Sunsetting & Fragmentation: Navigating TUPE Drafting in 2023

Sunsetting & Fragmentation: Navigating TUPE Drafting in 2023

The issue of fragmentation is a challenging area when it comes to TUPE (Transfer of Undertakings (Protection of Employment)) drafting. It raises questions about liability for unfair dismissal and redundancy payment claims in cases where a contract is split between multiple suppliers. In this article, we will explore the complexities of fragmentation in TUPE drafting and discuss relevant case studies that shed light on the matter.

One such case, Botzen v Rolterdamsdhe, highlighted the importance of transferring employees who have been "assigned" to the undertaking. This means that those employees who are essentially dedicated to carrying out the activities being transferred should be included in the TUPE process. However, the Department for Business Innovation and Skills guidance adds further criteria to determine an organized grouping of employees. According to the guidance, employees must be "essentially dedicated" and be identifiable as members of a client's team based on the client's requirements.

This distinction was reinforced in the case of Duncan Webb Offset (Maidstone) Limited v. Cooper, where the Employment Appeal Tribunal (EAT) held that it is not enough for employees to simply carry out the majority of their work for a specific client. They must also be organized by reference to the client's requirements and be identifiable as members of that client's team. This ruling emphasizes the need for a clear organizational structure that aligns with the transferring activities.

Another important aspect to consider is the issue of liability in cases of fragmentation. For instance, imagine a scenario where a contract is split, with 70% awarded to Supplier A and 30% to Supplier B. In such cases, the question arises as to who is responsible for unfair dismissal and redundancy payment claims from the employees (Claimants). It is possible that the liability for individual Claimants may be split between the two contractors, depending on the circumstances.

Navigating the complexities of TUPE drafting in cases of fragmentation requires careful consideration and attention to detail. To ensure a smooth transition and minimize potential legal issues, here are three actionable pieces of advice:

• 1. Clearly define the organizational structure: When drafting TUPE agreements, it is essential to clearly define the organizational structure of the transferring activities. This includes identifying the employees who are essentially dedicated to carrying out these activities and ensuring they are organized by reference to the client's requirements.

• 2. Consult legal experts: Given the complexity of TUPE drafting, consulting legal experts specializing in employment law can provide valuable insights and guidance. They can help navigate the specific requirements and nuances of TUPE, ensuring compliance and minimizing legal risks.

• 3. Conduct thorough due diligence: Before finalizing any TUPE agreements, conduct thorough due diligence to assess the potential risks and liabilities associated with fragmentation. This includes reviewing contracts, employee assignments, and any relevant case law to understand the implications and make informed decisions.

In conclusion, sunsetting and fragmentation present unique challenges in TUPE drafting. Understanding the criteria for an organized grouping of employees and the potential liability in cases of fragmentation is crucial. By following the actionable advice mentioned above, businesses can navigate these challenges effectively and ensure a smooth transition during TUPE processes.