TUPE – The Benefits of effective TU engagement

1. Getting Involved, Getting Organised, Protecting Our Future TUPE – The Benefits of effective TU engagement

2. The Timeline Commissioning Moves to Procurement TUPE Post TUPE Service & Needs Assessment Service Review SIPS Options Appraisal Contract advert Tender process Contract evaluation Contract award TUPE consultation TUPE transfer TUPE protection TUPE challenges TIME Statutory consultation rights – diminish over time Statutory consultation rights No formal TU consultation rights

3. The Timeline Pre-Procurement Moves to Procurement TUPE Post TUPE Needs Assessment Service Review SIPS Options Appraisal Contract advert Tender process Contract evaluation Contract award TUPE protection TUPE challenges TUPE consultation TUPE transfer TIME Statutory consultation rights – diminish over time Statutory consultation rights No formal TU consultation rights

4. Recap: When does TUPE apply? • An organisation (or part of one) is transferred from one employer to another and retains its economic identity • Service provision change – an organisation engages a contractor to do work on its behalf, subsequent retenders to other contractors or brings the work back in house • Must be an organised group of employees doing the work that will transfer

5. TUPE Or Not TUPE • Increasing examples of situations where TUPE does not apply • Let’s play TUPE or not TUPE

6. TUPE Or Not TUPE • An NHS Trust outsources its catering function to private company X • 120 staff formerly employed by the Trust transfer to Company X • The service provided to the Trust by Company X is broadly similar • TUPE or not TUPE? • TUPE

7. TUPE Or Not TUPE • A Utility company retenders its meter reading contract • The contract is awarded to Company X • Company X announces that meter reading jobs will be done on an individual franchise basis as this is its existing business model • The affected staff are told that TUPE will not apply and all will be made redundant • Company X offers re-employment, but the staff have to form individual franchise companies and will have to lease equipment (uniforms/vans/HHT’s etc) – they will be doing the SAME WORK as previously • TUPE or not TUPE? • Not TUPE

8. TUPE Or Not TUPE • 4 local authorities establish a Joint Venture company with Company X, where Company X is the major shareholder. • After 10 years the 4 authorities retender the work in 5 Frameworks • The work being retendered covers all of the work carried out by the JV and new additional work • 3 of the Frameworks will be awarded to one supplier exclusively • For the other 2 Frameworks • Work will be awarded to multiple suppliers, including the LA’s own workforce • each supplier will be guaranteed a minimum amount of work • Work over the minimum specified will be awarded ad-hoc for the duration of the contract • TUPE or not TUPE? • BOTH

9. Getting Organised TUPE

12. Impacts on UNISON organisation • Key impacts of failing to deal with transfers effectively are: • Member terms and conditions may be undermined (failure to deal with all TUPE and non TUPE issues • Pensions not protected • Recognition, facilities and UNISON organisation not developed for post transfer • Joint relationships and joint bargaining not developed for post transfer • DOCAS arrangements not in place • Two Tier/Workforce Matters issues not addressed

13. Getting It right – Special Measures • Special Measures – notification from transferee (new employer) of changes it will make post transfer • Clarifies what is covered by TUPE & what isn’t • Critical

14. Employment contract and Incorporation Issues Example of a TUPE notification on measures etc TUPE Measures proposed by Capita in respect of transferring Liberata employees. As required under the TUPE Regulations, I am writing to advise you of the proposed measures that will occur in connection with the transfer to Capita Business Services Limited on the 5th J anuary 2009. Capita will transfer existing Liberata Limited terms and conditions of employment with the exception of: Employee Handbooks — All previous employee handbooks will be replaced by the Capita Employee Handbook, Your Guide to Capita', which will form the basis of employment with Capita Business Services Limited. Upon transfer, Capita policies/guidelines will be used in respect of: Policies and Procedures: • Disciplinary and Grievance procedures — These will be replaced by Capita's Disciplinary and Grievance Procedures. Please refer to the employee handbook. • Employee Capability policy and procedure — Capita's arrangements will apply. Please refer to the Disciplinary policy and Performance Improvement Plan. • Dignity at Work — This will be replaced by Capita's Anti-Harassment and Bullying procedures. Please refer to The Open Door policy for Grievance and Anti—Harassment and Bullying sections of the handbook. • Performance Appraisal policy and procedure — Capita's Performance Framework will be implemented. Please refer to Performance Management in the accompanying Handbook. Current pay review arrangements will continue. • Absence and Attendance policy and procedures — Sickness pay entitlements will remain unchanged; however Capita's Absence Management procedures will be followed. • Equal Opportunity policy and procedure — Capita's Equal Opportunities and Diversity policy and procedure will be followed. Please refer to the Equal Opportunities and Diversity section of the handbook. • Maternity, Adoption, Paternity and Parental Leave Procedures — Enhanced pay entitlement will remain unchanged; however Capita's procedures will apply in relation to Maternity, Adoption, Paternity and Parental Leave. • Drugs, Alcohol and Substance Abuse policy and procedure — Capita's Alcohol and Drugs procedures will be followed. Please refer to the Health and Safety section of the accompanying Handbook. • Expenses (subsistence) policy — Capita's policy and procedure will be followed, please refer to Additional Information, Expenses and Travel sections of the handbook. • Bereavement I Compassionate Leave — Capita's process and procedure will apply. • Dependants' Leave Policy and Procedure — Capita's Time of for Dependants procedure will apply. • Leave for Religious Observance (as per Holiday policy) — Capita's approach will apply. • Health and Safety — Capita's policies and procedures will be followed, this includes the Capita provision for DSE eye tests and spectacles for DSE use. • Fraud policy and procedure — This will be replaced by Capita's policy, please see the Security and Confidentiality section of the handbook. • Whistleblowing policy and procedure — Capita's Whistleblowing policy will apply. • Flexible Working policy and procedure — Outside of all current arrangements that are in place and are transferring, Capita's flexible working policy will replace the current Liberata policy and arrangements. • Data Protection policy and procedure — These will be replaced by Capita's policies. Please see the Security and Confidentiality and Data Protection sections of the staff handbook. • Restriction of Activities — Staff transferring to Capita will be able to carry out any political activities as any other citizen. • Professional and Academic Training policy/MBA policy and procedure — Capita's Training Framework "Impact" will replace the Training and Development opportunities offered by Liberata. Capita policies in relation to study leave, membership of professional bodies and qualification training will be applicable. Any existing arrangements that are in place at the point of transfer will be honoured. • Bonus Schemes - Capita's approach to discretionary bonuses will apply post transfer • Car Scheme Policy — Those who currently have a company car or allowance will continue to have that entitlement. Car allowances will transfer at the current rate for a period of three years at which date they will be reviewed. Cars will be replaced on expiration of the lease. Capita's car policy will apply. n Mileage Rates — At the point of transfer, Capita's business mileage rates will be applied. For employees using their own car, currently, the first 10,000 business miles are paid at a rate of 40p per mile, 25p per mile thereafter. Employees using their own cars for business mileage must ensure that their cars are adequately insured for business (Class 2) and private use and are properly maintained and road-worthy at all times. For employees eligible for a car/car allowance, Capita's business mileage rates will be applied, in line with HMRC rates. n Recruitment and Selection policy and procedure — Capita's approach will apply. n Time off for Public Duties policy and procedure — Capita's approach will apply. • Smoking at Work policy and procedure — Capita's policy will apply. • Gifts — Capita's policy will apply. • Employee Introduction Bonus Scheme — Ongoing payment plans will continue. No bonuses will be awarded for referrals post transfer.

15. Terms: • Pay Date — Staff will be paid on the 27th o f each month or the preceding working day where this is a weekend or Bank Holiday and circa 201' December. • Job Security — There is a no compulsory redundancy clause in the commercial contract affecting this group of staff. Future Arrangements for Benefits: • Personal Accident Insurance — Transferring employees will benefit from Capita Group Personal Accident Insurance cover whilst on company business • Business Travel Insurance - Transferring employees will benefit from Capita Travel Insurance cover whilst on company business. • Pension Scheme — Broadly Comparable Pension schemes have been offered to transferring employees. • Long Term Disability (LTD) Scheme - Those who are currently eligible to the LTD Scheme will transfer to Capita's equivalent PHI scheme. Those currently absent and claiming will continue to receive benefit. • Discount Schemes — All employees will be eligible to access 'Capita Value' - a wide range of discounted goods and services. Included within the range are discounts on household equipment, cinema tickets, family attractions, CDs, travel, hotels, magazines and health club memberships. • Capita Share Schemes - Capita operates two Share Plans, 'Sharesave' and 'Capita Share Ownership Plan' (CSOP). Both schemes will be open to transferring permanent employees. • Dental Insurance — All transferring staff will be eligible to join the Capita RSA Dental Plan at anytime of the year. • HealthCare Cash Plan — All transferring employees will be eligible to join the Capita HSA Healthcare cash plan at anytime of the year. • Childcare Vouchers — Capita's childcare vouchers scheme provided through Fideliti will be replace the current scheme and will be available to all staff post transfer. Staff may contribute up to the agreed Inland Revenue salary sacrifice limit. • GAYE- Capita's arrangements will be available to employees. • Sports Club/Shop Steward deductions via payroll — These will cease on transfer. • Parking - Current arrangements will continue. Capita will set up deductions through payroll for those parking spaces that are currently paid for by cheque • Council Tax Deductions — Employees will be able to continue to pay their council tax via Capita's payroll for the current council tax year. From the new tax year (April 09) employees will need to make alternative arrangements. • Season Ticket Loan policy — Capita's arrangements will apply. • Relocation — Capita's policy to apply • Retirement policy and procedure - Capita's procedures will be followed, please refer to the Employee Handbook. • Dress Code — Capita's approach will apply, in line with what is required for the workplace and the work undertaken. Employees must be clean, tidy and with good personal hygiene. Please refer to the Employee handbook. • Special Leave — Capita's policy will be followed. Please refer to the Working hours and leave sections of the handbook. • Mobile Telephone policy and procedure - Capita will provide those employees who require a mobile phone/internet access where there is a business need. Capita's Phone Policy will apply. • Employee Assistance Programme — This scheme will not transfer and Capita's approach in line with the open door policy supported by occupational health services through Capita Health Solutions will apply. Any transferring employee currently using the existing Employee Assistance Programme will be able to complete any counselling that they are undertaking up until March 2009.

16. For completeness, I outline below those terms and conditions that will transfer without change: • Continuous Service • Annual Leave Entitlement • Salary • Salary Review Date • Salary Protection as a result of Job Evaluation • Grading structure • Outstanding pay awards • Hours of work • Mobility • Restrictive covenants • Notice periods • Probationary periods • Overtime • Market Forces supplements • Call out/Standby payments • Shifts and Shift pay • Sick Pay entitlement • Flexi-time • Current flexible working arrangements, including home working • Maternity and adoption leave entitlements and pay • Paternity leave entitlements and pay • Parental leave entitlements and pay • Redundancy payment provision will transfer • Life Assurance multiple of four times salary • Normal Retirement age • Private healthcare — contractual entitlement • Westfield health cash plan — current members will be able to continue to make deductions via payroll • Free vending/trolley service

18. Consequences • Capita challenged the incremental pay progression & separate salary increase mechanism post transfer – NOT INCORPORATED INTO CONTRACTS OF EMPLOYMENT • Wanted to apply only performance related pay for progression – virtually impossible for staff to progress to top of grade • UNISON legal advice was bleak • Incorporation of pay & grading into contracts in transferor pre-transfer was unclear • Minimal prospect of pursuing breach of contracts claims on that basis • Transferee would have strong chance of successful ETO defence based on unforeseen costs of a pay and grading scheme they did not expect to operate • Therefore, no realistic chance of a successful legal challenge for us • A new pay & grading scheme based on PRP principles and with lower salary max in each grade had to be negotiated with Capita

20. The Timeline Pre-Procurement Moves to Procurement TUPE Post TUPE Needs Assessment Service Review SIPS Options Appraisal Contract advert Tender process Contract evaluation Contract award TUPE consultation TUPE transfer TUPE protection TUPE challenges TIME Statutory consultation rights – diminish over time Statutory consultation rights No formal TU consultation rights

21. Current Post TUPE Issues • Increasing number of challenges to TUPE protection • How robust is TUPE protection? • No matter how robust the legal position is – our own TU organisation & strength is crucial

22. Current Legal Situation - TUPE • TUPE protects employee contractual T&C’s at point of transfer • There are NO time limits to protection • Employer can change T&C’s after transfer IF: • Economic/Technical/Organisational (ETO) reason connected with the TUPE transfer (must involve changes to the whole workforce – job function, no’s) • For a change unconnected with the transfer • Strong case law that harmonisation of terms and conditions is a breach of TUPE

23. TUPE Or Not TUPE • Increasing examples of situations where TUPE protection is being challenged • Let’s play TUPE or not TUPE

24. TUPE Or Not TUPE • A local authority transfers 60 staff from Children’s Services to Charity X under TUPE with all of their main contractual T&C’s protected • After 10 months Charity X announces its intention to move the TUPE staff onto its own, inferior pay and conditions • It argues: • It is finding it difficult to administer different sets of pay & conditions • It is unfair to have some staff on better pay & conditions doing the same job • TUPE or NON TUPE? • TUPE

25. TUPE Or Not TUPE • Charity X holds multiple local authority & NHS contracts, employing staff on a range of different TUPE protections, as well as new starters on its own T&C’s • It announces proposals to move all staff – TUPE & non-TUPE onto a common set of new harmonised conditions – with dismissal & re-engagement for those that refuse • Its justifications are: • Impending insolvency due to the pass through of government austerity cuts by local authorities & the NHS – the TUPE costs are the main costs • No other way in which to make cost reductions • Unfair to have different pay & conditions for people doing the same job – hence the desire for harmonised terms & conditions • UNISON has reviewed its accounts & accepts that it is facing insolvency • The TUPE staff are the main group of staff adversely affected • TUPE or NON TUPE? • NOT TUPE

26. TUPE – It’s Value • TUPE is very valuable at protecting workers rights • BUT – it comes with limitations • UNIONS MUST: • Maximise the legal protection it provides by engaging fully throughout the TUPE process • Build effective TU organisation to deal with TUPE challenges industrially as well as legally • Understand – “the die is already cast” when formal TUPE consultation starts • SO………… back to the time-line

27. The Timeline Pre-Procurement Moves to Procurement TUPE Post TUPE Needs Assessment Service Review SIPS Options Appraisal Contract advert Tender process Contract evaluation Contract award TUPE consultation TUPE transfer TUPE protection TUPE challenges TIME Statutory consultation rights – diminish over time Statutory consultation rights No formal TU consultation rights

28. The Pre-TUPE Stages • No formal consultation rights – Major problem • Decisions here shape TUPE/Non-TUPE & most of the post transfer employment landscape • Unions must organise/lobby to occupy this territory • Difficult – but not impossible – we did it with: • TUPE 2006 to secure rights above the Acquired Rights Directive • Secondment/retention of employment model (ROE) • TUPE Plus agreements • Cabinet Office statement on non TUPE public transfers

29. The Future TUPE Landscape • The future looks bleak • Government is currently consulting on changes to TUPE under its “Red Tape Challenge”. • Gov view that UK TUPE regulations “Gold Plate” the EU Acquired Rights Directive” and act as barrier to business. • Real purpose is: • to encourage wider and faster public sector outsourcing • to facilitate reductions in labour costs post transfer

30. The Future TUPE Landscape • This quote from the BIS consultation document is revealing: “It can be very hard when outsourcing a service for a transferee to introduce efficiencies and operate more cheaply than the transferor because the regulations act as a barrier to reducing the size of the workforce or the transferred workers’ pay levels.” “It can be difficult to harmonise the terms and conditions of the newly acquired workforce with the transferee’s existing workforce.“ Dismissals Pay & conditions cuts

31. The New TUPE Proposals • Service Provision changes • Repealing the 2006 TUPE provision which includes most service provision changes within the scope of the regulations • Will exclude many contracting out transfers from TUPE – opens public sector to wide scale outsourcing with no TUPE protection • Will bring greater legal uncertainty to whether TUPE applies – pre 2006 multi-factoral test • Will politicise outsourcing further and generate industrial relations disputes • Great uncertainty for staff caught up in outsourcing

32. The New TUPE Proposals • Loosening restrictions on • changes to terms and conditions • protection against dismissal • Economic, Technical or Organisational issues • Bring work relocation into scope – will allow employers to move work to new locations without triggering unfair dismissal TUPE protection

33. The New TUPE Proposals • Post transfer harmonisation of terms and conditions • To enable transferee to put transferred staff on its own employees T&C’s • Prime purpose is to facilitate reduction in labour costs post transfer • Likely to mean cuts in pay and conditions for transferred staff • Could be breach of Acquired Rights Directive • Alemmo Herron v Parkwood ECJ decision will be important – static or dynamic TUPE link

34. Conclusion • TUPE is a valuable employment protection mechanism • BUT – increasing challenges to the mechanism & the protection it provides • Trade Unions must engage fully in TUPE issues – vital to ensure transferring staff are as fully protected as possible • Trade Unions will need to build more effective organisation for industrial responses to respond to TUPE deficiencies and proposed changes • Trade Unions must organise/campaign/lobby against weakening of TUPE AND for formal TU involvement in early stages of procurement & commissioning under a future government

35. Available from UNISON Bargaining Support or download from UNISON web ALSO TUPE branch training From LAOS