TUPE. A Guide for Schools

TUPE

Contents

Checklist/Summary Paragraph

Number

1. Introduction

2. Outsourcing (and Insourcing)

3. The Decision to Proceed

4. Selecting a Provider

5. The Contract Specification

6. The Final Choice of Provider

7. Managing the Transition

8. Legal Issues

9. Consultation

10. The Client Role

11. Career Implications

12. Terms and Conditions – Contracts of Employment

13. Changes to Terms and Conditions

14. Pensions

15. Employment Charter

16. Dismissals and Redundancies

17. Information Exchange – Due Diligence

18. TUPE Indemnities – Academies

19. Remedies

20. Conclusion

Appendices

1. Template letter

2. Transfer of employment ‘Staffing issues likely to be faced’ 3. Legal position of continuous service

Checklist/Summary

 The guidance is written in the context of the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations introduced on 31 January 2014 and the Cabinet Office statement of practice ‘Staff Transfers in the Public Sector’.

 The guide is not intended to promote outsourcing or ‘insourcing’ (transferring staff onto the establishment of the school).

 Outsourcing will involve major procurement, personnel, financial and legal issues.  Schools should adopt a collaborative approach and ensure effective contract

management arrangements are in place.

 Schools should ensure they seek advice from their Human Resources provider and Legal Insurance provider as soon as outsourcing or ‘insourcing’ is being considered.

 The "core organisation" (see paragraph 3) is a key consideration. Are the functions being considered for outsourcing part of the core business or are they peripheral to the core business?

 Outsourcing a function does not exempt the school from responsibility for the function.

 Market and customer research, a SWOT analysis, budget and resources, benchmarking data and the standards for the service must all be considered.  What are the objectives of outsourcing the function?

- Cut costs? - Improve quality?

- Obtain specialist expertise?

- Cope with fluctuations in demand?

 Produce a specification. This is a key document. The school should seek procurement, legal, human resource and financial advice when producing a specification (see paragraph 5).

 In considering a provider take into account :-- qualifications and experience

- expected outcomes - confidentiality

- codes of practice (where relevant) - health and safety

- equal opportunities

- resources and competence of the provider - quality systems

- track record - references

 It is necessary to manage the transition for those staff transferring and those staff remaining.

 TUPE (Transfer of Undertakings (Protection of Employment) (Amendment) Regulations).

Schools will need legal and human resource advice in any transfer where TUPE applies.

Community and VC Schools and Nurseries should inform the HR Schools Statutory Service at the earliest opportunity upon consideration of a transfer as all employees of these categories of schools are employed by Central Bedfordshire Council. Any transfer that takes place will therefore be between The School and Central Bedfordshire Council “The Transferor” and the new provider “The Transferee”.

If the transfer is governed by TUPE Regulations then:-- transferred employees retain continuity of employment

- individual contractual rights (except for pensions) are taken over by new employers

- any dismissal or redundancy related to the transfer is automatically unfair - the transferee must honour collective agreements

- there is a duty to inform the employees.

 Consultation with employees and their representatives is the key to a successful transfer. There is a statutory duty to consult with the Council’s recognised trade unions and this must be carried out at the earliest opportunity.

 The School must undertake the "client role". Transfers do not exempt the school from responsibility for the function.

 Key factors for employees will be :-- Pensions

- Pay and terms and conditions of employment. - Continuity of Employment

 The pensions issue is important. Anything other than continued access to the current schemes is likely to meet resistance from the staff representatives. Schools should not underestimate the time needed to resolve such problems. (See paragraph 14)

 Changes to terms and conditions post transfer is complex and sensitive (see paragraph 15 and appendix 2)

 Schools may wish to consider an "employment charter" to protect staff at the point of transfer.

1. Introduction

1.1. The purpose of this guide is to assist schools in identifying the key issues, both strategic and operational, involved in outsourcing (and ‘insourcing’) and TUPE.

1.2. The most likely scenario where TUPE arises is when a school considers outsourcing a support function. This guidance is not intended to promote outsourcing as a universally desirable practice nor to provide more than outline information about the principles and processes involved in the tendering, letting and staff implications of outsourcing should the governing body wish to consider this option. Decisions about outsourcing are for individual schools to take in the light of their own service delivery needs. ‘Insourcing’ occurs where a school decides to take onto the school establishment a function previously outside the direct employment of the school (for example, bringing catering services in-house or taking management responsibility for a pre and after school care club or ………). 1.3. The effectiveness of any outsourcing or insourcing is strongly influenced by

the way in which the relevant people management processes are handled and the extent to which factors such as the compatibility of client and supplier cultures and values are taken into account so, although decisions about outsourcing or insourcing is a strategic decision by the governors, there is a major personnel and development component. It is important that there is full and proper consultation with the staff and their representatives. This must be taken into account in determining the possible timetable for an outsourcing venture. The issues involved in managing any transition from in-house to external provider (or visa versa) for a function are the focus of this guide rather than the long term management of the contracted out service. It is recognised that it will be necessary to plan for an effective ongoing client role if the outsourcing is to be successful. This guide deals mainly with the role of the school although mention is made of the issues that will concern the external provider and which may need to be addressed jointly by the client (the school) and the provider.

1.4. Effective outsourcing through the management of contracts requires a collaborative, not a confrontational, approach which will have many partnership qualities - but the school will be, in effect, the senior partner and will have ultimate authority over what is done

May 2014 equivalent treatment for the employees affected. The Government has confirmed that this will continue to be the position under the 2014 Regulations.

2. Outsourcing

2.1. Outsourcing has included many practices that have long been normal ways of working for almost all schools. For example, office furniture and equipment is bought from a specialist supplier (not made in-house) while advertising for posts is likely to be carried out through an advertising agency. Other services such as grounds maintenance, catering and property management, are often purchased from outside providers. More recently there has been some growth in the incidents of outsourcing of other functions such as cleaning, office administration, information technology and caretaking and site agent activities.

2.2. Outsourcing across most services is normally on a long term basis governed by contracts of a specifically agreed length. The biggest single cause for the increase in outsourcing has been the concept of the ‘core organisation’ which focuses on its in-house expertise (the provision of education) and purchases any necessary support functions from a range of sources at its periphery (such as payroll, finance and personnel support).

2.3. Another argument for outsourcing is obtaining access to a level and type of skill and expertise which it is often difficult to develop within the school. Again, the above examples would apply and many of these service providers can deliver a range of professional know how which is not available to many schools.

2.4. In any outsourcing exercise the school will be mindful of the need to achieve the best value and most effective use of the public funds involved. Some schools have embraced the core and periphery concept and have voluntarily outsourced a range of support functions as a matter of school policy. A decision to outsource a particular function does not exempt the school from responsibility for the performance of that function.

3. The Decision to Proceed

3.1. From an overall school perspective, effective outsourcing decisions are derived from answers to questions such as

:- What core business are we in?

 What are the aims and objectives of the school?

 What impact will outsourcing have on pupils, parents, staff, governors and the community?

 Is our ability to deliver the best for our ‘client group’ being diluted by involvement in other activities?

 Are we spending too much in resource time and managerial effort on peripheral functions?

 What are the full and unit costs of the support functions?

 Are there aspects of our activities which might more effectively be provided by an external supplier?

 What alternative sources are there?

 Do we need to gain access to new skills or new technologies?

3.2. Lying behind these questions will be market and customer research, a SWOT analysis (strengths, weaknesses, opportunities and threats) projections of budget and resource forecasts, together with a cost analysis. Outsourcing decisions may also be strongly influenced by benchmarking data which indicates whether the school standards and overheads on the functions to be outsourced compare favourably or otherwise with other schools. An equality impact assessment (EIA) will be a valuable tool in determining whether to proceed. A template EIA is available at (insert web link to schools portal). 3.3. There may be indirect but valuable information about the organisation’s image

within the local community through sources such

as:- The recruitment process (comments from applicants and agencies).  Exit interviews.

 Staff experience with parents, governors, the community and pupils.

 Professional contacts (through groups of Head teachers or professional associations).

3.4. In considering which services to outsource, the school will probably wish to define those aspects of the service which are likely to be retained “in-house”. There are two key issues to consider. The first is any strategic input to the organisational development of the school in line with the school’s vision and values. The second is areas of work which are unpredictable in their incidents and which may lead to immediate action when they arise, such as responding to a particular staffing crisis within the teaching group. It is likely to be very difficult to specify the tasks involved sufficiently precisely to contract out management of unpredictable incidents (especially on a long term basis) to an external provider and guarantee that the external provider would provide the necessary instant and informed response.

May 2014 staff engaged, the annual cost to the school of providing the service, the ratio of personnel to other employees within the school (particularly when these factors are compared against similar and / or neighbouring schools) and the percentage of the school budget that will be committed to a specific contract. 3.6. Obtaining this information may entail a substantial amount of effort particularly

where operational and day to day management has been devolved to heads of department. This does not imply that this work should not be done. Indeed, it may be vital to the success of the exercise although none of the costs or ratios will be sufficient by itself to justify outsourcing or retention in-house. This may have implications for the workload of the staff involved. 3.7. It will be necessary to consider the extent to which alternative sources for the

4. Selecting a Provider

4.1. The choice of provider is influenced by the nature of the function of the project concerned and by the outsourcing objectives. Is the primary objective to:- Cut costs?

 Improve quality?

 Obtain a specialist expertise?  Cope with fluctuations in demands?

4.2. If there are multiple criteria, which should be given most weight? Providers vary in the way they operate in their experience of different types of activity and in their understanding of the organisation and cultural differences of various types of client. A key feature of almost all outsourcing is that the client organisation (the school) is still seen by its customers and other stakeholders as ultimately responsible for the quality of the outsourced activity.

4.3. With the overall objectives in mind, it is necessary to define the parameters of the outsourced function more closely. There are two approaches to this (see below), though in both cases, the results should be a clear, mutual understanding between the school and the provider about the service to be provided, its costs and the quality standards will be vital.

(i) Particularly for specific projects the school may find it helpful to produce broad terms of reference and then discuss with each of the shortlisted potential providers how they would handle the project. A detailed project plan can then be evolved and agreed on a joint basis with the provider whose proposed approach is considered the most acceptable.

(ii) For large scale or long term duration contracts (such as facilities management or IT services), a more formal tendering process will almost certainly be needed particularly where the EU Services Directive applies.

May 2014 may be significant and failure to seek adequate advice and guidance may result in liabilities accruing which would otherwise have been avoided.

5. The Contract Specification

5.1. A range of matters will need to be included in the specification, such as:- Activity volumes

 Response times  Duration

 Frequency

 Methods or procedures (for example how a piece of training might be delivered)

 Joint working arrangements

 Facilities to be provided (for example, which party will provide and pay for any specialist equipment)?

 Liaison and reports

 Monitoring arrangements (ie the school monitoring the delivery of the contract)

5.2. Other matters which are likely to be included in the tender documents will be an indication as to the contracts duration, each parties termination rights, penalty payments for default, an arbitration clause and a procedure for dealing with any variations. It will also be necessary to define those quality standards which, from the school’s point of view, are essential for the satisfactory operation of the contract. These are likely to

include:- The provider’s qualifications and experience  The outcomes expected by the school  Confidentiality clauses where appropriate

 Codes of best practice (for example, schools will want to see relevant codes or professional standards in place for the relevant activity).

 Health and safety

6. The Final Choice of Provider

6.1. Making a final choice of provider has similarities to the selection of a candidate for a job. The outsourcing equivalent of the person specification is the set of criteria to be used in choosing the successful tender. The degree of importance placed on pricing is similar to the weight which may be given in recruitment to the salary levels sought by the shortlisted candidates. Issues to consider for all types of outsourcing are likely to

include:- The resources of the potential provider  The competence of the potential provider

 The quality systems used by the potential provider  The track record of the potential provider

 A ‘statement of methods’ of the potential provider. (This document would enable a provider to state how they would achieve the outcomes and standards required by the contract).

 References

 Interviewing the potential providers.

6.2. In making the final selection decision it is often necessary to strike a balance between cost and quality. The lowest price tender may not fully meet the desired quality standard any more than it can be assumed that the highest price equates to the highest quality. Schools may use a point score assessment to ensure a systematic approach to this decision. An alternative approach is to give a potential provider a small, short duration contract for a small sample of the whole activity and then assess their suitability in the light of experience. It should be noted, however, that this can work for both parties. A provider might decline to renew a contract or only be willing to do so on terms less advantageous to the school. In either scenario the school will need to secure continuity of service.

7. Managing the Transition

7.1. Once a decision has been made to transfer the delivery of a function from an in-house unit to an external provider, then management of the people aspects of the transition assume major proportions. It will be vital to manage the fears and expectations not only of the group of staff transferring into or out of the school but, also, those left behind and those receiving the new group of staff. It is important to gauge the attitudes of staff and assess their morale so that communication can be targeted effectively and the transition managed in the best way possible. The core function of a school is to provide education and, in considering a potential outsourcing, it will be necessary to consider the potential impact on teaching and learning.

7.2. There are three main variances to the transition process

May 2014 on a largely unchanged basis though its ownership has passed from the school to the provider. Such transfers are almost always subject to the Transfer of Undertakings (Protection of Employment) Regulations 2006. This will be the situation if the school converts to academy status and it will be necessary for governors and senior leaders to invest time in the process to ensure a successful transfer.

(ii) The provider is able to supply the function entirely from its existing resources and, consequently, there is no transfer or other resources. In these circumstances, there may be redundancies unless the school can find alternative work for the employees whose work has been replaced by the brought-in function. (There will be a need to manage the redundancy issues carefully in order to avoid protective awards). (iii) Hybrid situations in which some staff and resources may be transferred

to the provider but others become surplus. In these cases, it is likely that TUPE will apply but this will need careful review and the external provider may not share the view of the school as to whether it is necessary to apply TUPE.

8. Legal Issues

The importance of resolving the issues stem from the obligation imposed by the Regulations on both the school and the provider. Under the TUPE Regulations the following apply

:- Transferred employees retain continuity of employment

 Transferred employees’ individual contractual rights (except for pensions) are automatically taken over by the receiving organisation

 Any dismissal or redundancy related to the transfer is automatically unfair ( see paragraph 16 below)

 The transferee is responsible for any legal penalties resulting from such dismissals even if these are made by the client organisation (the school) before the transfer takes place.

 Any collective agreements applying to the transferred employees at the point of transfer (the date the transfer occurs) must be honoured by the transferee

 There is a duty on both the school and transferee to inform and consult with employees affected by the transfer (see paragraph 9 below on consultation).

8.2. There are exceptions to the ban on dismissals where these are made for “economic, technical or organisational reasons” resulting in changes in the workforce. The case-law on the practical interpretation of “ETO” provisions is still evolving and certainly cannot be taken as providing an easy way of avoiding the principal TUPE obligations. Again, expert advice is likely to be required in these circumstances. (See paragraph 16 for more information). 8.3. In some examples of outsourcing, because of the uncertainty applying to

TUPE, external providers agree with the client organisation (the school) to apply the TUPE terms to transferred employees whether or not TUPE would have been judged to have applied had this been tested at law. Guaranteeing transferred continuity of employment and their existing contractual terms can contribute significantly to obtaining employee’s acceptance of what may otherwise be feared as a change for the worse.

9. Consultation

9.1. The Regulations place a duty on both the school (transferor) and the new employer (transferee) to inform and consult representatives of the employees who may be affected by the transfer or measures taken in connection with the transfer. The affected employees might

include:- Those individuals who are to be transferred;

 Their colleagues in the school who will not transfer but whose jobs might be affected by the transfer; or

May 2014 9.2. Consultation must take place long enough before the transfer to enable the

employer to consult with employee representatives and inform them:- That the transfer is going to take place, approximately when and why;  The legal, economic and social implications of the transfer for the affected

employees;

 Whether the employer envisages taking any “measures” (for example, reorganisation) in connection with the transfer which will affect the employees, and, if so, what action is envisaged;

 Where the previous employer is required to give the information he or she must disclose whether the prospective new employer envisages carrying out any action which will affect the employees and, if so, what. The new employer must give the previous employer the necessary information so that the school is able to meet this requirement.

9.3. If action is envisaged which will affect the employees the school must consult the representatives of the employees affected about that action. The consultation must be undertaken with a view to seeking agreement of the employee representatives to the intended measures. During these consultations the employer must consider and respond to any representations made by the employee representatives. Where representations are rejected it is necessary to state the reasons why.

9.4. Where employees who may be affected by the transfer are represented by trade unions or professional associations then there is a duty on the school to inform and consult the authorised officials of these unions. (A list of the recognised trade union and professional association representatives can be found on the Schools Portal .

9.5. Regardless of any legal requirements the importance of informing employees about any outsourcing proposals and providing the opportunity for full consultation cannot be over emphasised. In the absence of adequate information and explanation, rumour of job losses and concern about enforced changes in employment will generate fear and uncertainty among the workforce which may even result in threats of industrial action to prevent the outsourcing occurring, or the loss of valued employees who have contributed to the school's success.

9.6. All communication channels need to be considered, including newsletters, general staff meetings and team briefings by senior staff. It is particularly important that managers are kept fully in the picture so that accurate information can be given consistently across the school. In addition, and especially when only a few employees are involved, staff need to be seen individually so that personal concerns can be addressed.

maximum information to reduce, if not wholly eliminate, the fear of the unknown. Some organisations have also included employee representatives on the panel which has interviewed shortlisted tenderers or arranged for employees to indicate which of the tenderers they would most wish to transfer to. This is widely regarded as good practice and may help to overcome some of the staff concerns. It may even prove to be helpful in the event of any claim made as a result of the impact of the outsourcing upon employment.

9.8. For TUPE transfers there is a legal requirement on both the transferor (the school) and the transferee to inform the representatives of the employees of the reasons for the proposed transfer and the various employment arrangements. Information should be provided in writing and given in good time. Attached at Appendix 1 to this Guide is a letter which can be sent to the relevant trade unions and professional associations at the earliest opportunity to begin the consultation process. Also attached is a list of issues which are likely to emerge in the course of consultation and which senior managers and governors in the school will wish to address.

9.9. A similar requirement to consult trade union representatives in good time applies where redundancies are envisaged for ETO reasons. Failure to consult sufficiently early may result in the school being taken to tribunal and having to pay significant compensatory sums known as “protective awards”. 9.10. It is common for all the attention and consultation to be focussed on those

transferring out of the school. This overlooks the possibility that outsourcing can undermine the morale of employees who are not transferring. Some may feel that they were not perceived as good enough to go while, on a wider basis, many may worry about their job security and speculate as to whether they might be the next in line. It is important, therefore, that all employees, whether transferring out or not, understand what the organisation is doing even though the more intensive consultation occurs with those who are directly involved. There should be careful consideration of the impact on the workload of remaining staff particularly matters such as capacity where, for example, a team of employees is broken up as a result of the outsourcing. 10. The Client Role

May 2014 small core of expertise within the client organisation (the school) and an adequate status level to deal influentially with the provider’s management. 10.2. For many managers the transition from managing their own employees to

managing through a contract is difficult. Managers are used to deciding what to do and then instructing their staff accordingly. If they now have a client responsibility for the management of an outsource contract, a different range of knowledge and skills will be required. The managers, as well as the provider, are bound by the terms of the contract and changes to the requirements will have to be negotiated on a formal basis. Acquiring the necessary understanding of contractual principles, and the ability to develop a constructive working relationship with an external organisation, can be aided by obtaining training in client side management.

11. Career Implications

11.1. Some staff due to transfer to an external provider may have concerns about the effect on their careers. It is often the case, however, that career opportunities with an external provider are greater particularly where the outsourcing has been of a support activity rather than a primary function. Individual specialists within small firms can feel isolated and, once they are part of a larger organisation, there may be an enhanced career prospect. In effect, staff involved in such transfers are moving from the periphery of the old organisation to the core of the new employer where their skills are now central – not simply supportive – to the new business. This is one of the issues which should be included in the consultation period prior to the transfer as it is to the benefit of the school and the provider if the potential transferees see outsourcing as an opportunity to enhance their career development. It should be noted that in the current employment climate the former employees of the school will not necessarily be dedicated to, or even involved with, the future provision of the service to the school.

11.2. Information about the provider’s career patterns, including an explanation of the organisation’s training and development policies, needs to be given by the provider if it is to have credibility with the transferring employees. It is as necessary to avoid creating unrealistic expectations as to dispel concern about career damage.

12. Terms and Conditions – Contracts of Employment

12.1. When a transfer takes place the position of the school and the new employer in respect of the contracts of the transferred employees is as

is temporary will depend on a number of factors such as the length of time the employee has been there and whether a date has been set by the school for his/her return or reassignment to another part of the school.  The transferee employer takes over all rights and obligations arising from

the contracts of employment except for criminal liabilities and some benefits under an occupational pension scheme (see below). This means that the transferee employer will inherit any outstanding liabilities from the school. An employee may make a claim to a court or an employment tribunal against the transferee employer for, say, breach of contract, personal injury or sex discrimination even though the breach of contract, injury or discrimination occurred before the transfer took place. It is normal practice for transferee employers to seek some form of indemnity in the transfer agreement with regard to potential liabilities which arose prior to the transfer. In circumstances where the transfer is out of the school to an external provider of services it would be prudent to negotiate a time limit and a financial cap to any potential liability.

 The transferee employer takes over any collective agreements made by or on behalf of the school in respect of any transferring employees and enforce immediately before the transfer.

 Where the employer of the school based staff recognise trade unions or professional associations in respect of some or all of the transferred employees then the transferee employer will also be required to recognise that union or professional association to the same extent after the transfer takes place. However, this requirement only applies if the organised grouping of transferred employees maintains an identity distinct from the remainder of the transferees business. If the undertaking does not keep its separate identity, the previous trade union recognition lapses and it will then be up to the union and the new employer to renegotiate a recognition agreement.

12.2. As indicated above, it is a common practice for transferee employers to require the school to indemnify them against any losses from such pre-transfer breaches of contracts in employment law. In addition, the Regulations require the transferor (the school) to inform the transferee in advance of the transfer about such liabilities. (See paragraph 17 below). 12.3. When a relevant transfer takes place the position of employees is as

re-May 2014 engage the employee on whatever terms they agree, although the continuity of employment would be broken.

 An employee’s period of continuous employment is not broken by a transfer and, for the purposes of calculating entitlement to statutory employment rights, the date on which the period of continuous employment started would usually be the date on which the employee started work with the old employer (the school or potentially another school) if the employer was the same (for example, Central Bedfordshire Council). The continuous service date should be stated in the employee’s written statement of terms and conditions.

 As indicated in the above bullet point continuous service is protected at the point of transfer. In circumstances where a member of staff moves to a different academy or to a school maintained by a local authority it is likely that there will be a break in continuous service for certain employment rights. Attached at Appendix 3 is a summary of the legal position with regard to continuous service when staff move between academies and maintained schools. To be entitled to a redundancy payment an employee must have two years continuous service with an employer body covered by the Redundancy Payments Modification Order. Academies and all maintained schools (including foundation and voluntary aided schools) are covered by the RPMO. In normal circumstances a change of employer means that an employee must accumulate 24 months service before accruing an entitlement to make a claim at Employment Tribunal for unfair dismissal. It must be noted, however, that Section 218(7) of the Employment Rights Act 1996 provides that where an employee moves between any type of school maintained by the same local authority then the continuity of service for the purpose of unfair dismissal is maintained. This means that moves from academies to maintained schools (or vice versa) will start the 24 month qualifying period once again. With regard to matters such as sickness and maternity entitlement schools have the right to exercise discretion and employees considering a change of employer will wish to inquire as to the school policy.

 Transferred employees retain all the rights and obligations existing under their current contracts of employment and these are transferred to the new employer. This means that their previous terms and conditions of employment carry over to the transferee employer. The main exception to this rule concerns the treatment of occupational pensions. (See paragraph 14 below).

13. Changes to Terms and Conditions

is:- The transfer itself; or

 A reason connected with the transfer which is not ‘an economic, technical or organisational reason entailing changes to the workforce’.

13.2. The same restrictions apply to the school where the school contemplates change in terms and conditions of those employees who will transfer to the new employer in anticipation of the transfer occurring.

13.3. Where an employer changes terms and conditions simply because of the transfer and there are no extenuating circumstances linked to the reason for that decision then such a change is prompted by the transfer itself and would be rendered void by the Regulations. However, where the reason for the change is prompted by a knock on effect of the transfer (for example, the need to requalify staff to use different machinery) then the reason is connected to the transfer. If the reason for the change is connected to the transfer then it will need to be an economic, technical or organisational reason, otherwise the variation would be rendered void by the Regulations. 13.4. There is no statutory definition of ‘economic, technical or organisational’

reasons but it is likely to

include:- A reason relating to the profitability or market performance of the transferee’s business (ie an economic reason);

 A reason relating to the nature of the equipment or production processes which the transferee operates (ie a technical reason); or

 A reason relating to the management or organisational structure of the transferee’s business (ie an organisational reason).

13.5. The Regulations also provide some freedom for a transferee or transferor employer to agree with an employee a variation to an employment contract before or after a transfer. The employer and employee can agree to vary an employment contract where the sole or principal reason

is:- A reason unconnected to the transfer; or

 A reason connected with the transfer which is an economic, technical or organisational reason.

May 2014 13.7. Transferred employees are entitled to the terms of a collective agreement as

they stand at the point of transfer (the so called “static” approach). Changes to collective terms agreed after the transfer through a collective mechanism of which the new employer is not a part will not apply. This will include matters such as pay awards. For school based staff transferring to an academy, for example, this will mean the NJC Green Book and the School Teachers’ Pay and Conditions Document will apply as at the point of transfer. In these circumstances The School Teachers’ Pay and Conditions Document ceases to be a statutory entitlement for teachers but becomes a contractual obligation subject to consultation and dialogue between employee and employer.

14. Pensions

14.1. In October 2013 the Government published The Fair Deal policy with regard to public sector pension schemes and the implications for employees compulsorily transferred out of the public sector. The guidance on The Fair Deal makes a distinction between “best value authorities” (as defined by the Local Government Act 1999) and other parts of the public sector. In respect of schools it should be noted that the Fair Deal will apply to schools where the employer is not a best value authority. Accordingly, the Fair Deal will apply to academies, free schools, foundation and voluntary aided schools because staff in such schools are directly employed by the governing body (not the local authority). Staff in community and voluntary controlled schools remain covered by the Best Value Authorities Staff Transfers (Pensions) Direction 2007 rather than the Fair Deal. Under the Direction a contractor must provide the transferred employees (who are in or eligible to be in) a relevant scheme (Teachers’ Pensions or the LGPS) with continued access or access to a broadly comparable scheme and this protection carries on for those originally transferred staff at each subsequent TUPE transfer. Under the Fair Deal, however, staff compulsorily transferred from the public sector will be offered continued access to a public service pension scheme rather than a broadly comparable alternative scheme. It must be remembered that in the case of a TUPE transfer applying at the point of an academy conversion all staff will retain their entitlement to access the relevant pension scheme (see paragraph 14.5 below).

inevitable that there will be costs involved and the timescales for resolution of this issue can be lengthy.

14.3. The obligation on the new provider is to offer a pension scheme which is broadly comparable to the scheme currently available to the staff. It will be work in this area by the actuaries, comparing the two schemes and seeking amendments which is likely to occupy the time and cause the expense. Schools will need to budget carefully to ensure that this is taken into account in the overall benefits of seeking to outsource a particular function.

14.4. Dealing with the pensions issue will need expert advice and it will probably involve calculations of the cash value of existing pension entitlements for transfer to the new employer’s fund or options involving money purchase schemes or subsidised personal pensions. There is no simple or single answer except for recognising that transferred employees pensions options and entitlements need to be given early and serious attention.

14.5. With regard to academies, schools will wish to note that the Teachers’ Pension Scheme and the Local Government Pension Scheme will continue to be available to staff post transfer to the academy employer. Once the academy trust becomes an employer under the relevant regulations it will be required to make employer contributions to the schemes at the rates imposed under the regulations.

14.6. In the case of the LGPS any deficit on the fund at the point at which the academy trust accepts the transfer of the relevant workers must be taken into account by the actuary in fixing the contributions and in that way the academy trust succeeds to the liability which was previously the local authority’s. The position of DfE appears to be that the transferring local authority is not obliged to meet the deficit and that while the academy must recognise the deficit in its balance sheet, the deficit is spread over time and will, therefore, be affected by investment performance and actuarial factors in the future. The DfE grant received by academies, which is based on the local authority funding formula, should take account of the deficit existing in the local authority pension scheme. However, there may be variation between the local authority employer rate and the academy rate dependant upon staff profiles. Academy trusts do not receive additional funding to take account of this potential issue with regard to a deficit in the LGPS.

May 2014 15. Employment Charter

15.1. In dealing with matters relating to outsourcing one way to address the concerns of the staff group ahead of transfer is to agree with the new provider an ‘employment charter’ which can cover areas such as arrangements that would be put in place to deal with terms and conditions post transfer, facilities for trade union and professional association representatives, equal opportunities issues, severance and redundancy arrangements, communication, consultation and negotiation mechanisms with staff representatives and any other factors which the two sides view as important to the success of the transfer. This might include, for example, an agreement about how to treat pension issues. At Appendix 2 is a list of issues which are likely to be discussed during any transfer to a new employer.

16. Dismissals and Redundancies

16.1. The general law on unfair dismissal and redundancy applies in situations where a relevant transfer occurs or is in prospect. There is an obligation on employers to follow the appropriate procedures when handling dismissals but, in addition, the TUPE Regulations provide some additional protections which limit the ability of employers to dismiss employees when transfers arise.

16.2. Neither the school nor the transferee employer may dismiss fairly an employee because of the transfer itself or for a reason connected with the transfer unless that reason is an economic, technical or organisational reason entailing changes to the workforce. If there is no such reason the dismissal will be automatically unfair. If there is such a reason and it is the cause or main cause of the dismissal the dismissal will be fair as long as an employment tribunal decides

that:- The employer acted reasonably in the circumstances in treating that reason as sufficient to justify dismissal; and

 The employer met the other requirements of the general law on unfair dismissal.

16.3. If the dismissal occurred for reason of redundancy then the usual redundancy arrangements would apply and, where appropriate, the dismissed employee would be entitled to a redundancy payment. (See paragraphs 16.8 and 16.9 below).

16.4. The onus lies on the dismissing employer to show that the dismissal falls within the ETO exemption and, as stated above, neither the Regulations nor the Acquired Rights Directive define exactly what a ETO reason might be. The courts and tribunals have not generally sought to distinguish between each of the three ETO categories but have tended to treat them as a single concept.

16.6. As described in paragraph 12 above employees can object to a transfer and, by doing so, the employee terminates their contract. In many cases, those employees will not be able to claim unfair dismissal because they have, in effect, resigned and therefore have not been dismissed. However, those transferred employees who find that there has been or will be a ‘substantial change’ (for the worse) in their working conditions as a result of the transfer have the right to terminate their contract and claim unfair dismissal before an employment tribunal on the grounds that the actions or proposed actions of the employer had constituted or would constitute a defacto termination of their employment contract. This statutory right exists independently of an employee’s common law right to claim constructive dismissal for an employer’s repudiatory breach of contract.

16.7. A ‘substantial change in working conditions’ will depend upon the circumstances in each case. What might be a trivial change in one setting might constitute a substantial change in another. A major relocation of the work place which makes it difficult or much more expensive for an employee to transfer may well fall within this definition. This does not mean, however, that it is unlawful for transferee employers to make ‘substantial changes’ and nor does the law automatically assume that a dismissal would be unfair when the employee resigns because such a change has taken place. The Regulations merely classify that resignations in such circumstances are dismissals. This can assist the employee if he/she subsequently complains of unfair dismissal since there will be no requirement to prove that he/she was dismissed. However, to determine whether the dismissal was unfair the courts will still need to satisfy themselves that the employer had acted unreasonably and there is no presumption that it is unreasonable for employers to make changes.

16.8. Dismissals on the grounds of redundancy are permitted by TUPE, as they would normally be for an ETO reason although the transferee will need to make sure that the redundancy is fair within other employment legislation (that is the selection was fair and not based simply on the fact that the person is a transferred employee). Dismissed employees may also be entitled to a redundancy payment if they have been employed for two years or more. Employers must also ensure that the required period for consultation with employees representatives is allowed. (Insert link to the CBC redundancy procedure).

May 2014 However, such consultation will only count for the purpose of discharging the duties in the 1992 Act where both the transferor and transferee employers agree that it can (and the consultation must be meaningful in accordance with the Act.)

17. Information Exchange – Due Diligence 17.1. This element of the guidance deals

with:- The requirements of the Regulations for the school to provide information to the transferee employer about the transferred employees before the relevant transfer takes place; and

 The requirements in the regulations on both the transferee and transferor employers to consult representatives of the affected workforce before the relevant transfer takes place.

17.2. The school must provide the transferee employer with a specified list of information which will assist the new employer to understand the rights, duties and obligations in relation to those employees who will be transferred. This should help the transferee employer to prepare for the arrival of the transferred employees and the employees also gain because their new employer is made aware of the inherited obligations towards the staff group. The information in question

is:- The identity of the employees who will transfer  The age of those employees

 Information contained in the statement of employment particulars for those employees

 Information relating to any collective agreements which may apply to the employees

 Instances of any disciplinary action within the preceding two years

 Instances of any grievances raised by those employees within the proceeding two years

17.3. If any of the specified information changes between the time when it is initially provided to the transferee employer and the completion of the transfer then the school is required to give the transferee employer written notification of those changes. The information must be provided in writing or in other forms which are accessible. So it may be possible for the school to send the information as a computer data file as long as the transferee employer can access that information or provide access to the school’s data storage. It would be good practice for the school to consult the transferee employer to discuss the methods which will be used in sharing the information.

17.4. The specified information may be given in several instalments but all the information must be given. The information may also be provided via a third party (for example, Central Bedfordshire Council). The information must be given at least 28 days before the completion of the transfer.

17.5. It might be helpful to the transferee employer for the school to provide documentation such as staff handbooks or sample contracts or the texts of local agreements so that there is clarity around the context of the employment. It would make sense for the parties to discuss in advance how information should be provided.

18. TUPE Indemnities – Academies

18.1. The purpose of this section of the guide is to draw attention to those matters which are likely to arise in the context of moving to academy status and about which governing bodies will wish to obtain information and clarity before proceeding.

18.2. Schools wishing to move to academy status should note that where Central Bedfordshire Council is the current employer of the staff (in community and voluntary controlled schools) a Commercial Transfer Agreement (CTA) will be required setting out the main employment clauses and implications.

18.3. Prospective academies will wish to note in particular that the Council will ensure that it provides time limited financial indemnity in relation

to:- Its own acts and omissions; and

 liabilities that would transfer as a result of the operation of the TUPE Regulations.

18.4. The Council will not indemnify the academy trust for constructive dismissal claims based on proposed contractual changes by the trust or any other anticipated breaches. This might be significant where an academy conversion involves a sponsor and the DfE seeks agreement to an Academy Action Plan (AAP).

May 2014 example, in respect of catering of cleaning services) and therefore academy trusts will need to take this into account when considering insurance provision.

18.6. At the time of the transfer the Council will provide information setting out its understanding of the safeguarding checks carried out on each employee. The Council will not agree to indemnify the academy trust in relation to any dismissal or other associated costs should a subsequent DBS disclosure check reveal that an employee has a record which makes him or her unsuitable to work with children.

19. Remedies

19.1. This guidance has set out a number of rights and duties for employees, their representatives and a right for the transferee employer to receive information from the school. This section sets out how these rights can be enforced and the remedies available.

19.2. If an employee considers that their contractual rights have been infringed they may be able to seek redress through the civil courts or an employment tribunal. Employees can complain to an employment tribunal if they are an employee who has been dismissed or who has resigned in circumstances in which they consider they were entitled to resign because of the consequences or anticipated consequences of the transfer. An employee must complain within 3 months of the date when their employment ended.

19.4. Where a school fails to comply with the provision of information to a transferee employer then the transferee employer can present a complaint to employment tribunal. If the tribunal finds in favour of the transferee employer it will make a declaration to that affect. The tribunal may award compensation for any loss which the transferee employer has incurred because of the employee liability information not being provided. The level of compensation must be no less than £500 for each employee for whom the information was not provided or for whom the information was provided but was subsequently seen to be defective.

20. Conclusion

20.1. The transfer of staff from one employer to another, particularly in accordance with TUPE, is a complex and lengthy process. It needs to be started as early as possible and schools should access expert advice on each stage of the process. A successful outsourcing methodology is likely to consist of

:- Clear understanding of the scope of the agreement

 Firm binding contracts based on measurable service parameters  Skilled, experienced contract managers

 An honest approach to problem solving  Clear problem solving procedures  Mutually beneficial terms

The Schools’ HR provider should be contacted at the earliest opportunity to o provide advice, help and support with regard to the people elements of

outsourcing. Schools should clarify with their providers if advice relating to outsourcing is included as part of their service level agreement or if additional costs will be incurred. Schools will also need to access assistance with regard to procurement issues, legal advice, pensions and financial matters as well as HR support.

APPENDIX 1

DRAFT

Addressed to: The National Union of Teachers

The National Association of School Masters / The Union of Women Teachers

The Association of Teachers and Lecturers The National Association of Headteachers The Association of School and College Leaders VOICE

UNISON GMB Confidential

Dear

Name of School – Transfer of Undertakings (Protection of Employment) Regulations 2006

[ ] School is in the process of managing an outsourcing operation in respect of the following service(s)

:- [ ]

 [ ]

 [ ]

There is a potential for staff at the school to be transferred to the successful company and the governors therefore wish to consult with you regarding the implications for the staff. The consultation will take place via an appointed group of governors established by the governing body for the purpose of managing the tupe process.

Consultation will take place in accordance with the Transfer of Undertakings

(Protection of Employment) Regulations 2006. During the course of the consultation the Governors will inform

you:- That the transfer is going to take place, when and why;

 The legal, economic and social implications of the transfer for the affected employees;

 Whether the employer envisages taking any action (for example,

reorganisation) in connection with the transfer which will affect the employees and, if so, what action is envisaged

It is anticipated that the full contractual and statutory rights of the affected employees will transfer (and that there will be no redundancies arising as a result of the transfer). The Governors of [ ] School look forward to working with you on this project. The first meeting in the consultation process will be held at the School on [ date ] commencing at [ time ].

Yours sincerely

May 2014 APPENDIX 2

CONFIDENTIAL

TRANSFER OF EMPLOYMENT

STAFFING ISSUES LIKELY TO BE RAISED IN THE CONSULTATION PROCESS

Transfer / Induction:

 Experience of relevant service management among senior managers of the new organisation

 TUPE transfer of staff

 Pensions (admitted body status; comparable pension scheme)

 Consultation / negotiation arrangements with trade unions and professional associations

 Trade union / professional association recognition  Advice for staff (ie. personal / welfare support)

 Communication with staff (ie information material, newsletters, notice boards etc)  Early understanding of the role for each member of staff

 Options for future terms and conditions (where appropriate)

 Induction arrangements (the culture of the new employer, business strategy, health and safety, equal opportunities)

 Work base, location

Competencies of New Employer:  IiP or equivalent

 Skills audit / training needs analysis of staff  Personal development programmes

 Customer care philosophy (and training for staff group on this)  Probation / capability procedures

Behaviour:

 Disciplinary procedures

 Performance management (appraisal)

 Performance measurement of the organisation  Quality assurance mechanisms

 Counselling of staff

Development:

 Continuous Professional Development scheme  Training programme / investment in training  Suggestion scheme

 Customer surveys

 Management of change and consultation mechanisms

Stability:

 Continuity of employment for staff

 Clearly defined line management responsibility  Recruitment and retention measures

 Communication to staff (for example team or staff group meetings)

Change (Reductions in Staffing):  Communication commitment  Formal consultation mechanisms

 Framework for redundancy management

- measures to avoid redundancy - recruitment freeze

- temporary / agency staff - reduced hours

- flexible working - restructure

 Ring fence arrangements

 Voluntary redundancy / early retirement

 Clear / objective selection policy for compulsory redundancy

- redeployment - retraining - relocation

- remuneration protection - severance policies  Counselling for staff

Equality:

 Compliance with the Equality Act 2010 (for all employers) and Equality Duty (if transferee is a public body)

 Equal Opportunities policy (for staffing and service delivery) 

May 2014  Who is responsible for Equal Opportunities (ie. which senior manager?)

 Training

 Complaints procedure / grievance policy  Equality Impact Assessment

 Action plan to ensure policy is implemented  Monitoring (eg. recruitment)

 Communication

Health and Safety:

 Health and Safety policy  Consultation on the policy

 Accountabilities of staff (especially senior managers)  Training

 Arrangements for risk assessment

 Adequate resources to address concerns  Monitoring

APPENDIX 3

The Legal Position on Continuous Service

Movement and Continuity of Service

Unfair Dismissal Redundancy and Redundancy Pay

Occupational Sick Pay Occupational Maternity Pay

TUPE to academy then move to Community/Voluntary Controlled School within the same local authority

Change of employer – 12 months continuous service for entitlement to claim unfair dismissal (2 years continuous employment from April 2012)

Service continuous for the purpose of calculating redundancy pay.

Change of employer – 12 months continuous service for entitlement to claim unfair dismissal by reason of redundancy. (2 years continuous service from April 2012).

Will not qualify for the full entitlement unless:-- The employee has four

years aggregated service in Community or VC School; or - the Local Authority

recognises service in academies for this purpose (see Circular)

Entitlement needs to be

acquired anew unless the Local Authority chooses to recognise service in academies (see Circular)

TUPE to academy and then moves to a Voluntary Aided or Foundation School within the same local authority

As above As above The VA or Foundation school is the employer, so has the discretion to decide whether to recognise service with the academy or with previous schools (see Circular)

The VA or Foundation school is the employer so has the discretion to decide whether to recognise service with the academy or with previous schools (see Circular) Community to VA/Foundation

School or VA/Foundation to Community school in the same authority (or a different authority)

If the move is within the same local authority this would be treated as the same employer (Section 218(7) of the

Employment Rights Act 1996). If the move is to a school in a different local authority then there is a change of employer and the employee needs 12 months continuous service to claim unfair dismissal. (2 years continuous employment from April 2012).

As above In all cases the move is from one employer to another and the new employer has the discretion outlined above. Only movement from a Community/VC school to a Community/VC school within the same local authority or different local authorities automatically builds up

entitlement to full sick leave/pay entitlement under the Burgundy Book. (See Circular)

May 2014

TUPE Amendment Regulations 2014 APPENDIX 4

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE Regulations 2006) were amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 (the amending Regulations 2014) with effect from 31 January 2014 with a further change being effective from 1stMay 2014..

The Government introduced the changes to the TUPE regime, effected by the amending Regulations 2014, to "remove unnecessary gold-plating ... and remove unfair legal risks to companies carrying out transfers"

A summary of the changes and how these relate to schools can be found below

Summary of Changes with effect from 31stJanuary 2014 as a result of the Collective Redundancies and Transfer of Undertakings (Protection of Employment)

(Amendment) Regulations 2014)

What Has Changed Effective Date

Schools Related Example Further Advice for Schools

Effect of the Transfer on Contracts of Employment / Dismissal of Employees because of the transfer

A variation to a contract of employment will be void, or a dismissal unfair, if the sole or principal reason for the variation or dismissal is the transfer (in relation to transfers that take place on or after 31 January 2014) The wording of the regulation 4, which deals with the effect of a transfer on contracts of employment, and reg.7, which deals with the dismissal of employees because of a transfer, more closely reflects the language of the

Acquired Rights Directive (2001/23/EC).

31/1/14 A school ends their facilities management contract and is to undertake the task in house. The employees of the previous provider transfer to the employment of the school. The school dismisses the

grounds maintenance officer as the site agent is to undertake the duties of the role.

The dismissal may be deemed to be unfair as the principal reason for the dismissal is the transfer.

Advice should be sought from HR provider and legal insurers prior to varying contracts of employment or the dismissal of employees following a transfer.

Community/VC Schools and Nursery’s should also contact the HR Statutory Schools Team at the earliest opportunity should a dismissal be identified.

Change in the location of the workforce following a transfer

A change in the location of the workforce following a transfer can be within the scope of "an economic, technical or organisational (ETO) reason entailing changes in the workforce".

31/1/14 A school in a hard federation ends their catering contract with an external supplier, and brings the provision in-house. The Governing Body of the Federation determine that school meals for all pupils in the Federation are to prepared in a kitchen 10 miles from the original location.

This may prevent a genuine place of work redundancy from being automatically unfair (under reg.7) and allowing a change of location by reason of a transfer to constitute a valid contractual variation (under reg.4)

This change may meet an ETO reason entailing changes to the workforce for a place of work redundancy or contractual variation.

All maintained Schools should also contact the HR Statutory Schools Team at the earliest opportunity should a place of work redundancy or contractual variation be identified.

Provision of employee liability information (due diligence)

The transferor is required to provide employee liability information to the transferee 28 days before the transfer, rather than the previous 14 days before the transfer.

Transfers on or after 1/5/14

A community school converts to an academy trust on the 1stSeptember 2014. Employee liability information is required to be provided to the Academy Trust by 4thAugust 2014.

Additional time planning will be required to meet the statutory timescale. Failure to provide employee liability information may lead to a complaint to tribunal and a compensation award subject to a

minimum of £500 per employee in respect of whom the transferor has failed to provide the information

For transfers out of the school or an Academy conversion early liaison with the Schools HR and Payroll provider is advised in order to ensure adequate time is allocated to produce and provide employer liability information.

Community/VC Schools and Nursery’s should also contact the HR Statutory Schools Team at the earliest opportunity to ensure CBC is involved in the

provision of employee liability to the transferee.

Rights & obligations relating to Collective Agreements made after transfer

Rights and obligations relating to a provision of a

collective agreement do not transfer, where the provision is agreed after the transfer, and the transferee does not participate in the collective bargaining process.

31/1/14 A school coverts to an Academy on the 1st July 2014 and a teachers’ pay award is collectively agreed nationally to be effective from 1stSeptember 2014 the pay award is not, by law automatically

applicable to the transferred employees on teachers’ conditions of service In these circumstances The School Teachers’ Pay and Conditions Document ceases to be a statutory entitlement for teachers but becomes a contractual obligation subject to consultation and dialogue between employee and

May 2014

employer.

Renegotiation of terms derived from collective agreements

Renegotiation of terms derived from collective agreements, where the variation is because of the transfer, is allowed one year after the transfer, provided that the change does not result in the rights and

obligations of the employee being no less favourable overall to the employee as compared to those immediately before the change.

31/1/14 A School ends their catering contract with an external provider and brings the provision in-house. The employees of the external provider transfer to the

establishment of the school on their existing terms and conditions of service. The school wishes to renegotiate the employees terms in order for them to be engaged on NJC terms and conditions of service in line with other support staff. This is possible under the revised

regulations provided that the change does not result in the rights and obligations of the employee being no less favourable overall to the employee as compared to those immediately before the change.

If the school is a transferee, advice should be sought from their HR provider and Legal Insurers prior to any

renegotiation of terms derived from collective agreements, where the variation is because of the transfer

Definition of Terms