We are taking over a service from another organisation and it is all agreed between the parties that the arrangement is covered by TUPE. However the outgoing contractor has said that they are able to offer one of the transferring employees a job elsewhere within their organisation. It would suit us for them to keep him. Are we ok to assume that the employee won’t come over to us on the date of transfer?
Under The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) as the new employer you are required to take over all the contracts of the employees assigned to the service as they automatically transfer over to you by virtue of TUPE.
An assigned employee does have the right to object to the transfer to your organisation. The employee can do this by either informing their current employer or your organisation. The objection of the employee will have the effect of terminating their contract of employment as though they resigned. There is no obligation on their current employer to retain them if they do object to the transfer.
It is not unusual for the outgoing contractor to want to keep certain employees and for the same employees to want to stay with their current employer. They can do this by objecting to the transfer or else by taking an alternative role with the outgoing contractor so that they are no longer assigned to the activity in question. However if you are acquiring the service you should verify that the employee has in fact agreed to stay with their current employer. This is to avoid a situation where you decline to accept them, believing that they have agreed to stay with their current employer, when in fact that is not the case. If you refuse to employ them under such a mistaken belief, they could claim that they have been unfairly dismissed by reason of the transfer.
We are 'contracting out' one of our services shortly, and the transferee has requested Employee Liability Information (ELI). Additional information has been requested relating to employee health including 'information/evidence on file of the employee's COVID-19 vaccination status. We have collated some vaccination status data voluntarily from our employees. Are we obliged to disclose it?
If you do not provide the relevant ELI required by law (or provide incomplete data or provide the information less than 28 days before the transfer), then the transferee may potentially bring a claim in the employment tribunal within three months of the date of transfer. The tribunal may award any amount it considers ‘just and equitable’, having regard to any losses the transferee has suffered.
On the other hand, information re vaccination status will be ‘special category data’ for the purposes of GDPR, so you need to be very careful regarding how and when it is disclosed.
Providing ELI information under TUPE will not generally cause a transferor to breach its data protection obligations. However, this exemption applies only to the information the transferor is obliged to provide under Reg 11 TUPE. This includes, for example and non-exhaustively, information about the identity and age of the transferring employees; key particulars of their employment; information on recent disciplinary procedures and grievances; and information about recent employment tribunal or court cases. The usual data protection principles will apply to any additional information provided by the seller during the due diligence process.
Our view is that information regarding vaccination status will fall outside the mandatory ELI provisions and you are entitled to decline to provide it. In fact, this would be the safest position to take to ensure that you do not breach your obligations to your employees to safeguard their data.
‘Special category data’ may only be processed by an employer in very specific circumstances One of those permitted reasons is ‘where is it is necessary for carrying out rights and obligations under employment law’. However, our view is that disclosing the information re vaccine status is unlikely to be ‘necessary’ in this context, as your organisation can discharge its statutory ELI obligations without doing so.
The information could potentially be provided on an anonymised basis; for example, how many/what percentage of employees have confirmed that they have/have not been vaccinated? However, it is a business decision whether you wish to take the time to compile this information, or simply decline to answer the question.
While it might be appropriate for a potential transferee to ask for various information related to COVID (for example COVID risk assessments, COVID-related sickness absence figures, information around your organisation’s use of the furlough scheme etc.), it is arguable that vaccine status does not fall within that ‘need to know’ category.
What happens to sponsored workers transferred under TUPE?
If an employee has been sponsored by the transferor for immigration law purposes, the transferee taking on the employees must be a licensed sponsor, or must apply to become a licensed sponsor within 20 working days of the transfer. Failure to make a valid (or successful) application will result in any sponsored worker's permission to stay in the UK being curtailed to 60 days. If the sponsored employee were to remain in employment beyond 60 days, they would be employed illegally and the employer would potentially have committed a criminal offence. Sponsors must report the change of business, and the transfer of any sponsored employees, via the government Sponsorship Management System (SMS) within 20 working days of the transfer.
Our company is set to acquire a failing competitor business. Will TUPE apply?
In order to assist the rescue of failing businesses, the TUPE Regulations include specific insolvency provisions which allow transferee buyers of insolvent businesses greater flexibility than would otherwise be the case.
The application of TUPE will differ according to whether the transferor business is subject to 'non-terminal' insolvency proceedings (which do not envisage the liquidation of the assets of the transferor) or 'terminal' insolvency proceedings (which have been instituted with a view the liquidation of the assets of the transferor).
Where proceedings are 'non-terminal' certain 'normal' TUPE rules will apply. Employees will automatically transfer to the transferee under Regulation 4 TUPE, and will receive unfair dismissal protection under Regulation 7. However, some 'special' variations to TUPE will also apply. Some of the transferor's debts in respect of the employees will not transfer to the transferee, but instead will be taken on by the Secretary of State, and paid out of the National Insurance Fund. In addition, the transferee will have greater scope than normal to vary the employees' terms. Case-law has confirmed that a a company in administration should be regarded as subject to 'non-terminal' proceedings, as the primary objective of administration is to rescue the company as a going concern; Key2Law (Surrey) v De'Antiquis (2011).
Where the transferor employer is subject to 'terminal' proceedings (such as bankruptcy) the normal TUPE rules do not apply. Employees will not automatically transfer to the transferee, and dismissals by reason of the transfer will not be automatically unfair.
Please do not hesitate to contact your HR Rely advisor to discuss the implications of TUPE if you are considering acquiring an insolvent business.