6. THE ORDER AND TUPE
Most of the participating authorities have by now had some experience of the operation of TUPE in a situation where a contract is offered for a service that is currently delivered by an in-house workforce. Many parties on both sides of the contract procurement process are concerned to know with certainty whether or not TUPE applies to a prospective contract[3].
6.1 Transfers from the Authority
The research revealed a clear indication that full workforce information is essential for the purposes of a TUPE transfer. If the organisation that wins a contract is to take over the workforce that at present delivers the service being tendered, bidders must have enough information about the present workforce to formulate realistic bids. The research suggested that the bidders require the following workforce information:
numbers, types and grades of workers currently employed to deliver the services and their general organisation;
the cost of employing the workforce, and its detailed components such as pay rates, allowances and pensions (these details must be applied by individual and not generalised across the workforce);
indicators of collective and individual problems, such as skill shortages, sickness/absenteeism, outstanding disciplinary cases and warnings.
In order to enable suppliers to bid for a contract where TUPE regulations apply, authorities need to provide enough information to enable them to assess the cost of running the present workforce. During discussions, it was recognised that authorities operate widely differing terms and conditions; it was commonly agreed that these are often complex and cause difficulties for bidders who need a great deal of information in order to prepare an accurate tender.
“Full details of employment are demanding to get – so much detail is required; the single-status arrangements may help us a bit (as more standardisation is introduced); we have the green book, Union agreements, individual agreements, etc” (authority)
Several supplier participants expressed concern about not receiving adequate workforce information. They state that common omissions are the names of managers from the transfer list; records of disciplinary proceedings, disputes and industrial tribunals; sickness and absence levels.
“A lot of “rich” data on employees is buried in files – who has the resources to search through these and extract relevant information?” (authority)
Unions are regarded by several supplier participants as very helpful intermediaries in TUPE transfers; it was suggested that bidders often rely on Unions to help with the information exchange and employee communication processes.
It is generally agreed by participants that workforce information is a key issue in facilitating TUPE transfers – and that it can vary from excellent to wholly inadequate. The course of some discussions indicated that a few authorities appear uncertain about what information may be legitimately issued to bidders whether in a summary or anonymous format, prior to contract award. At least three participants, who have a good deal of experience in tendering, state that they rely heavily on indemnities relating to the transferring workforce, to help manage the risk arising from the uncertain information base.
“We usually try to interview all the staff – if we’ve got the time – this is the only way we can get enough TUPE information – and sometimes we can’t do this before putting in our tender – so pricing the bid gets really difficult. We try to put in various warranties into the contract relating to the workforce information but some Councils don’t agree to this. We end up taking big risks and there’s lots of difficult negotiation once we get preferred bidder status” (supplier)
During one group discussion a supplier participant suggested a national proforma on which the incumbent provider should be required to provide key information about the relevant workforce.
6.2 Transfers between suppliers
Secondary transfers may involve some additional complications - the organisation in possession of the up-to-date workforce information is a supplier, and the authority might not know what changes the supplier has made to the terms on which the staff originally transferred may now be employed.
“Information obtained is very variable; sickness levels are often an issue (and how they are made up); some contractors are secretive about details; authorities also vary enormously - not a case of being secretive – simply the scope/accuracy of records” (authority)
Both authority and suppliers state that when incumbent suppliers resist and delay providing any workforce information (on the grounds that they regard this information as commercially valuable) this can cause bidders serious difficulties.
“Current contractors never want to give full TUPE information – they rarely refuse but they keep delaying and delaying – I think they regard it as commercially valuable” (authority)
The discussions also revealed that supplier-to-supplier transfers often require considerable indemnities to cover missing or incorrect workforce information; for example, some incumbent suppliers are said to have deliberately overstated the size of the workforce.
“Contractor to contractor transfers require huge indemnities to cover missing information; the contractor must start detailed staff-related negotiations on the day of winning the contract” (supplier)
Although a supplier cannot legally reduce terms to win a contract, three supplier participants knew of cases where an incumbent supplier had increased terms at the last moment. However, some authorities reported experiencing no difficulties during the TUPE transfers they had been involved with.
“I’ve been involved in two secondary transfers and they both went perfectly smoothly – the authority had little to do” (authority)
6.3 Transfers back to the Authority
There seems to be limited experience of transfers back to an authority. It appears that the problem of getting good workforce information from the supplier might apply in such circumstances as well. Indeed, it was suggested that, even if the authority knows exactly what questions to ask and provides a pro-forma, this might not result in an adequate response.
“We devised a very detailed pro-forma to get workforce information – but it was often not completed fully or incorrectly – it was very disappointing” (authority)
6.4 Pensions
One of the most sensitive areas of staffing information is pensions. It was established as long ago as March 1995 in a letter to local authority Chief Executives from the then DoE that all contracting authorities should consider the potential risk that claims for constructive unfair dismissal may arise from failure to provide satisfactory pension arrangements for transferred employees. Such arrangements should be "broadly comparable" with the local government scheme.
Some authorities and suppliers agree that the assessment of private sector schemes can be difficult. They cite the cost of actuaries and the difficulty of comparing schemes. For these reasons, some authorities prefer to preserve the local government scheme.
“The concept of comparability is tricky; actuarial advice is expensive and is of no help in resolving individuals’ concerns” (authority)
6.5 Staff Consultation and Information provision
Staff consultation is included here because it is a requirement of TUPE. It is affected by the Order because of the opportunity to broaden the agenda during a procurement competition to include matters of direct interest to employees.
“This is of primary importance and staff should have some influence over choice. Information sharing is very important. Local government normally seen as a job for life by workforce.” (authority)
Authority participants made clear that staff being transferred often get very concerned about a transfer away from the public sector into the private sector. Their concerns include uncertainty about their long-term employment, lack of knowledge about private sector practices, loss of the public service ethos (serving their community) and the culture change that would be involved. Several authority participants emphasise that staff need to be given good information about the successful bidder and ideally they should receive some advice about their own individual position.
“Staff need to find out as much as possible about the company they are going into – the period before a transfer really causes a lot of stress” (authority)
Most participants agree that it is also important to provide an adequate lead-in period during which staff anxieties can be addressed; they suggest that potentially difficult transfers are most successful where enough time is allowed for information flow and formal/informal consultation. From the group discussions it is clear that many approaches have been adopted for keeping staff fully in touch with the development of a procurement project. For example, at least two authority participants knew of authorities that had invited employees and recognised trade unions or staff representatives to meet the shortlisted bidders. Supplier participants from large contractor organisations claim to have very extensive and effective consultation, but often through informal communication channels.
“Consultation is vital, and should be well in advance of any bid process – not just at the time; this is vital for all parties involved; Unions help a lot with this; staff can be traumatised if there is no gradual lead in” (authority)
“Practices vary a lot; involvement of Unions is often very important – and Unions can give advice to the workforce; contractors can do presentations to the workforce and workforce representatives can visit reference sites; however, Councils aren’t often swayed by workforce views” (supplier)
Several participants (both supplier and authority) suggest that it is good practice for suppliers to prepare question and answer sheets in advance, to cover the common foreseeable concerns. For two authority participants these meetings had been successful in exchanging information, allowing people to meet existing employees of bidder companies, and generally providing reassurance.
Two authority participants gave examples of where employees have been allowed to vote on their preferences, even to the extent of choosing between two suppliers as potential employers. However, a majority of authority participants that commented on this issue that to be poor practice. One suggestion is that it should be made clear to employees that their views are only one of the considerations in choosing a supplier.
[3] The Statement of Practice on Staff Transfers in the Public Sector, issued by the Cabinet Office in January 2000, recommended "that at the earliest appropriate stage in the contracting exercise the contracting authority states that staff should transfer and this should normally have the effect of causing TUPE to apply." Nevertheless, a minority of participants in the seminars on both sides indicated that this was still a problem area.
Published 6 August 2002
Return to Local and Regional Government Research Unit Index
Return to Local Government and the Regions Index
Return to Local Government Finance Index
Return to Home Page
Web site terms