What Rights Do Workers Have When Their Jobs Are Outsourced?

In today's business world the search for profit often leads to companies divesting themselves of service teams and hiring the work out – outsourcing – to other companies so that they can concentrate on their core business. The trouble is what happens to the people who are doing those jobs and suddenly find that they are going to have a new employer? What workers' rights exist for them?

The History of Outsourcing

Outsourcing came into vogue in the 1980s when management consultants decided that it would be a good idea if large businesses offloaded all their overhead staff to separate companies. This makes the businesses appear more profitable as they do not have those overhead salaries on their books and in return, pay regular amounts to the company that took the staff off their hands, in return for the service they are delivering.

It started with easy-to-hive-off services, such as cleaning and catering, and then moved to more complex roles, such as customer services and IT Support. The second major advantage to the business that has outsourced the work is that they can, after the initial contract expires, put the contract out for tender to other service companies and lower the price they pay for the service.

Continuation of Terms and Conditions for Outsourced Workers

When this happens, the employer that is handing the staff over has obligations to their employees, and so does the business that takes them on. These workers' rights are largely enshrined in a set of regulations called the Transfer of Undertakings (Protection of Employment) Regulations (normally known as 'TUPE'), which state that the new employer should continue with the same contracts, terms and conditions of employment as before. It specifically protects pensions, holidays and continuation of service, as well as many other aspects of working life.

The continuation of service element is important because the length of service that an employee has accrued controls many aspects of workers' rights. Redundancy payouts, holiday allowances and pensions are just some of the areas where rights improve as time passes. The upshot of this protection is that you will be treated as though you do not have a new job and your years of service will pass on to the new employer. So if you have nine years service with the existing business, when you are outsourced to the new company you will still be treated as though you have nine years of service, not start again from scratch.

Consultation is Necessary with Outsourcing

It is not legal to simply outsource departments to a service company without consulting employees in the first place – that's a vital part of workers' rights. The consultation should be with trade union representatives or, if no unions are active in the firm, an elected body of employees. The consultation phase should make sure that all affected employees are given good notice of the change by the employer, explain the impact, and detail any other elements of reorganisation that may happen at the same time.

What Happens in the Future to Outsourced Workers?

If an employee stays with the new employer after the transfer and, when the original contract expires, a new business wins the tender to supply the original firm, then TUPE should apply again, so the terms and conditions transfer once more to the winner of the contract. If employees turn up for work and are told there isn't any for them, then they will have good grounds for an unfair dismissal claim.