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20 Feb 2012
Matthew Wort, senior associate, Anthony Collins Solicitors

How untangling TUPE could improve social care

Given the government focus on diversifying public service provision, from social enterprises to “spin-off” mutuals led by ex-council or health staff, the impact of transferring staff between organisations is more crucial than ever.

Legislation called the Transfer of Undertakings (Protection of Employment) regulations (TUPE) specifies that public sector staff contracts do not end because their employer changes. The regulations effectively mean the new employer takes on responsibility for and honours the employment rights employees had at their original organisation.

But while TUPE regulations, updated in 2006, now define more clearly when TUPE applies on a service provision change, there are still significant difficulties for health and social care providers.

A recent government call for evidence on the effectiveness of TUPE closed on 31 January. The VODG submitted a response based on responses from its members with the assistance of Anthony Collins Solicitors, the practice where I’m a senior associate.

One of the main problems VODG members identified was the lack of clarity. The notoriously complex framework and specific requirements run the risk of putting off many providers bidding to take over a service and therefore staff from another organisation. This in turn adversely affects both user-choice and threatens growth in the social care market.

For example, an organisation with the skills and experience to deliver a service better than the original provider from which it would inherit staff, decides against tendering because of uncertainty over risk. By this time, money and time will have been spent on meetings, with commissioners for example, about how to deliver.

In addition, because case law has provided mixed outcomes on when TUPE applies - some aspects of the regulations have room for misinterpretation –my experience is that more legal advice is being sought on the complex issues surrounding transfers and whether the regulations apply.

The lack of understanding about the implications of a transfer of staff is clear from the questions that are asked during the tender process. And even where the organisations have a greater awareness of potential liabilities, it is not always possible to reduce risks, which need to be budgeted for anyway.

A further issue is that employee liability information is provided at a late stage - not when a service is put out to tender. Information on employee liabilities only needs to be provided 14 days before transfer and only limited detail is provided - simply not long enough or detailed enough to allow the transferee to identify its impact and formulate measures it needs to consult on. Currently, the law does not oblige the existing employer (i.e. the transferring organisation) to provide the information sooner; this makes it impossible in some situations to tender a price to reflect existing arrangements.

So what are the solutions? One idea is to have an obligation on the commissioner to identify whether the work they are tendering out needs to be done so on a TUPE basis prior to that tender being put out and providing full details of the employment liabilities at that stage. This would help the organisation taking on staff or service delivery to better assess the risks involved at an early stage.

Broadly speaking, the regulations could also give greater flexibility to allow changes to terms and conditions after transfer and a limit on liability for actions of the outgoing provider.

Of course there are challenge for the government in making such changes, not least the concern that any tweaks might flout the requirements of the EU directive  - but there is some room for manoeuvre, for example, on the post transfer terms and conditions changes.

The transfer framework must be unpicked to allow more flexibility to help service providers maintain a quality service without ending up with a two or more tier workforce. If the problems were solved, providers would be putting in bids for tenders with confidence that they know they can deliver a sustainable service.

And let’s not forget that the benefits will extend beyond employers and employees; a more stable and more committed workforce means the care delivered will be of a higher quality, something that can only benefit service users.

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