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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 50191
Experience:  Qualified Solicitor
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We have bought out a committee run preschool we officially

Customer Question

We have bought out a committee run preschool we officially took over in september we were adviced to follow the Tupe and to honour their contracts for a reasonable amount of time we as new management decided on the autumn term 16 weeks.
we repeatedly informed the staff of all changes and had each member of staff in and asked if they would like to continue with their employment they all agreed and were happy with the change over. we have now issued new contracts for them to sign, we have adapted them when a point was raised about the possiblity of covering at another setting (if we were to purchase another one). a member of the staff has not signed the new contract where do we stand on this issue as wages are at a higher rate and they all receive higher holiday pay (set by the old committee which was actually wrong).
Submitted: 4 years ago.
Category: Law
Expert:  Ben Jones replied 4 years ago.

Ben Jones :

Hello, my name is Ben and it is my pleasure to assist you with your question today.

Ben Jones :

Not sure what advice you have received but you can’t just allow a bit of time after the transfer and then go on to change the contracts without running a risk it of it being unlawful.

If TUPE applies to a transfer, those employees assigned to the transferring business will move to the new employer on their existing terms conditions. Simply put, the new employer will 'step into the shoes' of their old employer and the employees should continue working for the new employer as if nothing had changed, apart from the name of their employer.

The above is the ideal outcome, although post-transfer difficulties may often arise. For example, the new employer may wish to try and change some of the incoming employees’ terms and conditions. However, under Regulation 4(4) of TUPE any such changes are automatically void, unless the employer can show they were in no way connected to the transfer or if they were necessary for an economic, technical or organisational reason (ETO reason) subject to employee agreement or the terms of the contract permitting the change.

Some employers may try and justify changes by arguing that they are needed due to harmonisation and therefore rely on an ETO reason. However, Government guidance and case law has restricted the application of harmonisation as a genuine reason to amend a person's terms of employment. Harmonisation will only be a valid reason if there is a change in the workforce and this must involve change in the numbers, or possibly functions, of the employees. In practice, relatively few contractual changes would involve such changes so harmonisation will rarely be used as a justifiable reason.

If the changes are part of a wider reorganisation which has nothing to do with the transfer, then they may be effective. The longer the gap between the TUPE transfer and any reorganisation, the greater the chance that the causal connection will be broken. However, there is no specific period after which it is safe to say that the connection with the TUPE transfer has been broken, as the test is whether the change is connected to the transfer. The mere passing of time does not of itself break the connection.

So if the person refuses to sign a contract with the changes you cannot force them to – you have to either start applying the changes you wish to implement and then risk any action they may take, like breach of contract or constructive dismissal, or dismiss them, in which case they could potentially claim unfair dismissal. Of course getting their approval to the changes would be the best way forward so if there is still the possibility to negotiate you may wish to do so.

JACUSTOMER-8nnpa949- :

We were advised to change the contracts as the contracts were by a committee, and we are no longer a committee run preschool, we are private owners so the old contract for the most is no longer valid as there is no longer a committee to answer to. The only additional clause was about the possibility of us as owners setting up a new setting and the need for occasional cover which would be agreed on mutual agreement .

JACUSTOMER-8nnpa949- :

Have you received my last message.

Ben Jones :

Hi sorry I was offline by the time you had replied. Whilst they may not have had a committee to answer to, it would not have allowed you for example to just change their pay at the same time. For example, you could have made changes to reflect the fact they were no longer going to report to the committee and left it at that, doing ancillary changes to their pay or other unrelated terms and conditions. If you have just made the changes to reflect the fact no committee is present, fine, but have you made any other changes at the same time?

Ben Jones :

Please let me know if this has answered your original question or if you need me to clarify anything else for you in relation to this?

JACUSTOMER-8nnpa949- : We have only added the clause that they may be needed to cover at another setting and put in a 20 mile radius, as we would like to start up another setting in the future and we were informed we could make changes to their contracts after the reasonable amount of time honouring their old contract. This was highlighted about going to another setting and we then added with mutual agreement ( we would have asked the staff before sending them but just had not added it to the contract) . This member of staff is wanting mileage which we have said we would not pay, we are a small company and we feel that all our staff are well paid and this has been proven within the county. Where do we stand as she is now making it difficult , we explain our reasons and our plans and we have always been very open with staff throughout the process of purchasing the business .
JACUSTOMER-8nnpa949- : looking at Tupe there is a statement referring to 'Organisational' reasons would this come under that , as I am reading it I believe it does, as this will be about the structure of the company if we purchase another setting.
Ben Jones :

it does not matter how much time after the transfer you allow, any changes done where the principal reason is the transfer will be automatically unfair, unless you can shoe they were required for an organisation, economic or technical reason. You may indeed try to argue this was an organisational requirement, but only a tribunal can decide if that is the case. At this stage all you can do is consult with the employee, try to reach an agreement, if that is not possible - consider whether you must implement the changes anyway and do so, remembering the employee could potentially challenge that.