TUPE, Reorganisation and Redundancy Advice for Employees

TUPE occurs if your employer’s business, or part of their business, transfers to a new owner, or if the business merges with another business to create a new organisation. It can also apply if work moves from one contractor to another such as in an outsourcing situation, or where a contract is lost. In TUPE, ‘transferring’ means that you will automatically transfer from your current employer to a new employer.

If you do not wish to personally transfer to the new employer, you can object by tendering your resignation to outgoing employer. Your resignation should be tendered before the transfer takes effect. Following your resignation, your employment will be terminated or the outgoing employer may decide to offer you a different job within their business. However, if you do object you have no rights to claim unfair dismissal or a redundancy payment, unless you object for particular reasons. So you should always think carefully before objecting. If you are offered alternative employment with your existing employer, you remain employed by them.

If the loss of business is substantial, your employer may decide that it cannot continue to run part, or all, of its business. Depending on how the work under the contract was organised it could amount to a Service Provision Change or ‘SPC’ meaning that TUPE law may apply to you. In these circumstances, the outgoing employer may agree to TUPE transfer a portion, or all, of its business to the new employer who has succeeded in gaining the client contract.

Before the transfer, your employer is obliged to give you certain information about the transfer and why it is happening.  If any changes are being proposed they will also have to consult with you and your colleagues via your elected representative. During the consultation process the representative should receive written information from the employer that sets out the planned TUPE transfer.

Your ‘employee representative’ is either a representative of your trade union, or an elected representative from your workforce. The number of representatives in a TUPE transfer will differ depending on the total number of employees affected.

If you have transferred under TUPE regulations, you are protected from any change to your contract of employment that occurs because of the transfer. If your new employer does breach this protection, the corresponding contract changes will be void. Changes to your contract of employment will only be valid if they are required for the running of the business.

The duty to inform and consult with affected employees and their representatives is of the utmost importance to ensure that employees are aware of changes to their employment. If your employer has failed to notify you of the TUPE transfer, you can bring a claim against them in the Employment Tribunal. Failure to inform and consult could cost your employer up to 13 weeks’ pay for every employee affected by the transfer.

Your employer may be forced to make redundancies because of the TUPE transfer. If this does occur, your employer will be obliged to consult with all potentially affected employees and their employee representatives.  

If you are worried about redundancies stemming from a TUPE transfer, you should consult your employee representative and ask them to discuss these concerns with your employer.

Thorntons’ Employment Law team are happy to talk through any worries you may have surrounding TUPE law and redundancy. Please contact us for further support and advice.

You have a number of rights if you are facing redundancy:

• A right only to be subject to possible redundancy in a genuine redundancy situation 
  Some employers fall into the trap of considering any period of business downturn, however short term, as allowing for a redundancy exercise to take place. Before any redundancy exercise should even be considered by your employer, there must be a ‘genuine redundancy situation’ and this usually means a business closure, a workplace closure or a real reduction in the need for you to do a particular kind of work for your employer.
• A right to be notified of your being at ‘risk of redundancy’
  After your employer has identified the pool of employees who might be made redundant (or any unique posts where there will not be a pool of employees) , your employer should meet with you and any of your colleagues also at risk and explain why redundancies may be needed, how many redundancies may be affected, how redundancies may be avoided and offer the chance to accept voluntary redundancy.
• A right to be consulted 
  If your employer is proposing 20 or more redundancies at your workplace within a 90-day period, this will require your employer to consult with your union or elected employee representatives. If fewer than 20 redundancies are considered, you have the right to be consulted individually about how you have been scored by your employer and invited to discuss alternatives to your redundancy. You also have a right to be accompanied at this meeting by a workplace colleague or union official or representative.
• A right of appeal 
  If, after the redundancy process, you have been identified as redundant and dismissed, you have the right to appeal against that decision. At this meeting you will have the opportunity to discuss the decision and explain why you disagree with the outcome. Again, you also have a right to be accompanied at this meeting by a workplace colleague or union official or representative.

There are two types of redundancy pay: statutory and non-statutory.

Statutory redundancy pay must be paid to you if you have at least two years’ continuous service with your employer. Statutory payments are calculated using a fixed formula which looks at your age, length of service and how much you are paid. Crucially, there is a statutory cap on statutory redundancy pay which is currently set at £14,370.

With non-statutory redundancy pay, this is usually offered to employees who have been made redundant but do not have two years’ service or is offered to you on top of your statutory redundancy pay (possibly as an incentive through voluntary redundancy).

A dismissal on grounds of redundancy is one of the specific categories of a ‘fair dismissal’; however, this still requires your employer to follow a fair procedure.

The first step in the redundancy process requires your employer to put you on notice of possible redundancies. This is often done through an ‘at risk’ letter.

Thereafter, your employer should identify any roles which are potentially redundant. If there are a number of employees doing the same or a similar role, a selection pool should be drawn up. The pool must relate to the type of work that requires a reduction in workforce.

Your employer should then score the pool so the best employees in the pool can be identified. The methods used to score you could include matters such as skill set, performance, disciplinary record and length of service, but should not include any discriminatory matters like gender or absence caused by disability or pregnancy-related issues.

Once the pool is scored, your employer should enter into meaningful consultation with you about your possible redundancy and as part of this look at ways your redundancy could be avoided. They may discuss voluntary redundancy and redundancy notice. Your employer should then consider any suggestions you have raised and take note of these points when deciding whether your role is to be made redundant.

Despite the fact redundancy is one of the specific categories of fair dismissal, this does not mean that it cannot be challenged by you if you feel the redundancy decision was unfair and a tribunal can find a dismissal by reason of redundancy was unfair. As there are a number of substantive and procedural hurdles your employer must follow when making redundancies, employers sometimes find themselves having missed out a crucial part of the process or not properly consulting with employees.

The nature of some redundancies means that you may be offered an alternative role instead of losing your job and your employer should in a redundancy situation look at whether any alternative positions exist for you.

However, in terms of your acceptance of any alternative role offered, this depends on the job actually offered to you and any rejection you make of an alternative role must be reasonable. What this means is that the alternative employment offered to you must be suitable relative to your current job and skillsets. For example, an offer with a significant drop in salary would likely be reasonable for you to refuse (although other factors would be relevant).

Getting legal advice as to whether an alternative job offer is reasonable is crucial as if you refuse a reasonable offer you will forego any right to any statutory redundancy pay due to you. If you refuse an unreasonable offer, your right to any statutory redundancy pay due to you continues.

The act of doing this in a redundancy situation is known as ‘bumping’ and can be lawful in certain circumstances. Bumping involves your position having been made redundant but you are transferred over into another position, with the current holder of that second position made redundant to allow you to fill it.

There is generally no requirement for your employer to consider ‘bumping’ you into another role but it is often asked for by potentially redundant employees or considered by an employer who risks losing an employee through redundancy they are otherwise eager to retain. Nevertheless, a failure to consider bumping can render a redundancy unfair so it is something your employer should usually look into if you are told you are at risk of redundancy.

The most common instances of bumping concerns employers looking to make a more senior employee redundant but retain those employees working under that senior employee. Given that the more senior employee is likely to have longer service, better qualifications and so on, if you are a senior employee in that position, your employer should ask whether you would be prepared to move down into one of those junior roles. While you may be against that suggestion for a variety of reasons, if you were willing to accept, this would usually require your employer to give real consideration to bumping you into one of those more junior posts.