West Midland businesses looking to cut costs and improve efficiency by outsourcing will have to tread more carefully than ever since the recent tightening up of the Transfer of Undertakings legislation.
The warning, from Martineau Johnson employment law partner Jane Byford, comes in the wake of the announcement by mobile phone giant Vodafone that it is axing jobs and outsourcing key parts of its IT function in a bid to save costs and boost its profits.
TUPE protects the interests of employees whose jobs are effectively transferred.
Ms Byford said: "TUPE now effectively applies pretty well across the board to transactions where the transfer of a business or part of a business is involved.
"The new rules make it clear that TUPE applies to all cases where services are outsourced or even where there is a change in the outsourcing contractor."
Cases could arise for example where an IT company, an advertising agency or a law firm loses the account with their trading partner and the new contractor could then find itself compelled to take on the old contractor's employees.
"Applying TUPE to every change in contractor, regardless of whether the new contractor carries out the services in a different way, whilst protecting the rights of employees can be bad news for the business concerned, because the contractor which loses out will generally have done so on the grounds that its people are not doing the job prop-erly or efficiently," said Ms Byford.
"TUPE rules now effectively insist that they are retained, which cannot be in the interest of improving competitiveness in the economy."