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Greg Campbell provides practical advice in relation to staff transfers under the TUPE legislation

My firm has just won the contract to produce all mailing materials for one of the major supermarkets. This morning we received a letter from the competitor we've displaced telling us that we have to employ the 15 people that they had working on that client's contract. Why has this happened?

Welcome to the world of TUPE, a piece of legislation that is still causing confusion after some thirty years of operation. The version of TUPE that was introduced in 2006 has specific provisions dealing with what is known as a “service provision change”, which can cover, amongst other things, the loss and re-grant of contracts to provide services.  The winning of a contract with the supermarket is capable of amounting to a service provision change - if the contract is large enough and there is an identifiable grouping of employees whose principal purpose was to provide the services on the supermarket contract.

If TUPE is activated then, on the date you assume responsibility for producing the materials, those employees of your competitor, who were dedicated to working for the supermarket, will automatically become your employees, on the same terms and conditions as they enjoyed with your competitor and with their continuity of employment preserved.

I don’t want or need these employees - what can I do to minimise my risks under TUPE?

TUPE operates automatically and there is no way of contracting out. The competitor is obliged to provide details of all employees it says will transfer, before the date of the contract passing, so you should have an opportunity to raise these issues with the client – and price them into your bid.  Additionally, you share with the previous employer an obligation to inform and consult with the affected workforce about the impending transfer.

Ideally, you will have agreed with the client that unexpected (or possibly even expected) employment costs will be factored into the contract, but in the absence of such agreement, the cost of employing and/or firing these transferred employees will fall to you.  The restrictions on your freedom to deal with those employees continue after the transfer, dismissals for a reason connected with the transfer are automatically unfair - and changes to transferring employees’ contracts are forbidden – unless there is an economic, technical or organisational reason for the changes, essentially, a redundancy situation.

IMPORTANT: This article is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice