There is a lot of confusing information out there for Carillion employees. Since the company went into liquidation earlier this month their 20,000 employees in the UK have faced an uncertain future. At the moment the advice to employees working on public sector contracts is to keep going to work unless told otherwise. They will continue to be paid as usual and their terms of employment will be the same. But no-one knows how long this will last and there has been talk of redundancy and TUPE.
Earlier this week my colleague Matt Huggett looked at the redundancy issues – take a look at his article here. Today I am looking at TUPE, or to give it its proper name, the Transfer of Undertakings (Protection of Employment) Regulations. TUPE is basically there to protect employees when a business changes hands or when there is a service provision change (ie outsourcing).
How does TUPE work?
It is a complicated area but basically when a contract or business changes hands the existing employees move over (transfer) to the new owner who takes on all their rights and liabilities. This means the employees continue to be paid the same as before, they are still covered by the same employment contract and there is no break in their continuous employment. This is important as employees generally can’t bring an unfair dismissal claim or receive a redundancy payment unless they have had over two years of continuous employment.
Information and consultation.
Employees have to be consulted about proposed transfers and informed about any measures that may affect them, i.e. the new employer may operate the payroll at the end of the month instead of the middle. If there is not a recognised trade union then the employees can elect representatives to attend consultation meetings with the employer on their behalf.
What if the employer is in liquidation?
Michael Mulholland of the GMB union wants Carillion employees to be transferred under TUPE so their future can be secured. However, it isn’t as simple as all that because
TUPE doesn’t apply when a company goes into liquidation. Instead, all employees are automatically dismissed from the date of the winding-up order and they are not entitled to bring unfair dismissal claims. It is thought this is why the company went into liquidation rather than administration.
No hope then?
It’s not all doom and gloom. Some businesses are seeing the merit in taking on Carillion employees in order to keep services going. For instance, Nationwide Building Society had a seven year contract with Carillion to provide facilities management services at 700 of its branches. It paid Carillion under the contract and Carillion’s employees did the work. Nationwide have now agreed to employ those employees direct. In practice, instead of outsourcing the facilities work to Carillion they are taking it back in house. This is a service provision change and so all 250 employees who worked on the contract have now transferred from Carillion and become employees of Nationwide. Their future employment is secured.