Organised groupings, assignment and TUPE issues: a case study

This case study illustrates some of the more complex issues that arise under TUPE. Many TUPE transfers are straightforward – but when a problem arises our specialist team of employment lawyers is there to help every step of the way.

In this particular situation, we advised a facilities management business who had won a major contract for the provision of security services to a national, multi-sited business. The out-going contractor was understandably sore about losing the contract and seemed determined to make life as difficult as possible for our client.

The challenge

It was accepted by both sides that TUPE applied to the change in contract. The problem was that the out-going contractor immediately sent over a list of over 100 employees they said were assigned to the organised group – in other words, they were dedicated to the contract and therefore should all transfer over under TUPE.

Background

Our client was, to put it mildly, flabbergasted. On their due diligence (and the tender document they had produced to win the work), their best estimate was that around 40 people were needed to service this particular contract. As this was just one of many security contracts they already had, they also were proposing to operate it in a radically different way making a leaner more cost-effective service. If they had to take on 100 employees and make most of them redundant this would outweigh any cost savings they were hoping to pass onto the client.

What needed to happen?

We were instructed before the transfer and asked if we could come up with a solution so that our clients would not have to accept the transfer of the majority of these employees from the outgoing contractor.

What did Menzies Law do?

Drawing on our wide experience of advising businesses on TUPE transfers, our specialist employment lawyers advised that the first point is to look at whether or not there was in fact an organised grouping of employees – this point is often overlooked in a potential TUPE transfer and ‘taken as read’. We were able, following disclosure, to advise our clients that only some parts of the contract were actually arranged into an organised grouping. This brought the number of employees who could be part of the TUPE transfer to around 40. We then looked at assignment. Again, following disclosure, we were able to advise our client that a significant number of the employees were not assigned to the grouping and therefore should not be transferring.

Outcomes for our client

Our client was able to go back to the out-going contractor with legal arguments, backed up with case law, as to why it only accepted that 25 employees were in fact assigned to the organised grouping and should transfer under TUPE. The out-going contractor backed down and we discovered later redeployed around 50 employees with the remainder taking a generous contractual redundancy payment. Our client avoid costly and time-consuming Employment Tribunal proceedings and were able to, from day one of the transfer, concentrate on providing an excellent security service to their new client.

 

For more information on how Menzies Law can help your business, please contact

Luke Menzies, Director

luke@menzieslaw.co.uk

0117 325 0921