What is TUPE?
What is TUPE and how does it affect tendering opportunities?
We know what some of you might be thinking – what is TUPE?
We’re not here to provide you with a whole lot of legal jargon surrounding compliance and adherence to specific laws. That’s not what we do here at Tender VLE. We’re here to answer ‘what is TUPE’ without any complications, hassle or fuss.
This topic focuses on the basics of TUPE and how this applies to suppliers who are tendering. So, if you’re asking the question, ‘what is TUPE’, keep reading to find out the answer!
What is TUPE?
TUPE is an abbreviation of Transfer of Undertakings Protection of Employment.
TUPE might seem like an overly complicated law at first but, essentially, it’s all about protecting employee rights.
When a UK business transfers ownership or two businesses merge into one, TUPE is there to protect its employees.
Under TUPE, employees can transfer from the old company to the new company without any complications.
Simply put, TUPE ensures that employees are treated as having always been employed by the new company. For example, the new employer can’t change an employee’s salary, holiday entitlement or any other terms and conditions. Changes can only be made after consulting the member of staff – and if they agree to the changes in question.
It also ensures that employees can’t be dismissed for any reason related to the business transfer.
Exceptions can only be made if the new employer can prove that any change or dismissal will benefit the company. This is known as an “ETO” (Economic, Technical or Organisation reason).
This is commonly used in a range of industries and rarely used in others. However, we still think this is useful to comprehend, as this is widely considered across many UK tenders.
Let’s give you an example
So, the best way to answer ‘what is TUPE’ is to look at an example:
|Bill, Bob and Ben are all IT Technicians for a local council on behalf of Company A.
Company B has just won the tender to provide IT Technical Solutions over 5 years for this local council. This means that Company A will no longer provide the services.
But what does this mean for Bill, Bob and Ben’s jobs?
As part of Company B’s contract win, the local council has stipulated that TUPE will apply. This will ensure that Bill, Bob and Ben are not made redundant or out of work due to supplier changeover.
Company B must then liaise with the council or Company A to start the relationship with Bill, Bob and Ben. This will ensure that their transfer from Company A over to Company B goes without a hitch.
They undergo company consultations and inductions to ensure a fair and transparent process, complying with TUPE regulations and legislation.
Is it starting to make sense yet? TUPE is essentially a procedure, governed by law, to move employees from an old employer to a new employer. And, of course, any liabilities associated with them.
When it comes to procurement and supplier changeover, TUPE can be rife!
When does TUPE apply?
TUPE is most likely to apply in two situations:
This is when a business (or part of one) transfers from one owner to another. This also includes the merging of two businesses into one. The business’ head office can be based anywhere, but the part of the business transferring ownership must be UK-based.
Service provision change
This is when a client moves work from one contractor to another or takes the work in-house. It’s important to note that TUPE only applies to service contracts – not the provision of goods.
How does it affect the tendering process?
Looking for an answer to the question ‘what is TUPE’? Then you probably want to know how it affects the tendering process.
You might find that you never have to deal with TUPE. But it’s always good to be aware of what to expect if you plan on looking for tendering opportunities. Then if you do have to deal with TUPE, you’ll know exactly what you’re up against.
To fully accept employees into their workforce, the new employer needs to know everything they can about their new employees.
If an old employer can provide accurate information to bidders, then TUPE costs could be added to tender pricing. This is great for employers, as they can see all costs relating to the tender upfront.
So, let’s say TUPE does apply. Now you have to inherit one or more employees as part of the contract-win. You’ll have to consider multiple things regarding the management of TUPE as per your tender response.
What do you need to consider in your tender response?
Assess the TUPE database
This may be on a spreadsheet or a similar information sheet – make sure a full assessment is made on this. It should detail employee liabilities, such as sick pay, holiday pay, etc. This is where the most basic details of the employee come to light. So, you can ensure you can afford the staff you may potentially inherit.
Use the details of all TUPE staff (acquired from the database/information sheet) to consider clear variances in your pricing model. You may pay your staff a specific amount, but the incumbent supplier may pay them a lot differently. You will need to take this into consideration.
Hint: For those that don’t know – the term incumbent supplier means ‘current/existing supplier’.
Understand your responsibilities
Do you need to contact the new employees directly or will the buyer bridge this relationship initially? Understand what you need to do when it comes to managing TUPE staff.
In your tender response, look for any questions on TUPE management. State how you’ll use a reputable and fully qualified legal service for support, advice and guidance. Don’t be afraid to reach out for help!
Now you know the answer to ‘what is TUPE’ – but what if TUPE information isn’t available?
For various reasons, it’s not always possible to get this information. If that’s the case, then bidders should tender for work as normal, with the assumption that TUPE does not apply. If TUPE does apply, the cost should be calculated and paid at a later date.
However, this isn’t always a good idea – for the old employer or the new employer. TUPE costs can add up, and it’s important to know what you’re up against before you submit your tender response.
It’s important to appear confident, competent and prepared when facing prospective clients. If you don’t submit the right information, clients might question your commitment to the contract. That’s no way to start a working relationship!
Sometimes TUPE information isn’t available, but employers want to know the potential costs of the transfer. If that’s the case, you can use “best guess estimates” to evaluate the potential cost.
Although these costs aren’t always accurate, the new employer can learn what to expect from their TUPE staff. And whether a transfer of services is viable for their company!
Still looking for an answer to the question, what is TUPE?
Struggling with the minefield that is TUPE and want to ask us some questions? Join the LinkedIn discussion today and have your questions answered.
Or do you require some support with your tender management approach and want to speak with a professional regarding TUPE? Speak to one of our Tender Consultants! We are always on hand to help you understand and your company succeed.
How about discovering those all-important opportunities where TUPE may or may not apply? Get in touch with us for your free demo on one of our 11-industry-specific platforms. This provides you will both private and public sector opportunities across your sector daily.
Want to learn more? Tender VLE can help!
So now we’ve answered the question, what is TUPE – but what’s next?
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