1. 1 INSTITUTE OF EMPLOYMENT RIGHTS PENSIONS AND TUPE Richard Arthur Thompsons Solicitors 24 February 2009

2. 2 PARTICULAR PROBLEMS Changes to terms and conditions; The Werhof case; Retention of Employment Model; Information and Consultation; and Pensions.

3. 3 CHANGES TO TERMS AND CONDITIONS If the sole or principal reason for the variation is (1) the transfer itself or (2) a reason connected with the transfer that is not an ETO reason, the variation is void; ETO reason “…..entailing changes in the workforce”; Change in headcount or job description; Variations permitted where the reason is connected with the transfer, and is an ETO reason; Does that comply with the ARD?

4. 4 CHANGES TO TERMS AND CONDITIONS London Metropolitan University v Sackur and others: two universities merged in August 2002; In 2004, the merged universities terminated contracts and sought to harmonise terms and conditions; Were the dismissals transfer-connected? Was there an ETO reason?

5. 5 CHANGES TO TERMS AND CONDITIONS ET: dismissals were transfer-connected despite the two year gap between the transfer and the dismissals; and No ETO reason because the reason was to harmonise (no change in the workforce). EAT agreed.

6. 6 CHANGES TO TERMS AND CONDITIONS Power v Regent Security Services Ltd: Pre-transfer contractual retirement age of 60; Post-transfer, employer and employee agree to retirement age of 65; Transferee sought to retire employee at 60; and Transferee argued change to 65 was transfer- connected, no ETO, and therefore void. EAT: “…No reason why the employee should not hold the transferee to the new term…”.

7. 7 The Werhof Case W’s rate of pay determined by collective agreement between trade union and employer’s federation; Employment transfers; Transferee not party to bargaining machinery; Transferee concludes new agreement with Works Council; Trade union concludes new agreement with employer’s federation; W argues that his pay should be determined in accordance with the new agreement between the trade union and the employer’s federation.

8. 8 The Werhof case ECJ: “Static” interpretation: Only the agreement in force at the date of transfer transfers; (Also employer’s rights under Article 10 ECHR); W could not rely on the new agreement.

9. 9 The Werhof Case Appears to undermine transfer of collectively agreed pay; But, in Werhof, there were two separate agreements; Entitlement to subsequent NJC awards should still transfer: Hughes v Aramark; Alemmo-Herron v Parkwood Leisure Ltd.

10. 10 The Retention of Employment Model To allow staff who would otherwise transfer in PFI/PPP schemes to remain employed in the NHS; Originally intended for non-supervisory staff in catering, cleaning, laundering, security and portering; Advantages: job security and pensions; Employee objects to transfer and enters secondment arrangement.

11. 11 The Retention of Employment Model The Celtec case: Transfer of vocational training to TEC’s in 1990; Civil servants continue to be employed by Department of Employment until 1993, working under secondment for TEC’s; Became employees of TEC’s in 1993; Q: What was the date of transfer of employment?

12. 12 The Retention of Employment Model Answer (House of Lords): If employee not given option of transfer, but is instead offered opportunity of secondment, she hasn’t objected to the transfer of her own free will; It follows that her employment transfers at the start of the secondment. Q: Does this cast doubt on the ROE Model?

13. 13 The Retention of Employment Model Answer: Probably not, provided that four conditions are satisfied: Employee given free choice as to whether to transfer; Employee freely decides not to transfer; Employee objects to transferring (preferably in writing); and Employee enters into new contract permitting secondment.

14. 14 The Retention of Employment Model The Department of Health agrees that ROE survives Celtec; Subsequent EAT decision in Capita Health Solutions v (1) BBC and (2) McLean can be distinguished.

15. 15 Information and Consultation “Long enough before the transfer to enable consultation to take place…”; Fact of transfer, date and reasons; Legal, economic and social implications for affected employees; “Measures” old employer envisages it will take; and “Measures” old employer envisages new employer will take

16. 16 Information and Consultation “Affected employees”-any employee who may be affected by the transfer, regardless of whether they actually transfer; Election of employee representatives; “Measures”: any changes to existing working practices or arrangements.

17. 17 Information and Consultation Obligation to consult only where employer envisages taking “measures”; Employer must consider union’s representations and reply to them; With a view to reaching agreement; Up to 13 weeks’ pay per affected employee;and Award is punitive.

18. 18 Pensions: The Basics Past Service and Future Service: No contractual right to future service benefits as pre-transfer; Past Service: Pension Schemes Act 1993 and Preservation Regulations; Future Service: Sections 257 and 258 Pensions Act 2008 and Transfer of Employment (Pension Protection) Regulations 2005; Public Sector: Best Value Authorities Staff Transfers (Pensions) Direction 2007 and Cabinet Office Statement of Practice 2005.

19. 19 Pensions: Past Service PSA 1993 and Preservation Regulations apply to “early-leavers”: Money purchase scheme: accrued value; Final salary scheme: (i)<3 months: refund of contributions; (ii)>3 months, <2 years: refund of contributions or “cash transfer value”; and (iii)>2 years: deferred pension or “cash equivalent transfer value”.

20. 20 Pensions: Compulsory Transfers Can be forced upon active, deferred and pensioner members on reorganisation or business transfer where: 1.Transferor scheme trustees consent; and 2.Transferor scheme actuary certifies credits in transferee scheme as no less favourable (GN16 Certificate). (Actuarial Standards Board: only “exceptionally” will a transfer from a db to a dc scheme satisfy the Preservation Regulations).

21. 21 Pensions: Future Service Pensions Act 2004 and Transfer of Employment (Pension Protection) Regulations 2005: DB scheme meeting defined standards; or DC scheme (matching employer contributions up to 6% of pay); or Stakeholder scheme (effectively a personal pension). Employer gets to choose which, regardless of transferor scheme.

22. 22 Pensions: Public Sector Transfers Pensions Direction 2007 and Cabinet Office Guidance 2005: Future Service: contracting public authority must ensure that contract provides for “broadly comparable” pension; GAD: in the opinion of a qualified actuary, no identifiable member will suffer material detriment; DC scheme can not be broadly comparable with a DB scheme; GAD Passport Scheme in local government discontinued; Enforcement: Section 101 Local Government Act 2003; non-local government-more difficult.