TUPE and Welfare to Work programmes

There's been a lot of confusion in the past couple of years over what happens to people delivering welfare-to-work contracts when a new organisation wins the contract. So it seemed reasonable to put what we do know in one place as a primer for staff and organisations who haven't run into TUPE issues already.

Bear in mind that we are not lawyers, and bear no responsibility for you or your company exploding if you take our advice.

What is TUPE?

Transfer of Undertakings (Protection of Employment) regulations have existed for many years as a way of protecting an organisation's staff if their jobs are outsourced. The best explanation we've found is in Wikipedia. Changes to the regulations in 2006 are believed to have extended them to cover welfare-to-work contractors delivering government-funded provision.

How does it apply to welfare-to-work contracts?

Most providers appear to have applied TUPE in taking over contracts such as NDDP or Pathways to Work. WorkDirections tried to avoid TUPE and backed down in the face of legal threats from Shaw Trust. The DWP Commissioning Strategy refuses to make a statement on whether TUPE applies, on the grounds that as a legal matter only courts should make a decision on its application. However, they make clear that 'special' provision will be made for organisations who assume it does not apply, considering it as a risk factor for contract award.

There appears to be a consensus that TUPE applies when a new provider takes over an existing delivery or sets one up that incorporates a previous delivery. So for example Pathways to Work incorporates NDDP and thus TUPE applies. Flexible New Deal will replace the other New Deals and providers will presumably agree to TUPE for this also.

What it means for providers

There's an obvious cost in taking on existing staff - their salaries, benefits and length of service entitlements may all be greater than from fresh recruitment. The benefits are also clear - lower recruitment costs and experienced local staff. A wider issue is that it reduces control over staffing quality during setup, and makes it more difficult to create a new culture and delivery model. It also makes financial calculations more complex, as existing providers may refuse to provide details of their existing staff costs.

The benefits to existing providers are more clear-cut. If they lose a contract, they are not liable for paying redundancy or other costs for staff that are transferred under TUPE. There is also the (somewhat dubious) possibility of cherry-picking staff to ensure that the best ones are not transferred out of the company.

Another issue to be aware of is that, in many cases, providers run out of funding and make staff redundant before a new contract is awarded, reducing or removing the staff to whom TUPE would apply.

What it means for delivery staff

TUPE is mostly good for delivery staff. Their benefits, length of service, hours and other perks are generally protected. However, this can occasionally be used in the opposite direction, to pay transferred staff lower wages than newly recruited ones!

A key issue is whether TUPE safeguards your job - if there is no equivalent to the job you're doing in the new contract, or if there are fewer staff positions than people to TUPE transfer, then you may still be at risk of redundancy. While your current employer would hopefully arrange TUPE transfer, you have the right to demand that TUPE is applied if they don't.

Local law advisory clinics, CAB or other similar services should be able to advise you on this. We would suggest relying on these rather than this column if you're in any way unsure! Click here for local CAB or here for local law centres.


Further advice and stories relating to TUPE can be found in the following locations:

CIPD introductory guidance http://www.cipd.co.uk/subjects/emplaw/tu...

DWP guidance from the Commissioning Strategy (page 34) - http://www.dwp.gov.uk/publications/dwp/2...

Official government guidance http://www.berr.gov.uk/files/file20761.pdf (pdf)

ERSA position statement on TUPE http://www.ersa.org.uk/files/ersa_positi...

Third Sector magazine article on TUPE http://www.thirdsector.co.uk/News/DailyB...

Independent Inquiry into Pathways to Work Contracting has a TUPE section (page 13) http://www.acevo.org.uk/downloads/upload... (pdf)