Public Services > Central Government

Volatile future in store for 'TUPE' staff

Published 01 September 2014

Since 2006, the terms and conditions of IT staff have been protected if, through outsourcing, they become employees of an incoming employer. But now the government's drive to use SMEs and changes in legislation means the future cover provided by TUPE may not be as effective. Terry Ernest-Jones explains.


TUPE - which stands for the Transfer of Undertakings (Protection of Employment) legislation - was introduced to protect the terms and conditions of outsourced employees.

But now the future for those outsourced employees looks riskier with recent changes in government IT strategy and employment law . At the same time, departments are shifting responsibility towards the supplier for any resulting lay-offs amongst 'TUPE' IT staff.

A great deal more UK public sector IT staff are impacted by the shifts in computing strategy taking place across the EU than in other countries: the value of government outsourcing contracts in the UK far exceeds the combined total of the whole of the rest of Europe.

This has put them in the line of fire for cost-cutting and triggered moves to break up what has been described as a "cluster of big suppliers who have had it too good for too long".

Now, with current IT trends, it is getting harder to transfer TUPE staff successfully to other, more cost-effective contracts. And the need for their skills is likely to fall with the advent of IT developments such as digitisation and cloud computing. This can result in TUPE staff being 'stranded' with confusion over who takes responsibility for them.

Complexity is being added with the government's drive to outsource to SMEs: previously SMEs were chosen as partners by systems integrators (SIs) but now they are being chosen for business by government officials. Many SMEs are quite unable to support public sector pensions and other employment conditions; some may want to take on new government business - but without any of the existing staff.

Government departments' unease with the situation is shown by their reluctance to discuss present-day TUPE issues affecting IT staff.

"Right across the industry, TUPE's getting more and more fraught," says Chris Morrison, national executive member of the PCS union. "Employers say they've identified project work for IT: they want the work but not the staff that go with it."

In some contracts, Morrison has found, there are cases where a department will make a contribution to redundancy payments "but now that's disappearing and for secondary contracts the government will not accept responsibility." This now largely falls on the systems integrator charged with introducing new, lower-cost IT.

Smaller contractors, shorter contracts

Morrison adds: "By breaking up contracts with SMEs, you're not getting an entire service - you have to re-bid each contract on an issue-by-issue basis. So the developer's future becomes extremely precarious: it's going to be glorified piece work." SIs point out that the policy of dividing IT work into separate 'towers' means that the jobs of TUPE staff are being further destabilised: in theory, nine separate firms could end up handling the nine different towers in a single ministry, previously managed by one large SI. Furthermore, renewal times for outsourcing contracts which previously stretched ten years or more are now being drastically cut.

Though the PCS is not unsympathetic towards the measures aimed at lowering costs for taxpayers, it believes the approach being taken is wrong; there is general agreement that changes made to TUPE have weakened outsourced employees' position.

"The government is not responding to problems put forward by staff or representative organisations - it's rewritten TUPE and listened to employers, not trade unions. It undervalues the knowledge IT staff have, and the complexity and size of government systems. They're [the staff] seen as disposable."

Some suppliers have resorted to underhand tactics: first meeting the department's conditions for a fair transition of staff, then offshoring, and presenting staff with wildly unsuitable options, forcing them to leave.

Opportunities for doing that have recently expanded. "There's a risk employers will seek to fragment and break up contracts to avoid TUPE obligations," Hannah Reed, the TUC's senior employment rights officer. "The new law's designed to enable employers to drive down costs by cutting pay and conditions."

The drive towards greater use of SMEs for government IT work and the shortening of contracts will shake the status quo, but many like Morrison believe the game is by no means up for the largest firms: "The SI will be the main supplier - development and testing work will move out, but integration will stay."

Is Cloud different for TUPE?

Despite several accounts of 'betrayal' amongst 'TUPE'd' employees, government departments generally aim for a smooth, fair transition, fearing negative publicity over redundancies. For outsourcing, they use the Cabinet Office Statement of Practice on Staff Transfers in the Public Sector 2000 (COSOP), revised in November 2013 to include the new arrangements for the HM Treasury "Fair Deal" pension policy, as their main guidance.

"Bidders will often seek to argue that TUPE does not apply when submitting their bids by saying that the service is being provided in a different way," says Nick Willis employment partner with law firm PwC Legal.

Usually a department will take a dim view of contractors circumventing TUPE by claiming a radical alteration in the service: "Although TUPE won't apply if there's a 'fundamental change in the service', normally there won't be one," he says.

Kathryn Dooks, employment partner at technology law firm Kemp Little and a member of the National Outsourcing Association's advisory council points to a key area of debate on this point: "Cloud-based suppliers don't necessarily have a dedicated team for a single function. For me the big issue round cloud is the question: Is it a different activity? Is cloud a sufficiently different activity that TUPE doesn't apply?"

Early engagement

Faced with the need to cut government computing costs and introduce new SMEs to the supplier mix, without an HR bloodbath, what can be done? Interviewees with a variety of interests agree on one thing: employers involved with outsourcing should engage in discussions with staff and their representatives at the earliest stages when they are planning change.

"To avoid unpleasant TUPE surprises, successful bidders should enter into a detailed fact-finding and communication exercise pre transfer, particularly when redundancies are envisaged," says PwC's Willis. This will enable hidden costs to be factored in and ensure that employment conditions and arrangements don't come as a 'bolt out of the blue', he says.

As one senior government advisor puts it: "Tell people as much as you can as early as possible - ask about ideas and get input. SME [organisations] do a fantastic job of informing staff and the fallback is much better. Others might try to 'bounce it through' but there is a legal requirement to consult with the workforce. Employee representatives are useful to have or focus groups, and a two-way process of communication. There'll be concerns and resentment but it will be better."

That said, PCS's Morrison is not optimistic: "There'll be far fewer TUPE transfers - employers will want to give their own staff the work. My fear is workers will just lose their job for each TUPE transfer."

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.