This presentation covers the issue of the transfer of undertakings protection of employment (TUPE)and how this impacts outsourcing transfers and contracts.

1. Transfer of undertaking protection of employment
What is it and how can we adapt to it?
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2. What is TUPE and its importance in outsourcing?
• The terms and conditions of employees of organisations are protected
in the UK under the Transfer of Undertakings (Protection of
Employment) Regulations 2006, known as 'TUPE'.
- This regulation means that the existing terms and conditions of an
employee contract of employment will transfer to a new employer
in our case the outsource vender.
• This means an employee will normally carry on working for the
outsource vender as before (same T&C’s)…
• … And if the new employer refuses to meet the terms of the existing
contract this will amount to a breach of contract.
• Often you will hear this mentioned as an outsourced employee having
a ‘mirror’ or image terms
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3. TUPE legislation applies to all Outsource services in UK (extends
ARD Europe)
• TUPE was updated in April 2006
• Existing law built upon in 4 key areas:
- When TUPE applies (to all relevant transfers question is identity)
- The pre-outsource transfer obligation to notify those affected
- The post–transfer ability to change terms and conditions
- TUPE and how insolvency is handled
• Fairly clear on initial sourcing case law is now starting to clarify
situation.
- On renegotiation or contracts awarded to new supplier
Outsourcing Fundamentals See more at >> www.roymogg.com

4. Generally all employment rights are moved across
• Includes any holiday or outstanding claims you've made against the
original employer
- including discrimination for example (and current employer must
disclose this)
Outsourcing Fundamentals See more at >> www.roymogg.com

5. TUPE Applicability
• New definition of Service Provision Change
- Aim to reduce uncertainty in law
- Applies to ‘labour’ intensive services like cleaning, catering, security
and refuse collection
• No need to show transfer of assets or employees
- Exceeds acquired rights EC requirements
• TUPE will apply where:
- Services cease by one person and are taken up by another
- Where there is an organised group of employees whose main
purpose is to carry service activities on behalf of a client
Outsourcing Fundamentals See more at >> www.roymogg.com

6. TUPE Applicability
• Service provision change
- Reassigning contract
- Insourcing
• Exceptions:
- Limited to where on service provision change, the new provider
carries out activities with a single specific event or task of short
term duration
- Or where activities consist mainly of supply of goods for client’s use
• However these exceptions may be caught by the general
definition of TUPE
Outsourcing Fundamentals See more at >> www.roymogg.com

7. Practical implications for outsourcing
• Practical Impact:
- TUPE will apply in most outsourcing/insourcing scenarios
- Where contracting with service providers ensure that no one
individual (or group of individuals) at service provider is
permanently assigned to your work as TUPE may apply when you
wish to move your business elsewhere
- Similarly if providing services to clients ensure employees are not
specifically assigned if you wish to avoid TUPE
Outsourcing Fundamentals See more at >> www.roymogg.com
Interestingly it may apply to an organisation such as an advertising agency or a law
firm that takes over a client from another firm following a tender process

8. Notification requirements have been tightened
• New Requirement for Transferor to notify Transferee of Employee
Liability Information.
• Existing law on information and consultation unchanged.
- Except liability for failure to consult will be the joint and several
liability of Transferor and Transferee.
Outsourcing Fundamentals See more at >> www.roymogg.com

9. Reflection
• What would you do if someone being outsourced came to you and
asked if there were going to be redundancies as a result of the
outsource?
Outsourcing Fundamentals See more at >> www.roymogg.com

10. What employee liability information needs to be handed over?
• Following information is needed:
- ID and age of employee (TUPE does not apply < 1 years service).
- Employment particulars (type of contract etc.).
- Information on any disciplinary or grievances to which dispute
resolution procedures apply within last two years.
- Court or Employment Tribunal claims within the last two years.
- Any claims that the Transferor may reasonably believe that the
employee may bring against Transferee
- Information of any relevant collective agreements.
Outsourcing Fundamentals See more at >> www.roymogg.com

11. There is a legal requirement hand over liability information
• When and How do you Notify?
- Not less than 14 days before the relevant transfer
- In writing in one or more instalments
- Probably exempted under DPA
• What is the remedy for failure to notify?
- Transferee can take Transferor to Employment Tribunal
- Just and equitable compensation having regard to any losses
sustained subject to a minimum of £500.00 per employee
Outsourcing Fundamentals See more at >> www.roymogg.com

12. Can terms and conditions be changed following transfer?
• The ability to change terms and conditions post transfer is still difficult
even consensually
• However post-transfer changes will be permissible if:
- The changes are unconnected to transfer…
- …or connected to transfer there is an economic technical or
organisational (ETO) reason entailing changes in the workforce
• In London Metropolitan University -v- Sackur and others the
Employment Appeal Tribunal (EAT) confirmed that an ETO defence is
only available to employers who have reduced the numbers of their
workforce, or made changes to the functions of relevant employees.
Outsourcing Fundamentals See more at >> www.roymogg.com

13. Some specific issues second generation outsourcing when a new supplier wins
contract
• Case law in Europe decided that ARD may not apply unless:
- Significant tangible or intangible assets are transferred
- The new supplier takes over a significant part or workforce
• Issues determining whether ARD may apply
- the type of undertaking in question
- the transfer or otherwise of tangible assets
- the value of intangible assets at the date of transfer
- whether the majority of the employees are transferred
- the transfer or otherwise of customers and …
- … the degree of similarity between activities before and after the transfer and the
duration of any interruption in those activities
Outsourcing Fundamentals See more at >> www.roymogg.com

14. If the service substantially changes then there could be issues…
• A new supplier could argue that the service model has so changed that
the old workforce is no longer required
- This implies the incumbent supplier could remain liable for
redundancy payments unless it can persuade the client to include
transfer in new contract (unlikely!)
Outsourcing Fundamentals See more at >> www.roymogg.com

15. TUPE Update 2006
• Insolvency:
• Tries to promote rescue culture by:
- Limiting the transferee’s liability for employees dismissed.
by Transferor
- Allows variation of employment contract post transfer via
appropriate employee representatives to safeguard employment
opportunities.
Outsourcing Fundamentals See more at >> www.roymogg.com

16. TUPE Update 2006 Summary
• Safer to assume TUPE applies to service provision changeover
- ambiguity is whether the employees in question
have as a principal purpose the carrying out of work for the client
• If Transferor
- Put together information on Employee Liabilities
• If Transferee
- Obtain information on Employee Liabilities
- Slightly more scope for post-transfer changes to terms and
conditions
Outsourcing Fundamentals See more at >> www.roymogg.com

17. Reflection
• You have just won a outsourcing bid and you want to avoid taking on
the old staff from the previous supplier
• What would you do?
Outsourcing Fundamentals See more at >> www.roymogg.com