Before the summer, Velocitii’s People Director Clare Blain shared a series of #TUPETopTips blog posts that have been providing a great basis for an online TUPE community. One topic we haven’t explicitly covered yet is the vital importance of commercial considerations.
Like many of Velocitii’s expert partners I have a varied career background, but for several years now I have been a commercial professional for the public sector. Experience has shown me that commercial considerations are at the heart of managing a successful TUPE and the broader business/service change. Keeping on top of the commercials during the TUPE process can be the key to maintaining a good relationship between the organisations involved.
Considering commercial during a TUPE
A commercial professional should always be part of your TUPE project team. During a recent TUPE project I worked on, the organisation’s Commercial Director chaired our project board, which really highlights the importance of this role in the process.
The commercial profession covers all sorts of responsibilities. If you’re not familiar with the government commercial function, the image below sums it up really well.
Whatever your role in the TUPE process - whether it’s the Director in charge of the business/service provision change, the HR Business Partner, or a subject matter expert - considering the commercial aspect is essential.
In this blog post I’m going to share some essential commercial points that will help lead to the success of not just your TUPE transfer, but also the wider contract and commercial relationships.
Commercial Top Tip #1: TUPE is not a bargaining chip
We sometimes see organisations attempting to off-load staff as part of a transfer, even though their roles are not actually moving. They may commonly do this if they’d otherwise be liable for costly and time-consuming redundancies. They may even try to force an off-loading of staff by stalling or delaying critical parts of the service transfer, thus putting the continuity of service at risk.
I have personally come across suppliers ‘downing tools’ (on a service transfer that they were contractually obliged to perform) until the other party guaranteed that people would transfer - even though it had not yet been established whether or not the service they carried out was moving.
Contract law makes it clear that organisations must continue to provide services right through to the expiry date; and TUPE legislation makes it clear that people transfer if the work or service they perform transfers. Therefore your contract, along with expert commercial (and legal) support, should protect you against organisations attempting to use TUPE as a bargaining chip.
Our advice is this: when establishing a contract for services with a supplier - such as if you are outsourcing a function - make sure to consult a commercial expert about including a clause covering TUPE. This should clearly state that the transfer of staff should only take place in circumstances where the majority of their work is moving either back in-house or to another supplier.
Commercial Top Tip #2: Make timely and accurate provision of employee data a contractual obligation
The organisation the staff are transferring from should be given clear timelines and responsibilities for providing a list of employees, and the employee data needed, in the staff transfer schedule of the contract.
Include a note stating that the transferring organisation should not make changes to the employee’s terms & conditions, role, working time or anything else that could take advantage of the transfer. You can see in this recent case that contractual changes in the run up to a TUPE transfer were deemed ‘artificial’ and even ‘abusive’ at the Employment Tribunal.
In the event of any delays that may impact upon the ability to fully consult and transfer staff that are in scope of the TUPE, there needs to be clear obligations on the transferring organisation.
Commercial Top Tip #3: Include a termination assistance period in your exit management schedule
I have been involved in more than one TUPE in which the organisation would have had an outage of service provision had we not borne this point in mind.
You don’t need me to tell you that preventing a ‘lights out’ situation is paramount.
There needs to be an option in the exit management schedule of the contract to allow for at least a six month termination assistance period. This will ensure the smooth transition of the people, services or works, and help in establishing responsibilities for the organisations involved.
You need to notify the organisation that you intend to utilise this period when you inform them of your intent to end the contract. This is the case even in the event of a contract expiry.
A notice is usually issued in the form of a ‘Termination Assistance Notice’, as the contract is ending. Part of this notice will include the service lines or works that you may need to extend beyond the contract end date. This is critical as it will give you the timetable needed for the smooth transition of staff and services.
The contract exit schedule should also state that the supplier will be obliged to produce a plan of how and when each service line will transfer within this time frame, and that failure to do so will leave them liable for damages.
Being commercially astute before and during your TUPE isn’t just good practice; it’s essential. Considering the commercial aspects can save your organisation time and money throughout the process.
The bottom line is this: ensure you have a commercial expert on your team or seek advice from one early on in the process.
I’d love to hear your feedback or examples of vital commercial considerations you’ve come across in your own TUPE transfers - reach out to me at firstname.lastname@example.org.