TUPE abuse is setting a dangerous precedent

I’m Peter Webster, chief executive of Corps Security, and this is where I examine the issues affecting the security industry. My thoughts and opinions are intended to generate debate, and whether you agree or disagree with them, you’re welcome to post your comments below.

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The Transfer of Undertakings (Protection of Employment) Regulations – better known to us all as TUPE – are designed to protect employment rights when employees transfer from one business to another. However, I’ve noticed a growing trend towards avoiding TUPE that not only threatens the entitlements of employees, but also the financial well-being of security service providers.

TUPE clearly states that employees of the previous service provider or owner automatically transfer to the new employer, and must be given the same terms and conditions. It applies to all companies regardless of size and provides clarity on outsourcing, insourcing and transfer of service contracts. I should point out that when the UK leaves the European Union (EU) TUPE will still exist in UK law, although the UK government will have the right to amend it in whichever ways it sees fit.

In my opinion the industry is a much better place for TUPE, as companies are not competing to exploit the workforce and try to win contracts by undercutting wages and eradicating existing terms and conditions. It provides a basic legal framework to adhere to and failure to comply can result in serious repercussions for any company guilty of flouting the law. Yet there has emerged a worrying threat to the protection of workers and the operational health of security service providers. This threat takes a number of different forms but all share the same intention of undermining the ethos of TUPE.

One particular case was that of McCarrick v Hunter in which the Court of Appeal held that TUPE did not apply in cases where a new client took over the facilities services, even though the service remains unchanged. Since then other dubious activities have begun to chip away at how TUPE is applied and in recent months there has been a sharp increase in the use of clauses in commercial contracts that try to avoid TUPE altogether.

One clause Corps Security came across stated, ‘The supplier warrants that it will undertake the services in such a way that none of the staff are specifically assigned to any or all of the services and that there is no organised grouping of employees dedicated to carrying out all or any of the services’. One way to comply with this would be to rotate personnel and make sure that no individual works on the same site for an extended period. This clearly is a case of trying to get around the ‘identifiable economic entity’ part of TUPE.

Other contracts state that if TUPE applies then the onus is on the security services provider to indemnify either the client or the company that takes over the contract, if personnel have to be dismissed. The implications of this move are serious and far-reaching for all in the manned guarding sector. If TUPE doesn’t apply then affected employees risk losing their employment and all accrued service rights. As for employers, they have the burden of being encumbered with a substantial unfair dismissal liability for which it is unlikely that they will have made financial provision. If the matter goes to court, it is unlikely that a judge would consider their lack of scrutiny as being a good enough reason for the contract to be overturned.

This narrow interpretation of TUPE is creating an uneven playing field and acting as encouragement to organisations to try and avoid its implementation. Although companies that are savvy enough to identify this kind of surreptitious behaviour will either decline the contract or amend it, those that aren’t could be at serious risk.

Even though instances of TUPE abuse are relatively rare, this is arguably more to do with the fact that we are operating in a low unemployment economy. Generally speaking, at the moment companies are happy for TUPE to apply, but the examples above highlight that instances of TUPE avoidance could gain further momentum if the nation’s employment situation changes.

Ultimately, there is no genuine advantage for any security services provider in accepting the types of terms that these onerous clauses stipulate, as they simply create uncertainty and put the contractor in a highly precarious position. Although there will always be a minority of companies prepared to take a risk if they perceive there to be a competitive advantage in doing so, it is up to the majority to make a stand and reject contracts that try to negate the use of TUPE. Equally, the government should recognise the value of TUPE, be rigorous in the clarification of its use and take steps to remove any ambiguities and loopholes that are currently being exploited.

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