Time to defend TUPE‏

One of the defining battles of the Thatcher years was the trade unions principled stance to ensure the Acquired Rights Directive (later known as TUPE in domestic legislation) was adhered to in public sector contracts. TUPE was instrumental in ending the practice of outsourcing workers in order to reduce wage bills. After a couple of decades of complex case law TUPE has stood the test of time and helps to cement arguments to protect the pay and conditions of workers transferred to new providers. It is far from perfect however and there are worrying developments which will fundamentally undermine worker rights.

The recent collapse of building maintenance contractors Connaughts has brought this issue to the foreground raising doubts over the application of TUPE following earlier case law which suggested that TUPE might not apply when a company goes into Administration, even where the collapsed company’s contracts are passed over to a new provider.

This Administrative mechanism (known as a pre-pack sale) could see workers engaged by a new contractor but on less favourable conditions, possibly losing out on continuity of service, receiving limited if any money by way of redundancy payments and of course working in the end on much reduced pay but the broad interpretation of the case law is allowing Adminstrators to conveniently peddled this rouse as fact and there are attempts to expand the interpretation of the case law to try and avoid TUPE in all cases where a company collapses – even where contracts are sold on or novated.

The business lobby greeted this position with joy, because in their view, the reduction in wages would make unviable contracts sustainable because you could pay the workers less to do the same job. A recent House of Lords motion calling for amendments to clarify the position further was only narrowly defeated by 79 to 77 so the case law has done what Parliament rejected.

This all appears to be happening under the radar. The case law seems to be a complete corruption of the principles of TUPE but it likely to be an area that will be tested to the extreme given the likelihood of more public sector contract collapse. You have read about toxic housing debt with the collapse of the banking systems well if you are into prophecy there are toxic contracts out there in the public sector.

Firms desperate for a slice of the public sector pie appear to have engaged in so called ‘suicide bids’ – placing contracts bids so low so as to gain work that is financially unsustainable. This will lead to more collapse as they struggle with both cash-flow and balance sheets becoming insolvent.

With Connaught workers now facing redundancy instead of TUPE protection the time for the unions to flex their industrial and legal muscle has arrived. Let’s act now before the hard fought for protection is swept away. If the Government wants a dialogue with the unions they can show their true colours by acting to stop this perverse misuse of worker rights legislation. It has to be a key bargaining position and one upon which there is no room for compromise.

Anna Rose