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Postal Services Bill [HL]

The sentiment behind these amendments is to ensure that employees get the best protection possible from any transfers that take place as a result of any company restructuring. While I agree with this sentiment, I disagree that the amendments signify the best way to do this. I will deal with Amendments 17 and 19 first and then turn my attention to Amendment 18. The Transfer of Undertakings (Protection of Employment) Regulations, or TUPE, provide that where there is a transfer of an undertaking, or part of an undertaking, from one person to another then the effect of that on the contract of employment of employees working in that undertaking, or part thereof, is that those contracts are not treated as terminated by the transfer. They are instead treated as though they were originally made between the transferee and the employee concerned. TUPE also applies to the same effect in a situation where activities cease to be carried out by one party on behalf of a second party and are then carried out instead by the second party on his own behalf. This is similar to what will be happening with the reorganisation of Post Office Ltd staff. Currently, those working for Post Office Ltd are actually employed by Royal Mail Group but seconded to Post Office Ltd. As part of the internal restructuring, the secondment agreement between POL and RMG will be ended. Consequently, Royal Mail Group Ltd will cease to carry out activities on behalf of Post Office Ltd and instead Post Office Ltd will undertake those activities itself. Applying TUPE to this situation will ensure that employment contracts of the staff seconded to Post Office Ltd will transfer so that they are formally employed by Post Office Ltd once the secondment agreement ends. TUPE is designed to facilitate a smooth transfer of employees. It is in the interests of both employees and the effective implementation of the internal restructuring of the Royal Mail Group for TUPE to apply and we believe that the Bill achieves this. However, I do not believe that Amendments 17 and 19 meet that goal. I believe that there are two key problems with them; namely, that they would increase uncertainty for employees, and that they are impractical to implement. Amendment 17 is much wider than the provision it seeks to amend. Schedule 1 currently applies TUPE to a transfer of rights and liabilities under a contract of employment transferred under a transfer scheme. Amendment 17 applies TUPE to the transfer of any property, rights or liabilities under any transfer scheme, with no reference to a transfer of employment contracts. This amendment could therefore apply TUPE to cases where it clearly does not normally apply. I am unclear about exactly how this would work in practice. Our intention is to give employees comfort that TUPE will apply to any employment changes necessary as a result of the internal reorganisation. However, it is not our intention to extend TUPE to circumstances where, for good reasons, it would not normally apply. For example, it is not in the employees’ best interests for their rights and liabilities to transfer to the transferee—likely to be the Post Office—if their role remains with the transferor—likely to be the Royal Mail Group. This is the effect we believe this amendment could have, and therefore, while well meaning, we believe that it would create confusion and uncertainty for the very employees we are trying to help. Again, Amendment 19 is much wider than the provision it seeks to amend and could lead to the application of TUPE in circumstances where TUPE clearly would not normally apply. As I said before, that is not our intention and it is not in the employees’ best interest. This amendment also seeks to remove two key aspects of Clause 8. The first is that the employee-restructuring matters must be documented in a written agreement and the second is that the Secretary of State may designate contracts or employees under that written agreement. The effect of that designation is to confirm that once the agreement comes into force TUPE will apply in respect of the designated arrangements. Without this designation power, TUPE would continue to be applied to any circumstances falling within Amendment 19 after this restructuring is complete. While we want to provide employees with certainty during the upcoming group restructuring, it is not our aim to change employment law for these companies for ever. By contrast, the proposals in the Bill ensure that all employees who will be transferred, whether or not they are being transferred through a transfer scheme, will know that they are being transferred and what the process will be. This will reduce uncertainty for employees as it will be clear who is moving and that TUPE will apply to them. Again, while the sentiment behind Amendment 18 is worthy, we think that it is unnecessary and burdensome. It seems that there may be concern that those who are affected by a transfer of employment will be disadvantaged by the application of TUPE, and therefore that the Secretary of State should consult the company and employees before making any designations under this clause. This consultation is not necessary, however, as consultation on any transfers of employment is already required under TUPE. This consultation is carried out by the relevant employer. This is the correct level for such consultation. To require the Secretary of State to consult the company and its employees over and above this would only cause unnecessary delay and uncertainty for those affected. The application of TUPE to designated contracts or employees will facilitate a smooth transfer of the employees properly assigned to Post Office activity from Royal Mail Group to Post Office Ltd. For the following reasons, it is in the interests of both those employees and the effective implementation of the internal restructuring of the Royal Mail Group for TUPE to apply. TUPE will apply to transfer the employees on the same terms and conditions of employment as they enjoyed before the transfer in all respects, save in respect of pensions, full details of which are dealt with in Part 2. The employees will also benefit from protections by virtue of TUPE which they would not otherwise have had, such as certain protections in relation to any transfer-related changes to terms of employment. They will enjoy continuity of service and will have a right to be consulted in relation to the TUPE transfer. In summary, I remain unconvinced that the amendments would help to smooth the transfer process and create greater clarity or certainty. The clause is designed to avoid any ambiguity that there may be some situation where TUPE would not apply. We do not believe that there is one, and this assures employees that in transfers TUPE will apply. This is a comprehensive cover, and TUPE as it is now is satisfactory both in terms of the transfer of rights and in its consultation provisions. We are not proposing to give greater rights than the TUPE regulations as they work today and as they have successfully worked over recent years. TUPE is good and it is properly balanced. In so much as the noble Lord, Lord Clarke, is concerned that there may be some holes or concerns in this provision, we are happy to have detailed discussions with the noble Lord and his advisers to see whether there are any remaining concerns or holes. The amendments make TUPE work less well and less clearly. That would be best left to further discussions, if it were felt necessary. On consultation, TUPE has consultation rights intrinsic in it. They have worked well in other industries, and they should remain unchanged as they are in TUPE and not be modified by virtue of Amendment 18.