The Transfer of Undertakings (Protection of Employment) Regulations 2006

The case of Royden v Barnetts ­Solicitors decided in the Liverpool Employment Tribunal last week is the first involving a law firm and the Transfer of Undertakings (Protection of Employment) Regulations of 2006. For a detailed analysis it's worth reading the following article in The Lawyer: http://tinyurl.com/chm24l.

In summary however, what it means is that where professional service providers such as lawyers and accountants win a commercial contract with a corporate client, those winning the contract will need to look very closely at the existing provider of those professional services and the staff employed by that provider, because in accordance with the TUPE 2006 regulations and as ruled in this case, they will be inheriting the former provider's employees. This could be tricky particularly if the client has decided to change their professional service provider because of the former provider's employees! The cost of dealing with those employees ie re-deploying them or paying the unfair dismissal costs will more than likely land with the new service provider.

The good news is that only those former employees who spent more than 50% of their time on the client's work will qualify for the TUPE protection though if someone spends slightly less but always treats that work as a priority then they could also be caught under TUPE.

In this case, the employees claimed unfair dismissal because of the location of the new service provider being in Southport when they had previously worked in their own firm's Birkenhead office. The judge ruled in this case that there had been no appropriate consultation and that the former employees had been "affected by a service provision change" under Regulation 4(9) of the 2006 TUPE regulations and that there had been a "substantial change in working conditions to their material detriment" which meant they could claim unfair dismissal.

Regulation 4(9) of the TUPE 2006 regulations states: Subject to regulation 9 (which relates to insolvency) where a relevant transfer involves or would involve a substantial change in working conditions to the material detriment of a person whose contract of employment is or would be transferred under paragraph (1), such an employee may treat the contract of employment as having been terminated, and the employee shall be treated for any purpose as having been dismissed by the employer.

So working conditions are much softer factors such as job status, uniform, location, job description and aren't necessarily contractual.

The commercial reality now is that professional service providers such as law firms and accountants will now have to make sure they have carried out all necessary enquiries and agreed in writing/contractually with the new client how the issue of any former employees who might come under TUPE is to be handled so that they are fully aware of all upfront costs of taking on the new client.

Disclaimer: the contents of this blog are not intended form the basis of legal advice. Independent legal advice should be taken from your own solicitor for all cases.