Definition
A type of TUPE transfer that occurs when a client awards a contract for services to a new provider, bringing activities in-house, or outsourcing them, and the activities remain fundamentally the same before and after the change.
UK Context
Service provision changes are a UK-specific addition to TUPE that goes beyond the EU Acquired Rights Directive. They were introduced in the 2006 Regulations to provide certainty in outsourcing situations. The concept does not exist in most other European jurisdictions. Case law has clarified key concepts including what constitutes fundamentally the same activities and what constitutes an organised grouping of employees.
Best Practices
- Conduct thorough due diligence on the transferring workforce including terms, conditions, and liabilities
- Engage with the outgoing provider early to obtain Employee Liability Information within the statutory timeframe
- Assess whether the activities are fundamentally the same to determine if TUPE applies
- Budget for the cost of honouring existing terms and conditions of transferring employees
- Seek specialist employment law advice before planning any post-transfer changes to terms
Frequently Asked Questions
Does TUPE always apply when a contract changes hands?
Not always. TUPE applies to service provision changes only if the activities are fundamentally the same before and after the change, there is an organised grouping of employees dedicated to the activities, and the arrangement is not for the supply of goods or a single specific event. Each situation must be assessed individually.
Can the new provider change transferred employees' terms and conditions?
Changes to terms and conditions are void if the sole or principal reason is the transfer itself. Changes may be permissible if there is an economic, technical, or organisational reason entailing changes in the workforce, but this is a high bar to meet and legal advice should always be sought.
What is Employee Liability Information?
The outgoing employer must provide the incoming employer with Employee Liability Information at least 28 days before the transfer. This includes employee identities, written particulars, disciplinary and grievance records from the past two years, collective agreements, and any outstanding legal claims.