What is TUPE, and what does it mean when tendering?

A review of TUPE should form a crucial part of your ‘bid/no-bid’ decision and wider bidding strategy.

We explain ‘what is TUPE’ to bidders unfamiliar with the regulations, in addition to the definition of a TUPE transfer, when it applies and how bidders should answer TUPE-related questions in a tender.

What is TUPE?

The Transfer of Undertakings (Protection of Employment) Regulations 2006, or TUPE, is in place to protect the entitlement of UK employees so that they retain the same terms and conditions as they had before a business transfer or service provision change.

For public sector tenders, the definition of a TUPE transfer is that it ensures existing employees, on the current iteration of a contract, are able to retain the same rights when a new provider takes over. Whilst the new provider can propose measures to amend existing terms, this must be done with caution to avoid the risk of employee litigation.

Employees have the right to terminate their employment and claim constructive unfair dismissal at a tribunal, potentially causing significant financial and reputational damage, if successful. For example, if a care provider had taken over a contract with TUPE-eligible employees but reduced their benefits or pay package, the provider could be taken to an employment tribunal and be forced to pay a fine.

Why and how does TUPE apply?

In tendering, TUPE applies to organisations of all sizes and can be relevant to contracts of any value or size – but not all. For example, a service where there is no outgoing provider will not have any staff to transfer over, with recruitment the responsibility of the new provider.

In many cases, TUPE requirements are clearly stated in tender documents (i.e. stating whether they will or will not apply), accompanied by a list of anticipated, eligible transfer numbers and their current employment conditions, anonymised in line with GDPR requirements.

TUPE information in a tender may include but is not limited to:

• Position title
• Gross annual salary
• Contracted hours and actual hours worked
• Overtime rates
• Service start date
• Employment status (e.g. self-employed, freelance, etc.)
• Pension scheme membership
• Annual leave and sick pay entitlement
• Unresolved employment claims
• Contractual notice periods.

Using this information, tenderers can make an informed decision on whether they have the financial and operational capacity to accommodate the number of staff transferring and their current terms and conditions.

When submitting the bid, tenderers are typically asked to sign off their understanding of the TUPE requirements, evidencing their commitment to carrying out their obligations and awareness of penalties and legal issues if not managed appropriately.

What should organisations do when TUPE does apply?

TUPE requirements can vary significantly between tenders, from one individual for a small security contract or hundreds of health workers for a large homecare service.

Consequently, it is critical that tenderers analyse TUPE information carefully when deciding whether or not to bid to confirm their capability.

A few essential yet straightforward steps organisations can do to improve their understanding of the TUPE process include:

• Submitting a clarification question to the buyer if unsure about the accuracy or comprehensiveness of data provided – for example, if annual salaries are omitted from overviews. There may be a reason why a buyer has not provided this information but a suitable explanation should be offered to enable the organisation to factor in costs.
• Assessing employment contracts for key areas of concern, such as annual leave entitlement, pension agreements, etc. integrating these into overall contract costs, recruitment strategies, staffing structures and service delivery models.
• Analysing the pricing document to ensure any TUPE-related costs are accommodated into the organisation’s overall commercial submission.

How do you answer TUPE-related tender questions?

As part of the quality submission in a tender, the TUPE process may be addressed as a stand-alone question or a sub-point under a wider topic, such as mobilisation, recruitment or service delivery. As always, responses should be tailored to the exact question asked; however, typical areas that could be addressed in TUPE questions to evidence an organisation’s understanding and consideration of TUPE contract include:

• Referencing legislation and any associated guidance, such as briefings from ACAS, to showcase wider knowledge and how it is relevant to the tender opportunity and quality response.
• A clear timeline of activities that will take place to ensure key activities are carried out in advance of the TUPE contract start date. For example, allowing at least two weeks between first and second consultations, ensuring initial queries can be investigated and transferring employees have adequate time to make their decision.
• Detailing experience and how employees were successfully transferred using TUPE regulations in the past – for example, how many employees were transferred for a previous contract and remain with the business two or three years on?
• References to where the organisation has obtained external legal or HR advice to maximise the fairness and compliance of the TUPE process.
• Any added value the organisation brings that is above and beyond legal requirements. How will you help TUPE-regulated employees settle into the business once transferred? Will they be assigned a buddy to help them adapt to the team culture, whilst providing an opportunity to share advice from someone who was involved in the previous iteration of a contract?

TUPE bid responses should be focused on the needs of the individuals being transferred, so a personal approach should be adopted throughout, prioritising employee welfare from point of transfer to employment duration.

This will evidence to the buyer how the organisation views TUPE not just as a legal requirement, but an opportunity to deliver a service using the skills and experience of existing staff, improve workforce diversity and strengthen their business.

 Supporting with TUPE questions in a tender

If you are struggling with a TUPE question in your ITT submission, or for further details on the specialist writing services and training courses offered by Executive Compass, please contact us to discuss how we can help.