22nd December 2021

Employment Law Advent Calendar: Day 22

It’s the 22nd of December and do you know what Simon and Santa Claus have in common? They both have a dog called Santa Paws! Take a look behind door number 22 of my Employment Law Advent Calen -deer to find out who or what is there to help employers Blitzen their employee problems this Christmas.

It’s Santa Claus

Like a lot of businesses, Santa is looking to cut costs and improve efficiency. He’s decided to outsource the cleaning of his workshop to Jack Frost Limited, normally the task of a team of 15 elves. 

Are the elves protected?

The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) protects certain employment rights where there is a ‘service provision change’:

  • as in this case, where Santa engages Jack Frost Limited to carry out the cleaning service on his behalf;
  • in the future, if Jack Frost Limited put up its prices and Santa decides to move the cleaning service to Grinch Enterprises Limited; and
  • Grinch Enterprises Limited provides a terrible cleaning service and Santa brings it back in-house.

The effect of TUPE is that any elves ‘wholly or mainly’ engaged in cleaning the workshop will transfer from Santa to Jack Frost Limited, the new service provider, on the existing terms and conditions of employment. In other words, Jack Frost steps into Santa’s fur trimmed shiny black boots.

What can the elves expect?

​Santa has an obligation to:

  • Inform the elves of the transfer and, if Jack Frost Limited envisages taking any ‘measures’ in relation to the transferring elves (ie changes to their contracts or working arrangements), consult with them about these measures, both prior to the transfer. As there are more than 10 elves, he’s going to have to inform and consult with either elf representatives (which may require an election) or their trade union representatives.
  • Share the elves ‘employee liability information’ (ie certain personal and employment details) to Jack Frost Limited. 

However, it’s not just Santa who has obligations. If Jack Frost Limited has any employees who may be affected by the transfer, they should be informed and consulted with and it needs to inform Santa of the envisaged measures. 

Will TUPE always apply to outsourcing?

If there is no ‘organised grouping of employees’ who work on the service or if the services, once transferred, will not be fundamentally the same, TUPE will not apply. That doesn’t mean Santa should start moving elves to and from cleaning duties before the transfer in an effort to keep his best elves, or that Jack Frost Limited should try to ‘re-design’ the service to try and beat TUPE, because it could result in employment claims. 

What might help Santa in the outsourcing agreement?

Firstly, there should be an agreement otherwise Santa could find himself liable for all sorts of expense employment claims. It’s common for outsourcing agreements to include indemnities and warranties that apply at the start and at the end of outsourcing period. These will be different in each case depending on the service and the commercial arrangements but key areas include:

  • Who is responsible for the cost of failing to inform and consult (called a protective award it is up to 13 weeks gross pay per employee).
  • Who is responsible for any dismissals, claims arising pre and post transfer, and any pre-existing claims.

Is there anything else Santa should do?

TUPE is complicated and this is only intended to be a summary of how it applies to outsourcing. Santa should take legal advice as soon as the idea of outsourcing occurs to him to make sure he gets the help he needs to avoid any problems. 

Make sure you elf a merry little Christmas and contact a member of the Blackaders Employment Team working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland for help and advice.

Donna Reynolds, Partner
Accredited by the Law Society of Scotland as a Specialist in Employment Law & Discrimination Law
Employment Law
Blackadders LLP
@EmpLawyerDonna

www.blackadders.co.uk

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