Your business has taken on a major catering contract and the outgoing contractor, annoyed at losing the contract, has neglected to hand over the employment records of transferring staff.
The Law Under the Transfer of Undertakings (Protection of Employment) Regulations 1981, when a business or part of a business is transferred from one party to another, the employees of that business automatically transfer to the new owner. Today (6 April), the regulations will be amended by the Transfer of Undertakings (Protection of Employment) Regulations 2006. They will continue to be commonly known as the TUPE.
The new law will make it clearer that TUPE applies to contracting out, contracting in and retendering parts of the business, such as a catering contract. Basically, whenever there's an identifiable group of employees - or, indeed, one employee - dedicated to meeting one customers' needs, those employees will transfer to the new contractor - or, if the contract is going back in-house, to the customer.
Under the new TUPE regulations, an outgoing contractor must provide the incoming contractor - or customer, if the services are going back in-house - with the following information:
The identity and ages of employees who will transfer.
Information contained in contracts of employment or statements of particulars.
Any information relating to collective agreements.
Details of any disciplinary action or any grievances dealt with within the preceding two years, only if the statutory dispute resolution procedures applied.
Details of any legal actions taken by employees in the previous two years or potential legal actions if the outgoing contractor has reason to believe those actions might occur.
The information must be given in writing and must be accurate to a specified date and then updated, if appropriate.
The information can be given in instalments and through a third party. This is particularly relevant in outsourcing arrangements where the information will normally pass through the client to whom the services are provided.
Expert Advice Until now, contractors have often been left in the dark as to the liabilities they take on when "inheriting" staff under TUPE.
Under TUPE 2006, incoming contractors will be able to require the outgoing contractor to provide relatively detailed information about the employees and liabilities.
Incoming contractors should ensure that they keep accurate and up-to-date records of their employee details so that if the contract is terminated they can comply with the obligations of the new TUPE regulations. Those details should be kept for at least two years.
Employers "inheriting" staff from a previous contractor should be aware that under TUPE (old and new) the contracts of employment with the previous contractor or, contractors before them, may have remained in place.
Keep copies of employment contracts or particulars of terms of employment.
Keep full details of employees' identities and ages.
Keep records of disciplinary action or grievances raised for at least two years, particularly if the statutory dispute resolution procedures applied.
Keep copies of any legal action threatened or pending or details of any circumstances which, in your opinion could give rise to legal action.
Remember that although providing information to an incoming contractor can be painful, particularly if you have just lost a contract, the next contract you win will mean you will want the same information.
Beware! If an outgoing contractor refuses to provide the information, the incoming contractor can make a complaint to an employment tribunal. If the tribunal considers the complaint is well founded it can make an award of compensation, which will be based on any loss sustained as a result of the failure and also any loss resulting from any contractual agreement. Compensation will be at least £500 per employee in respect of whom information should have been provided, although tribunals have discretion towards a lesser sum. The general view is that the awards are likely to be at least £500 per employee unless failure is trivial or unintentional.
Squire, Sanders & Dempsey
020 7189 8162