TUPE is one of those areas that seems to scare more employers than it enthuses.  TUPE 2006 is the main piece of legislation that protects employee rights during takeovers and transfers.
 
In simple terms, if company A takes over company B then company A inherits, and has to abide by, all Company B’s employee’s rights, obligations and liabilities.  These include employee start dates and their existing contractual terms.
 
So far so good – but it gets more complex if, for example, an existing contract is split between two contractors:
 
Let’s say one new contractor carries out 71% of the contract and the other 29%.  Surely you split the transferring employees accordingly – 71% go to one contractor, 29% go to the other?  Not so said the Employment Appeal Tribunal in the case of Kimberley Group Housing Ltd v Hambly. This is what you do:
 
1)  First check that each individual employee is ‘assigned’ to the transferring activity. This involves the classic tests of how much time each employee spends on it, costs and income attached to it for that employee etc. and then:
 
2)  Pass all employees (100%) to the contractor who took over the majority of the activities, i.e. the 79% holder.
 
Nice and simple, but (and there is always a ‘but’ in law) this case will only apply where the contract involves the exact same ‘activity’ being split between the two new contractors.  (Here it was the processing of asylum applications.)
 
If the contract can be split into two different activities, each one now to be performed uniquely by one of the two new contractors, then a division of the workforce will take place. A typical example would be a contract for printing and marketing that is now to be split between two new contactors, one doing the printing, and the other the marketing.
 
The test in (1) above will now have to be carried out for each employee to determine whether they are part of the printing or the marketing activities.
 
If there are so many new contractors that is it is now impossible to see where the activity has gone, or if it is even being carried out at all after such fragmentation, then TUPE will not apply at all.
 
We love TUPE…
 
For further information on this and other employment issues please contact anyone of the team at Deminos 0191 460 1111 or email info@deminos.co.uk
 

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This entry was posted on Wednesday, October 8th, 2008 at 10:26 am and is filed under Human Resources. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.