Date: June 2011

Author: Matthew Potter

Publication: EADT & Suffolk Business

Hopefully the acronym TUPE is enough to instil fear into the psyche of any business, whether it is as a result of them going on the acquisition trail or tendering for contracts in the public or private sector. A copy of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) are never far from my reach, as I can - without fail - state that there is not a day that goes by when I am not advising on the contents of those Regulations.  

There have been over the past 12 months or so a number of cases that have continued to shape the extent of the Regulations.  We are also currently in the middle of a consultation process issued by the Government on the “Fair Deal” policy relating to the transfer of staff from the public sector to a third party employer.  You will no doubt appreciate that this latter process of outsourcing by public authorities has become more and more prevalent, and will continue to do so as both central and local Government seek to reduce the public purse. The most restrictive element of contracting with the public sector today has been the pension conundrum, and ensuring that the private sector employer adopting the contract is able to provide pension benefits that are no less favourable than those already received by the transferring employees.  

The consultation process is due to close on 15th June 2011, so watch this space with interest if you are currently contracting with the public sector - or indeed considering it.  Under the current regime, I have one business client who is paying annual contributions in excess of 30% of gross basic salary for each transferred employee in order to provide the equivalent pension benefit!

The most draconian TUPE case of recent months is that of Whitney -v- Monster Worldwide Limited.  Here, employees were promised that on the winding up of a final salary scheme they would be no worse off. When they were transferred as a result of TUPE at a later date, the incoming employer provided similar assurances. When on retirement the pension benefits were drastically less than they had been promised, the employees were successful in pursuing a breach of contract claim against their new employer - a claim that cost the employer £900,000. As I said, ignore TUPE or the circumstances relating to a transfer of staff to your business, at your peril.

If you would like further information please contact Matthew Potter

This article is for general information purposes only and does not constitute legal or other professional advice. You should not act or rely upon this information.