TUPE – What businesses need to know about the retention of employment model

November 1 2012 – The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) give domestic effect to the EC Acquired Rights Directive (ARD) on “the approximation of the laws of Member States relating to the safeguarding of employees’ rights in the event of transfer of undertakings, businesses or parts of undertakings or business.”

In essence the underlying purpose of TUPE is to protect employee rights in the event of a transfer or service provision change. This is secured by the statutory novation of the employee’s contract of employment.

The RoE Model
The Retention of Employment model (RoE) was originally developed by the Department of Health (DoH) in response to UNISON campaigning several years ago on Private Finance Initiative (PFI) schemes. UNISON negotiated the RoE model as a means of limiting the number of non-clinical staff forced to transfer to the private sector from the NHS under PFI.

In summary the RoE model works as follows:

Stage 1
Employees opt-out of the transfer of their employment under regulation 4(7) of TUPE. The employees must be properly informed of their situation and be freely objecting (see Senior Heat Treatment -v- Bell [1997] IRLR 614, EAT). The objection can be given either to the transferor (generally the public sector employer) or to the transferee (the incoming private sector provider). A model Notice of Objection appears in the box below.

Stage 2
If employees opt-out under TUPE, their employment terminates immediately by operation of law and automatically on the date of the transfer. They have not been dismissed and are legally in the same position as if they had resigned.

Stage 3
However, under RoE the employees are then immediately re-employed by the public sector employer on the same terms and conditions of employment as they previously enjoyed with continuity of service preserved for all purposes, including pension rights.

Stage 4
The final stage in the RoE model is for the employees to be seconded to the private sector provider, but remain employed by the public sector employer. It may be necessary to change the relevant employees’ terms and conditions of employment to make express provision to allow for secondment.

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