Can we avoid the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”)

One sizeable logistics company ended up with a £100k bill last year after falling foul of TUPE regulations. There has been a bit in the press recently that would seemed to imply that the regulations might be changing so we thought this worthy of a little clarity.

Indeed, the Coalition Government has indicated that it will bring an end to the ‘gold plating’ of EU rules, where regulations bringing in European law into UK law go further than required.

Thanks to our partners at JMW Solicitors (www.jmw.co.uk)for a bit of case law and precedent

In January 2011, the European Court of Justice (“ECJ”), in the case of CLECE SA -v- Maria Socorro Martin Valor and Ayuntamiento de Cobisa, said that a mere change of service provider is not a transfer of an undertaking.

In this case, a Spanish local authority contracted out the cleaning of its schools and premises. The local authority terminated the contract and brought the service back in-house. However, when it did so, it did not employ the contractor’s staff and instead hired new employees to do the work. Assets did not transfer from the outgoing contractor to the local authority and as no staff were taken on, the ECJ decided that there had not been a transfer of an undertaking.

This case reafirms the position that where there has been a transfer of a service provision change, the mere change of a provider cannot, without the transfer of assets or the taking of employees, amount to a transfer.

In the first instance, this decision may appear to be an invitation to employers to avoid the TUPE Regulations when outsourcing, where there is no transfer of assets, by simply refusing to take on the staff. Unfortunately, had the case arisen in the UK, TUPE would have applied because it goes further than European law so that a mere change in service provider can in itself trigger a transfer of an undertaking under UK law.

So there you have it

The service provision change sections of TUPE, which do not feature in European law, are often quoted as an example of the so called 'gold plating'. This case is likely to be utilised by campaigners who have been trying to persuade the government to reform TUPE and simplify employment law regulations more generally.

For the moment however, nothing has changed but you can always lobby!

Watch this space for more info

If you want to talk to an expert please contact Jessica @ JMW directly .. jessica.mistry@jmw.co.uk

Royal Wedding Holiday Headache for Employers

Background ..

Having talked with lots in the business about their approach to the extra Bank Holiday, it is surprising how many different strategies are being adopted, and indeed how many companies have yet to make a decision. So with some help from our partners at JMW - we hope the following may help!

Bank holidays are holidays under the Banking and Financial Dealings Act 1971, when banks and many businesses are closed for the day. Public holidays are holidays which have been observed through custom and practice and include bank holidays. In England and Wales, there are currently six permanent bank holidays. Christmas day and Good Friday are public holidays.

The law allows the dates of bank holidays to be changed or other holidays to be declared, for example, to celebrate special occasions. It has been announced that there will be a special public holiday on 29 April 2011 to celebrate the Royal Wedding and another on 5 June 2012 to celebrate the Queen’s Diamond Jubilee.

Although many employers will be happy to give staff the extra day off with pay, the current economic climate may mean that this option may not be affordable to all. Also, in many industries or occupations (e.g. travel, retail, emergency services), working on a public holiday is a commercial or operational necessity.

Am I obliged to let my staff take the 29 April 2011 as a paid day off?

Workers do not have an automatic statutory right to time off (paid or otherwise) on any public holidays. Also, if your staff work on a public holiday their pay for the day will be dependent upon their contract of employment as there is no statutory right to overtime or time off in lieu.

Whether your staff have a right to take a public holiday as leave will be regulated by the terms of their contract of employment:
• If the contract entitles them to take, for example, 20 days holiday plus public holidays, it is likely that the 29 April 2011 will qualify as an extra day’s paid leave.
• If the contract specifically lists the public holidays that thee are entitled to take, they are unlikely to be entitled to take the 29 April 2011 off and whether they can take the time off will be at the discretion of the employer.
• Some contracts of employment may specify that they are entitled to take, for example, 28 days leave inclusive of all public holidays, so there will be no extra entitlement.

Where there is no consistent contractual wording within your organisation which could result in some staff being entitled to the extra day and some staff who are not entitled to it, it is advisable to allow all staff an extra day off in order to maintain good employment relations. Employers should ensure that there is consistency in treatment across their entire workforce.

Can I ask staff to take the extra time off from their normal holiday entitlement?

If the contract of employment does not entitle your staff to take the 29 April 2011 as an extra paid day off, you may require them to take the extra day off from their normal holiday entitlement. You should notify your staff that they must take a day’s holiday from their entitlement on that particular day. You should provide notice in writing as soon as possible and you must give them at least two clear days notice of your requirement before the public holiday.

It is important to bear in mind that if you do grant an additional paid day’s holiday for the Royal Wedding in 2011, you will be setting a precedent which may imply that you will grant an additional paid day’s holiday for the Queen’s Diamond Jubilee in 2012 as well.

For further info or support, please contact jessica.mistry@jmw.co.uk

Rail Freight Interchanges: What Next? Two more proposals have been refused planning permission!

In July and August two Strategic Rail Freight Interchange (SRFI) proposals have been refused planning permission following on from major planning inquiries: Radlett and Kent International Gateway (KIG). To paraphrase Oscar Wilde, to lose one rail freight interchange may be regarded as a misfortune. To lose two looks like carelessness!

Where does this leave plans to develop a network of SRFIs as a foundation for significant rail freight growth?

The Recent Planning Decisions

Both proposals were in areas with significant impacts on the countryside and local communities.

Clearly there are very few locations in England where you can build a huge development of warehouses and rail facilities without having a major impact on the local environment and communities. This is recognised in the planning process, and SRFIs can still gain planning permission provided they can demonstrate the need for the facility and that there are no suitable but less harmful alternative sites available.

Kent International Gateway

KIG’s “needs case” was partly based on an assumption that the facility would be used to intercept goods from Europe and consolidate them in warehouses for onward distribution by road and rail. However, the planning inspector reported that he was not satisfied that the proposal would function as an SRFI in this way.

Nor did the inspector agree that KIG would be well placed to function as an SRFI serving London and the South East. In particular, he cited the Strategic Rail Authority’s (SRA) SRFI policy which suggested that such facilities should be near to the M25. More on the SRA policy later!

Radlett Freight Interchange

Following a second planning inquiry the planning inspector recommended that the appeal be upheld and the SRFI be given planning permission, but the Secretary of State disagreed and denied the appeal.

There was general agreement that the facility was needed and would function as a true rail freight interchange, but one of the key issues at both inquiries was whether a less harmful suitable alternative site could be developed as an SRFI.

Again, a key influence was the SRA SRFI policy which suggested that 3-4 SRFIs would be required to serve London and the South East. Given the location of Radlett, the search area for alternative sites covered the North West quadrant of the region around London.

While the inspector agreed that there were no suitable alternative sites which would potentially have less impact, the Secretary of State (SofS) disagreed. He found that a potential SRFI at Colnbrook, near Heathrow, could have less impact.

The Good News

The Secretary of State has made it clear that support for the development of SRFIs is undiminished.

There are several major SRFIs currently being planned, some of which serve the areas of the refused applications.

Significantly, SRFI developments of over 60 Hectares will be considered as “nationally important infrastructure projects” and dealt with through the new processes introduced by the last government (and currently being amended by the present government). This may provide more clarity on the needs issue in particular.

Our View

The decisions should be seen as an opportunity to reassess the way in which need and alternative sites are assessed.

In distribution terms, Colnbrook would serve a very different market to Radlett. Radlett would have been well placed to serve businesses and communities in Hertfordshire and North London. But the scheme proposers could not make this case as the SRA policy would suggest that there is not demand for both Colnbrook and Radlett.

The other reason for concern at the Radlett decision is the idea that a viable site can be turned down on the basis that an alternative sight might be developed which might have less impact. If the remaining alternative site fails to be developed, where does that leave the strategy for rail freight? The result may be ad hoc development of individual or small clusters of warehouses served 100% by road.

KIG is perhaps different. The needs case is not helped by the absence of major distribution developments in the area and a feeling that the location is neither near a port nor well suited for access to London. There will be many in the distribution industry as well as local communities who feel that the right decision has been made in this case.

Time for a New Approach?

Our key concern is that major planning decisions continue to be influenced by a policy published by the SRA six years ago – the SRA SRFI Policy. This policy was based on theoretical research into distribution flows and patterns. At the time it was not clear exactly how the theoretical approach had been applied, and there was little consultation with the distribution industry.

IF SRFIs are refused, ad hoc distribution development will result, without access to rail. It makes sense to support developers who see demand for distribution centres with rail access.

Demand forecasts for SRFIs tend to be based on models which assume that past trends continue, and are not necessarily well suited to forecasting future changes such as portcentric distribution. Any new approach should be rooted in the changing needs of the distribution sector.

Obviously there are more issues than this, but our clear view is that it is time to move on from the SRA’s SRFI strategy and to bring the planning process closer to emerging distribution strategies.

Ian Brooker – Peter Brett Associates
Chris Geldard – Geldard Consulting
Andrew Spence-Wolrich – The Spence-Wolrich Partnership



Intermodal Terminal Solutions
www.intermodalterminalsolutions.co.uk
http://www.theswp.co.uk/intermodal-terminal-solutions.php

Fuel hedging - Is it a gamble?

Fuel hedging is not for everyone but generally is not very well understood and is viewed with suspicion by many.

For many hauliers that have robust fuel escalators they can protect themselves against the rising price of fuel by passing on the cost to their customer base (albeit with a time lag). This means that margins and bottom line are protected against any price rises in diesel. For others, this is not so easy to do, or they are nervous to implement an escalator given the risk of losing business. Very few hauliers have escalators in place to cover all of their turnover, and this inevitable makes for difficult budgeting and forecasting of results.

Many hauliers may have entered into agreements or contracts with a customer to deliver goods on a fixed price for a term. When negotiating pricing the haulier can use the relevant forward price to ensure that its margins are maintained during the period, and lay off its fuel risk with a Bank. This enables the haulier to still be able to negotiate with its fuel suppliers, but off set the possible higher fuel price with “cash for difference” contracts with the Bank.

The outcome is that the original level of profit wanted by the haulier is protected (and the budget for fuel will be accurate). It also gives peace of mind and an alternative for the customer that they will not have to bear the cost of rising fuel. For many customers, having a haulier supplier that is able to have such a facility with a Bank, and offer a fix price, can be a differentiator when choosing its transport suppliers. With tenders submissions it is worth quoting this option pending further discussion and agreement with the client.

Your accountant can advise you about the implications of fuel hedging, but the important factor to recognise is that if your fuel costs rise above the price at which you have hedged, you will receive a cheque for the difference. If your fuel costs fall below the price at which you have hedged, you will have to write out cheque for the difference. What you effectively pay for the fuel will however be exactly as you have budgeted for the period.

I will post a link for an independent article on this shortly, but i believe hedging is something that should be seriously considered and is in fact not a gamble. Timing is everything of course, but my information is that if you are going to do it - now is a good time to hedge

Are you sure that you are buying fuel at the lowest cost?

The SWP have been working on a number of fuel procurement projects recently and a number of factors are evident

• Fuel card handling charges vary by as much as 0.8 ppl
• The price companies pay for fuel on any given day can vary by as much as 6 ppl
• The margins charged by the same fuel suppliers change on a daily basis  
• The largest companies do not necessarily buy fuel at the lowest cost
• Few suppliers charge less for delivering into a card bunker system vs on site storage, even though they enjoy considerably lower costs.

It is suprising - given that fuel accounts for around a third of a transport companies total costs - that most buyers cannot be sure that they are getting their fuel at the lowest available prices in the market.

In our experience, most companies use a similar process for buying fuel, they have 3 suppliers and ring them all to get a quote, buy from the cheapest of the 3, and the volume purchased is based on the information given at the time as to the likely price trend over the subsequent days. Buyers tend to be very senior in an organisation, and in the SME sector are quite often the owner. Ironically these are the very people who tend to have the least time, and very very few ever benchmark their performance against their peers (let alone the Platts cost price).

Fuel suppliers are becoming a little like soap powder manufacturers .. lots of brands but with consolidation a reducing amount of competition (also hindered by a lack of refining capacity in the UK). Some of our clients were not aware that two, and in one case three of their three suppliers were in fact all owned by the same company. That fact that all have quoted a different price gives the illusion of competition.

Of course, it is not all about price. Credit terms are also a vital consideration affecting cash flow, and have been considerably tightened in the last two years. Companies should nonetheless attempt to renegotiate these terms and the best threat is to take your business elsewhere. Of course healthy trading figures and results make a huge difference, but credit terms may have been set when the business was in a less positive position than may currently be the case.

So why is there such a mystique surrounding the fuel buying process, and how many companies would be willing to undergoe an independant benchmarking excercise? How many buyers would admit internally, let alone externally that they don't really know if they are getting the best price available.?
 
I will talk about hedging in another blog .. in the meantime have a good week .. all comments welcome