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TUPE and its implications for Outsourcing and Procurement

last updated: 3rd January 2017

The Transfer of Undertaking Protection of Employment Regulations (TUPE) provide employment rights to employees when their employer changes as a result of a transfer of an undertaking.  Examples of a ‘transfer of undertaking’ where TUPE is usually relevant are:

  • contracting out services (in-house to contractor);
  • second generation contracting (contractor to contractor); or
  • contracting in services (contractor to in-house).

Note: TUPE only applies to service contracts not contracts for the provision of goods.

This means that employees working on the contract that is being transferred have the right to have their employment transferred to the new contractor and on no less favourable terms and conditions than they are on at the date of the transfer.  The new contractor also takes over any liabilities such as non-payment of wages prior to transfer, unfair dismissal prior to transfer, etc.  The only exceptions are liabilities in relation to occupational pensions*, criminal liability and insolvency rescue operations).

In terms of TUPE implications on procurement activities, prospective Tenderers will need access to information concerning the employees entitled to transfer under TUPE and their terms and conditions of employment.  Those evaluating bids will need to ensure TUPE and pension considerations have been taken into account in tenderers proposals and suitable terms and conditions of contract will need to be drafted to ensure all parties are aware of their responsibilities and liabilities.

The TUPE Top Tips for Procurement Managers guide provides more information about the steps you should undertake when managing a tender process involving a TUPE Transfer.  There are also specimen TUPE contract clauses available alongside a suite of template TUPE forms for inclusion in your tender documents.

More information on TUPE Regulations in general can be found in the BIS Guide to TUPE Regulations.

*Although under TUPE Regulations there is only a requirement for the new employer to offer a defined contribution pension scheme and to match employee contributions up to 6%, there is additional best practice guidance when employees who are members or who are eligible to be members of an Local Government Pension Scheme transfer.  Further information see LGPS Transfer Guidance.

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