Sunderland 700/701 TUPE dispute

[35B]

From the ACAS website:

Employee liability information - TUPE - Acas

What information an employer must provide about employees who are transferring under TUPE.

www.acas.org.uk

So quite clearly there is a minimum 28 days notice from employer to employer by which time required data that must be provided for each in-scope employee.

I never said that data was a test of whether TUPE applies. It feels as if my comments are being misrepresented, and I don't understand why. Maybe some of my phraseology could be clearer, but it should be pretty clear what I mean unless of course pedantry is the order of the day. It all distracts from the central question of who's at fault in this case.

Anyway, I'm ducking out of this now.

The point is that this guidance note is written for a normal situation, and presumes that there is 28 days' notice. A typical outsourcing transition will be between 1 and 6 months, which makes that entirely reasonable. But the regulations are written to cover all possibilities - including an overnight transfer.

I apologise if I've given offence, but there is a simple question of logic here - the emphasis on the 28 days requirement leaves the "what happens when there aren't 28 days" question wide open. Occam's razor says that, if 28 days notice is the test of whether TUPE applies, then failure to do so within 28 days would deprived potentially transferring employees of their rights to continue.

Having spoken at (expensive) length to commercial lawyers specialising in this area, I'm acutely aware that the ACAS guidance is a very limited introduction to a very complicated topic, in which employers (public and private sector alike) are frequently very keen to avoid the costs of obeying the law, and employees risk being left out in the cold.

 

[MotCO]

So quite clearly there is a minimum 28 days notice from employer to employer by which time required data that must be provided for each in-scope employee.

But how can this work if a company suddenly collapses or has its contracts taken away? When there is an orderly transfer, TUPE processes make sense, but I'm not sure how it can operate in this situation.

The logical thing would be if the old contractor informs the new contractor of the staff wholly involved in the service, and for the temporary operator to use and pay these staff. Any redundancy costs would be picked up in the new permanent tender, and the contract priced to reflect these costs. The old operator should pay any wages outstanding, or if it has gone bust, then the wages would be part of the settlement of creditors (unless it is picked up by any Government schemes). But common sense doesn't always apply.

 

[35B]

But how can this work if a company suddenly collapses or has its contracts taken away? When there is an orderly transfer, TUPE processes make sense, but I'm not sure how it can operate in this situation.

The logical thing would be if the old contractor informs the new contractor of the staff wholly involved in the service, and for the temporary operator to use and pay these staff. Any redundancy costs would be picked up in the new permanent tender, and the contract priced to reflect these costs. The old operator should pay any wages outstanding, or if it has gone bust, then the wages would be part of the settlement of creditors (unless it is picked up by any Government schemes). But common sense doesn't always apply.

The simple answer is that it doesn't, and it gets messy. But that's where principles are important. And the principle here is that if there is a transfer of an organised grouping of employees, then their employment rights are protected and they transfer to the new employer - redundancy doesn't enter into it. The detail of who pays whom in the fallout from a collapse becomes secondary, and is about debt rather than employment.

What isn't visible here are the employment provisions of the contracts the bus operators have with Nexus. I would expect there to be provisions governing what should happen in an enforced or short notice transfer, but the account here suggests strongly that they don't exist, which suggests that Nexus have fallen down on the job.

 

[34D]

So quite clearly there is a minimum 28 days notice from employer to employer by which time required data that must be provided for each in-scope employee.

So quite clearly there is a minimum 28 days notice from employer to employer by which time required data that must be provided for each in-scope employee.

You are forgetting that some situations (like apparently this) have a few days and not 28.

The question is likely to be 'was the information provided as soon as practicable' in which case all is fine.

Less than 28 days does NOT negate the employees claim that they are part of an organised grouping.

 

[Starmill]

Or they didn't want to get involved in a legal battle they didn't have to be involved in.

I would say they decided to involve themselves to a degree by cancelling the contract unilaterally, rather than negotiating a termination...

What isn't visible here are the employment provisions of the contracts the bus operators have with Nexus. I would expect there to be provisions governing what should happen in an enforced or short notice transfer, but the account here suggests strongly that they don't exist, which suggests that Nexus have fallen down on the job.

Indeed. They could get this right, or they could avoid unilaterally pulling the plug mid-contract. But as it stands they've decided not to bother with either, it appears.

 

[stevieinselby]

But how can this work if a company suddenly collapses or has its contracts taken away? When there is an orderly transfer, TUPE processes make sense, but I'm not sure how it can operate in this situation.

The logical thing would be if the old contractor informs the new contractor of the staff wholly involved in the service, and for the temporary operator to use and pay these staff. Any redundancy costs would be picked up in the new permanent tender, and the contract priced to reflect these costs. The old operator should pay any wages outstanding, or if it has gone bust, then the wages would be part of the settlement of creditors (unless it is picked up by any Government schemes). But common sense doesn't always apply.

When bus companies have folded and their contracted services have been reallocated to other providers, I have never once heard anyone suggest that TUPE would apply. The new providers have often directly reached out to the former employees of the failed company and invited them to apply for jobs, but it has been very clear that it is an application process and not an automatic enrolment. I realise that it's a slightly different situation here because CTG wasn't insolvent, but it still feels relevant.

 

[Cesarcollie]

When bus companies have folded and their contracted services have been reallocated to other providers, I have never once heard anyone suggest that TUPE would apply. The new providers have often directly reached out to the former employees of the failed company and invited them to apply for jobs, but it has been very clear that it is an application process and not an automatic enrolment. I realise that it's a slightly different situation here because CTG wasn't insolvent, but it still feels relevant.

But don’t forget that it depends on the detail. If the failed company provides three routes, each requiring two drivers, but the six drivers are all on one rota, they will only spend 33% of their time on any one route. If after the failure each route goes to a different operator, none of the drivers will automatically qualify for TUPE as the ‘more than 50%’ threshold isn’t met. (This is a simplistic example to illustrate the point, but as others have noted, TUPE is rarely simple!).

 

[Dwarfer1979]

When bus companies have folded and their contracted services have been reallocated to other providers, I have never once heard anyone suggest that TUPE would apply. The new providers have often directly reached out to the former employees of the failed company and invited them to apply for jobs, but it has been very clear that it is an application process and not an automatic enrolment. I realise that it's a slightly different situation here because CTG wasn't insolvent, but it still feels relevant.

I think that a company failure is different to a contract transfer even if the latter is done with little notice due to poor performance by the previous operator. In the case of company failure there is a break in service, even if only 1 day for an on the ball tendering authority, which I would think means there is nothing to transfer though it can be complicated by a slow failure where the council gets some pre-warning of a problem so they can have replacement contracts ready (though even where that has happened you tend to find the operator fails in the middle of one day and the new contract doesn't kick in until the following day meaning there is still several hours or no service). Conversely if the service is re-assigned or retendered, no matter how short the notice, there isn't the break in service and so it would seem more related to a Transfer of Undertakings. As others have said TUPE is complicated and only a qualified employment lawyer, which I suspect none of us are, could give remotely definitive responses to all the possible different scenarios that could be faced.

 

[35B]

I think that a company failure is different to a contract transfer even if the latter is done with little notice due to poor performance by the previous operator. In the case of company failure there is a break in service, even if only 1 day for an on the ball tendering authority, which I would think means there is nothing to transfer though it can be complicated by a slow failure where the council gets some pre-warning of a problem so they can have replacement contracts ready (though even where that has happened you tend to find the operator fails in the middle of one day and the new contract doesn't kick in until the following day meaning there is still several hours or no service). Conversely if the service is re-assigned or retendered, no matter how short the notice, there isn't the break in service and so it would seem more related to a Transfer of Undertakings. As others have said TUPE is complicated and only a qualified employment lawyer, which I suspect none of us are, could give remotely definitive responses to all the possible different scenarios that could be faced.

This is the key point - the scope of work of the employees was moved, rather that stopping and then (quickly) restarting.

 

[AndrewP]

I have been involved with the flawed legislation that is TUPE and this seems very complex and the issue might be that the replacement contract was let by the contracting authority on the basis that it did not apply and the new / interim supplier bid and delivered on that basis.

This really puts the employees in an awkward position and although legal advice is often advised, this is not always straightforward as it's not cheap meaning the decision to take it is not simple. This is where unions come into their own (or should).

This is an awkward situation but someone, arguably rightly, prioritised keeping the service going

 

[35B]

I have been involved with the flawed legislation that is TUPE and this seems very complex and the issue might be that the replacement contract was let by the contracting authority on the basis that it did not apply and the new / interim supplier bid and delivered on that basis.

This really puts the employees in an awkward position and although legal advice is often advised, this is not always straightforward as it's not cheap meaning the decision to take it is not simple. This is where unions come into their own (or should).

This is an awkward situation but someone, arguably rightly, prioritised keeping the service going

I agree with both the description of TUPE as "flawed" and the conclusion about keeping the service going. However, when negotiating contracts involving a change of service, lawyers have always been at pains to advise that neither customer nor supplier can rely on "TUPE won't apply", and always need to prepare themselves (probably with suitable indemnity clauses) for the possibility that it will and the affected staff will take legal action over their positions. That preparation will include provisions around the idea of a "successor supplier", recognising that the customer organisation may well cause the service to be transferred directly from one supplier to another.

I'm willing to bet that Nexus didn't do this, and especially didn't consider what might happen if they had to take back a contract with a small supplier that might be unable to absorb the workload into its other operations - or unwilling to stand up to its legal liabilities if redundancies were required.

 

[MotCO]

But caught up in the crossfire are the staff who may still be owed wages and possibly redundancy pay, and I assume no end in sight to resolve this.

 

[35B]

But caught up in the crossfire are the staff who may still be owed wages and possibly redundancy pay, and I assume no end in sight to resolve this.

Precisely.

 

[AndrewP]

I agree with both the description of TUPE as "flawed" and the conclusion about keeping the service going. However, when negotiating contracts involving a change of service, lawyers have always been at pains to advise that neither customer nor supplier can rely on "TUPE won't apply", and always need to prepare themselves (probably with suitable indemnity clauses) for the possibility that it will and the affected staff will take legal action over their positions. That preparation will include provisions around the idea of a "successor supplier", recognising that the customer organisation may well cause the service to be transferred directly from one supplier to another.

I'm willing to bet that Nexus didn't do this, and especially didn't consider what might happen if they had to take back a contract with a small supplier that might be unable to absorb the workload into its other operations - or unwilling to stand up to its legal liabilities if redundancies were required.

I should have added that my comments were based on experience elsewhere (try applying TUPE and it's equivalents on a pan-European basis - that's fun!).

I have seen exactly the scenarios that you have described and you are so right about never assuming that "TUPE wont apply". It's a risk with any contract change / renewal and that risk has to be allocated and managed (normally with a cost attached)

 

[richard13]

TUPE seems complex, but reading part of the .gov intro, I noticed a couple of things.

There are 2 distinct situations, transferring a business and transferring a contract. Transferring a whole business includes debts like arrears of pay, but a contract transfer does not.

The current business has to state up front, whether they expect TUPE to apply so that any new supplier/ purchaser can bid accordingly and collect data and start the formal welcome process. Staff cannot just turn up to the new employer on the first day of a new contract and expect employment when the new contractor will have already allocated / employed staff for the new work.

TUPE never applies to short term contracts, but what is short term?

Bus tendering is normally a fixed process and in Nexus's case it is outsourced via a third party. It will have fixed minimum timescales. Short notice contracts are presumably done manually with likely candidates asked personally - email / phone? and thus only short term so others can apply formally via the standard process. School buses sometimes have to be replaced between morning run and afternoon pick up with a lot of panic, with short term and later proper contracts following. TUPE is a process requiring a formal transfer of information and so can never be instant, but redundancy and re-employment can be pretty quick.

When Yellow Bus went bust in Bournemouth, Morebus restarted their routes in 36 hours with over a 100 Yellow bus drivers. There was no TUPE. It was I think actually more benifitial to accept government redundancy and start again with a higher wage / benifits and a welcome bonus.

I get the impression that City Transport Group did not understand TUPE, but it sounded like a way to get out of paying wages and redundancy and the suggestion to the drivers kept them happy until it failed. That matches the image I am getting about CTG. The drivers were plain misled.

 

[robertclark125]

The post above asks what is short term? Given my employer, wh Smith, and my previous employer, focus diy, had a probation period of 13 weeks, I'd say short term could be a maximum of 13 weeks.

 

[Deerfold]

The post above asks what is short term? Given my employer, wh Smith, and my previous employer, focus diy, had a probation period of 13 weeks, I'd say short term could be a maximum of 13 weeks.

6 months isn't an unusual probation period.

 

[Teapot42]

6 months isn't an unusual probation period.

Every job I've had was 6 months, not sure if it differs for hourly paid roles - I've always been salaried.

Probably not strictly speaking probation, but many UK Universities 'game' the system by having staff on a series of rolling temporary contracts up until the point (three years I believe) where they have to be made permanent.

 

[35B]

Every job I've had was 6 months, not sure if it differs for hourly paid roles - I've always been salaried.

Probably not strictly speaking probation, but many UK Universities 'game' the system by having staff on a series of rolling temporary contracts up until the point (three years I believe) where they have to be made permanent.

The question of "short term" is a red herring - the roles transfer when the work transfers if the individual is part of an "organised grouping".

 

[Tetchytyke]

The current business has to state up front, whether they expect TUPE to apply so that any new supplier/ purchaser can bid accordingly and collect data and start the formal welcome process. Staff cannot just turn up to the new employer on the first day of a new contract and expect employment when the new contractor will have already allocated / employed staff for the new work.

If TUPE applies- and what either employer says doesn’t actually change whether it applies or not- then employees can turn up and expect to remain in employment. That’s the whole point of TUPE- their employment transfers.

It is not uncommon for new contractors to attempt to argue that TUPE doesn’t apply, particularly where the outgoing contractor offers better pay and they don’t want to match it. It’s also not uncommon for the outgoing contractor to also try and argue that TUPE doesn’t apply where they want to keep their staff.

When Yellow Bus went bust in Bournemouth, Morebus restarted their routes in 36 hours with over a 100 Yellow bus drivers. There was no TUPE.

That is because there was no transfer of undertaking. Morebus didn’t acquire any of the assets of Yellow Buses and nor did they acquire the contracts. They simply registered new commercial operations on the routes that Yellow Buses had been operating, and invited Yellow Buses drivers to come and work for them.

If Morebus had bought the assets of Yellow Buses then TUPE probably would have applied. Whether they’d have been on the hook for unpaid wages would depend on whether the transfer took place before or after insolvency; if the transfer happens before the insolvency event then the new employer is on the hook, if it happens after the insolvency event then the old employer is liable. City Transport Group are not insolvent (yet!).

== Doublepost prevention - post automatically merged: Yesterday at 16:24 ==

When bus companies have folded and their contracted services have been reallocated to other providers, I have never once heard anyone suggest that TUPE would apply.

It depends whether there is a transfer of undertaking and that is a very complex area of law when insolvency or contract defaults are involved. If there isn’t continuity then TUPE often won’t apply. It also won’t apply if there isn’t a discrete group of employees to transfer.

If bus operator A goes bust and bus operator B buys the assets from the administrator/insolvency practitioner then TUPE would likely apply. If bus operator A goes bust and the contracts are re-tendered after a short gap of a few weeks to operators C, D, and E then it likely won’t. It gets very messy where there isn’t a gap (e.g. where the replacement is already lined up and ready to go) or where there isn’t a discrete group of drivers (e.g. one contract gets divvied up across two or three new operators).

The law is very complicated and it in a decent proportion of cases the incoming employer will not have any desire for TUPE to apply.