article
Caring about TUPE
14 September 2010
The sale of a care home brings with it a host of potential risks
and challenges both for the outgoing and incoming owners. So it
goes without saying that careful due diligence is required before
any purchase can be agreed. This is because both parties need to
fully understand all the legal requirements and liabilities
involved in any transfer and none more so than in the area of
staffing as one recent care home owner found to her detriment.
The Transfer of Undertakings (Protection of Employment)
Regulations 2006 (TUPE) protects employees in most situations where
a care facility is sold or there is a change in contractor.
TUPE also imposes obligations on the outgoing employer to inform
employee representatives about the proposed transfer and consult
them on any other ‘measures’ that may affect employees.
Mrs. Todd owned a care home in Glasgow and in 2008 sold it to
Care Concern GB. She paid wages for 1 to 3 January shortly after
the transfer, rather than at the end of the month, estimating the
PAYE deductions. The Employment Appeal Tribunal (EAT) decided that
this was a measure that required consultation.
The EAT awarded seven weeks’ pay for each of the 32 employees,
totalling over four years’ pay. This, in the EAT’s view, was
appropriate in view of Mrs Todd’s complete failure to arrange for
the election of employee representatives (although this was
mitigated by the fact that she provided employees with most of the
required information); and her failure to inform and consult about
the revised pay arrangements. It was appropriate to award
compensation for the latter because, it had been found, these
revised arrangements caused the employees to worry, particularly
because they were low paid.
The result of this case may be that innocuous administrative
arrangements could be measures requiring consultation with employee
representatives - an obligation to be taken seriously, since an
Employment Tribunal can award up to 13 weeks’ pay per employee for
a failure to comply.
Practical steps for the outgoing employer
· If in doubt, err on the side of caution. Even very minor
departures from the norm could be measures within the meaning of
TUPE and should be subject to formal consultation with employee
representatives.
· Plan ahead – representatives might need to be appointed by way
of an election before consultation can take place. Most care
facilities are staffed around the clock so arrangements will need
to be made so that all those affected are represented in any
consultation.
· Consider TUPE indemnities in the contract or sale agreement.
If your bargaining position is strong enough, you may be able to
obtain an indemnity from the other party in respect of awards for
any failure to inform and consult.
Practical steps for the incoming employer
· Remember that under TUPE you are liable jointly with the
outgoing employer for their failure to consult transferring
employees, so make detailed enquiries about any measures the
outgoing employer might take, and the extent to which they have
consulted on them.
Again, consider apportioning liabilities under TUPE in the
contract or sale agreement.
This article was first published in Caring
Times