same terms and conditions of employment with the incoming employer.
Following a transfer, the staff mutual may find that it has employees with different terms and conditions and may wish to harmonise them. However, TUPE protects against this change/harmonisation for an indefinite period if the sole or principal reason for the change is the transfer. Any such changes will be void.
Collective agreements in place at the time of the transfer would also transfer to the staff mutual. This can include the collective disputes procedure, time off facilities, training for union representatives, negotiated redundancy procedures or job security arrangements and flexible working arrangements.
Terms and conditions from collective agreements may be renegotiated after one year, provided that overall the contract is no less favourable to the employee. In some circumstances contractual changes arising from new collective agreements agreed by the outgoing employer are not required to be incorporated after a transfer.
Where COSOP applies, the parent public sector body should handle the project on the basis that staff will transfer to the staff mutual and TUPE will apply, unless there are genuinely exceptional reasons why it should not.
On the assumption that TUPE applies, it is also likely that transferring employees' pension rights will be protected under "Fair Deal" or related legislation. In practice, this means that employees would continue to be eligible to membership of the local government pension scheme after transfer.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com