The transfer of undertakings minefield should not be allowed to obliterate new business opportunities. Gordon Turner offers guidance how to cross it safely

Business confidence is growing, and so are the opportunities for law firms and their clients to pick up new business. Solicitors should be aware, however, of the risks involved in winning a contract off another firm – it could cost you thousands of pounds. There have already been settlements of up to £70,000 and claimants have included individuals working on their own account as well as groups of employees. It is a minefield.

Since the first solicitor service provision TUPE (transfer of undertakings, protection of employment) case was reported in the Gazette, my firm has been inundated with cases of this type. They mostly bear similar thumbprints because TUPE generates the same raw emotions. Lawyers don’t like being pushed around and no amount of case law analysis, it seems, will ever change that.

For my part, I can safely say that the TUPE landslide predicted in the Gazette is well underway. It should not be allowed to get in the way of new business opportunities, however, so here are five tips to help solicitors keep out of TUPE trouble.

Spotting a TUPETUPE or not TUPE? Failure to spot a TUPE seems to be at the very nub of most TUPE disputes I see. In all the excitement of getting a large new contract with guaranteed fee income, solicitors tend to go a little gooey-eyed, cooing at the beautiful new client only to trip over their shoelaces. So whenever you are pitching, always remember: watch out - there maybe a TUPE about. These are the main indicators:

  • Services being provided for a single client
  • A designated team focusing mainly on that client’s work
  • Movement of work – taking it back from an external provider, moving it out to one or transferring between outside providers

Due diligence – watch out there’s a TUPE about! When looking at tender documents, go right to the end and you will probably find a tiny little paragraph in which the client chirps bashfully that it makes no warranties about the applicability of TUPE and suggests you might like to take a little advice (if you have time after you finished your colourful PowerPoint slides for the first presentation).

This little proviso will be to make sure that, once you have pared your bid to the bone and signed on the dotted line, it is you who will take all the liabilities if there is a TUPE situation or even a related legal challenge – the costs of which will probably wipe out your margins. Expect all kinds of disclaimers in government-related tenders for obvious reasons. Remember your basic contract law caveat emptor – let the buyer beware!

One of the biggest challenges solicitors will face is handling all relevant information. You could get a barrage of emails from individual employees, their mums, union representatives, elected representatives and so on. The most important point of all is to establish a manageable and digestible structure for receiving and addressing information so that you don’t miss something important.

  • Agree and identify singular representatives for both sides
  • Set up structured methods of challenging and addressing information with pro-forma lists and milestones
  • Don’t engage in machine gun email exchanges

Doing the right thing – notifications and consultation One of the reasons TUPE tends to end in tears is the massive human challenge of absorbing large groups of employees at short notice into an existing status quo. Many losing firms, feeling somewhat snubbed and peeved (shall we say), take their eye of the ball, perhaps secretly enjoying the prospect of hoards of their disaffected former employees landing on the unsuspecting winning firm. They may even throw in a few undesirables who are not really part of the client-related grouping, while divesting themselves of any redundancy and contractual notice liabilities.

The primary duty to consult, however, lies with the losing firm and this has to be done on a timely basis. You need to be providing employee liability information to the winner as soon as possible and pushing hard for all relevant information so you can advise the transferring team of their rights and any measures to be taken after the transfer. Key points:

  • Failure to consult by the loser can lead to awards of 13 weeks’ gross pay per employee, which will wipe out the savings on redundancy many times over.
  • If the winner is responsible for the failure to consult, you can join them to any tribunal claim where the lion’s share of the award might be ordered against them. More poetic justice.
  • There is a statutory duty to consult in a positive way with a view to reaching agreement – so don’t stare out of the window at meetings…

Terms and conditions or working conditions While it is unrealistic, and sometimes unfair, the transferor has to take employees on the same terms and conditions. Changes concerning the workforce can only be made to contracts for economic, technical or organisational reasons. The winner also has to honour existing conditions that may not even be contractual, such as more general habits like flexible time or travel concessions. The natural urge is to harmonise with your existing staff, but this is not permitted. This will lead to unlawful wage deduction, breach of contract and unfair (constructive) dismissal claims.

Fairness is a weaponMost employers see the TUPE rules as grossly unfair. The new government may abolish them, but for the time being they are here to stay. It requires very impressive poker skills to be calm and reasonable when surrounded by what you may see as unwanted gooseberries ruining the romance of your lovely new client relationship, but at the end of the day you are in a legal dynamic which could end up in a very focused employment tribunal.

You will not be able to fend off cross-examination with hearty comments like: ‘Look, I run a good chip shop like my dad did before me and I get on with anyone who can peel a spud.’ You are a firm of solicitors and will be judged as such. You know how to photocopy relevant documents and put them in an envelope for a consultation meeting in a good time. Surprisingly, many established firms seem to forget that reticence, sniping or filibustering tend to go against you on credibility or even liability. It is also fuels much of the anger that drives TUPE challenges.

While you struggle with your photocopying, there are employees out there genuinely concerned about what is going to happen to their livelihoods. They may want to transfer and, heaven knows, they may even be assets. Why annoy them?

Terms such as ‘in due course’ are a red rag to employees desperate for information as the transfer date approaches. They know that you know what your plans are – they are the ones that you will have to produce on discovery. Remember that all your solicitor exchanges will be scanned and circulated within minutes to groups of concerned or even litigation-minded employees.

Solicitor-related TUPE claims do not yet feature much in the reported decisions of senior courts. In fact only one such case has reached the Employment Appeal Tribunal – Capsticks v Ward Hadaway. For guidance you may wish to apply the more general dicta that applies across the board in employment law: ‘You catch more flies with honey than vinegar’ (with thanks to the late Hughie Green).

Gordon Turner is co-founder of Partners Employment Lawyers, London