Home Opinion TUPE: Setting a Dangerous Precedent

TUPE: Setting a Dangerous Precedent

by Brian Sims
Peter Webster

Peter Webster

The Transfer of Undertakings (Protection of Employment) Regulations – better known as TUPE – are designed to protect employment rights when employees transfer from one business to another. However, as Peter Webster explains, there’s a growing trend towards avoiding TUPE that not only threatens the entitlements of employees, but also the financial well-being of security service providers.

Thinking about the subject for any degree of time leads you to the conclusion that it’s hard to imagine life without TUPE. The TUPE Regulations were first passed in 1981 and, while the intention was as noble then as it is now, due to various ambiguities there were endless disputes and persistent uncertainties about whether, in various circumstances, TUPE applied when an organisation changed its contracted out functions. This resulted in a never-ending stream of litigation that involved trying to ascertain the relevance of TUPE.

Despite the problems involved with enacting the 1981 version of the TUPE Regulations, it wasn’t until 2006 that they were duly overhauled to implement the European Community Acquired Rights Directive 2001/23/EC, later known as the Transfers of Undertakings Directive 2001/23/EC.

The 2006 version of TUPE clearly states that employees of the previous service provider or owner automatically transfer to the new employer and must be given the same Terms and Conditions. It applies to companies regardless of their size and, despite some anomalies, it has, on the whole, succeeded in providing clarity on outsourcing, insourcing and the transfer of service contracts. It’s important to clarify at this point that, when the UK leaves the European Union, TUPE will exist in UK law, although the UK Government will have the right to amend it in whichever ways it sees fit.

By creating protection from dismissal where the dismissal is by reason of the transfer, providing a framework for protecting existing Terms and Conditions as at the date of transfer and creating an obligation to inform and consult the workforce whenever there’s a proposed transfer, TUPE has undoubtedly exerted a significant impact on those providing security services.

TUPE provides a basic legal framework to which companies can adhere. Any failure to comply can result in serious repercussions for those organisations found guilty of flouting the law. However, even when legal compliance has ultimately been achieved, it’s not unusual for employees to be viewed by some as commodities, or even as an inconvenience.

It’s therefore no surprise that, if they’re not carried out correctly, many personnel transfers result in dissatisfaction and animosity between the various parties involved, in turn leading to a deterioration in the standard of service provided for the end customer.

Negative attitude

The industry is a much better place for TUPE, as companies are not competing to exploit the workforce or trying to win contracts by undercutting wages and eradicating existing Terms and Conditions.

However, there are those companies that adopt a negative attitude towards it. At best, they consider TUPE to be a necessary evil, while at worst it’s seen by some as an overzealous piece of red tape that only serves to make what could be a simple process that much more difficult.

This stance gained traction a few years ago when, as part of its goal to make employment laws more flexible and less onerous on employers, the Conservative and Liberal Democrat Coalition Government took the view that the Service Provision Change (SPC) element of TUPE was unnecessary and planned to radically change it and reduce its scope.

A consultation on this proposal was undertaken, but in the face of significant opposition from businesses, Trade Unions and the employment law fraternity, the Government changed its tack and declared that it would not, after all, eliminate the SPC distinction.

While those plans to abolish the SPC element of the TUPE Regulations could be considered to be a near miss, over the last few years there has emerged an equally worrying threat to the protection of workers’ rights and the operational health of security service providers themselves. This threat takes a number of different forms, all of which share the same intention of undermining the ethos of TUPE.

One particular case was that of McCarrick versus Hunter in which the Court of Appeal held that the TUPE Regulations didn’t apply in those instances where a new client has taken over a given facility’s services even though the service remains unchanged.

On the dotted line

Since then, other dubious activities have begun to chip away at how TUPE is applied to the point where service providers now need to thoroughly scrutinise the contracts they’re looking to sign.

In recent months, there has been a sharp increase in the use of a clause in a commercial contract that tries to avoid TUPE altogether. One clause Corps Security came across stated: ‘The supplier warrants that it will undertake the services in such a way that none of the staff are specifically assigned to any or all of the services and that there’s no organised grouping of employees dedicated to carrying out all or any of the services.’ One way to comply with this would be to rotate personnel and make sure that no individual works on the same site for an extended period. This clearly is a case of trying to circumvent the ‘identifiable economic entity’ element of TUPE.

Other contracts have stated that, if TUPE applies, the onus is on the security services provider to indemnify either the client or the company that takes over the contract if personnel have to be dismissed. The implications of this move are serious and far-reaching for all in the security guarding sector.

Put simply, if TUPE doesn’t apply then affected employees risk losing their employment and all accrued service rights.

As for employers, they have the burden of being encumbered with a substantial unfair dismissal liability for which it’s unlikely that they will have made financial provision. If the matter goes to court, it’s then unlikely that a Judge would consider their lack of scrutiny as being a good enough reason for the contract to be overturned.

Narrow interpretation

Previously, TUPE was rigorously applied in the true spirit of what it was originally designed to do. Now, we’re seeing instances of a more narrow interpretation of the regulations which is creating an uneven playing field and acting as an encouragement for organisations to try and avoid its implementation. Companies that are savvy enough to identify this kind of surreptitious behaviour will either decline the contract or amend it. Those that are not could be placing themselves at serious risk.

Even though instances of TUPE Regulations abuse are relatively rare, this is arguably more to do with the fact that we’re presently operating in a low unemployment economy. Generally speaking, companies are happy for TUPE to apply, but the examples mentioned highlight that instances of TUPE avoidance could gain further momentum if the nation’s employment situation were to change.

Ultimately, there’s no genuine advantage for any security services provider in accepting the types of terms that these onerous clauses stipulate, as they simply create uncertainty and put the contractor in a highly precarious position. Although there will always be a minority of companies prepared to take a risk if they perceive there to be a competitive advantage in doing so, it’s most certainly up to the majority to take a stand and reject contracts that try to negate the use of TUPE.

TUPE is designed to protect employees. Legal compliance with the regulations should be viewed as a bare minimum requirement. Prime Minister Theresa May has stated her intention to protect workers’ rights, and TUPE plays a fundamental role in achieving this objective. The Government should therefore recognise the value of TUPE, be rigorous in the clarification of its use and take steps to remove ambiguities and loopholes that are being exploited.

The benefits of a rigorous TUPE application are numerous. Security companies that approach the issue with a policy of inclusivity, communication, consultation and Best Practice will be rewarded with a more motivated and engaged workforce. This, in turn, will ensure that high levels of productivity and service provision are maintained at all times. At the end of the day, that’s what the client – and quite rightly so – wants to see and expects.

Peter Webster is CEO of Corps Security

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