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What Rights Do Workers Have When Their Jobs Are Outsourced?

By: Chris Hogan MSc - Updated: 17 Sep 2021 | comments*Discuss
Workers' Rights Outsourcing Business

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.

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My department is being outsourced to another company, however the company I currently work for are now advertising our current jobs. Is this correct, as the jobs we did are still required, they just want to pay people less money and change their working pattern.
Lou lou - 17-Sep-21 @ 12:39 PM
My employer is outsourcing my job to save money & I am to be made redundant.Do I have any legal rights covering this eventuality or grounds for unfair dismissal in this instance.
Tiggii - 8-Sep-20 @ 7:48 AM
12 months ago my department was outsourced told it would be coming back but if we could help out in a different department entirely different job due to it being in a mess few months later they said our department is still being outsourced and we could stay in this new job for now we then got a letter saying our job will be back in December and we could move back. We have now been told it's not coming back for the foreseeable future and they would offer us a permanent position in this other department. I want to refuse I hate the job if I do have I any rights if I refuse and leave the company
Rocky - 12-Dec-18 @ 6:38 PM
I was outsourced to another company last year after 8 years of working for my original employer, the original employer is now relocating so I am being made redundant. My issue is I will be getting basic redundancy from the new employer even thou Iv only been with them 1 year an 8 years for my original employer and their redundancy pay us a lot higher?Am I entitled to the same redundancy package as everyone else at my original employer?
Jhill - 5-Jun-18 @ 5:08 PM
Company is going to outsource me and i want to write an email to CEO as an effort to save my self from outsourcing, please suggest me a pattern and share sample email and also suggest wt should i write effectivrly as i want to remain insource.
Moozaro - 20-Feb-18 @ 9:26 AM
My employment company is out sourcing my department we were told about this on Monday 21st August 2017 and the new company will take over on the 11th September 2017 is that enough time for the employee or should it be at least a month.
Shellbell - 23-Aug-17 @ 6:18 AM
My employer is outsourcing my job to save money & I am to be made redundant.Do I have any legal rights covering this eventuality or grounds for unfair dismissal if my job is still being there?
G - 15-Aug-17 @ 10:33 PM
Hi, I am a gardener and was told I could use the van to commute to work after they relocated me. It is not classed as a company car, it's a 'don't use it too much, nod nod, wink wink' I was told, if the company relocates me then they have to provide me with the means to get there for two years. Is this correct?
Marie - 22-May-17 @ 4:53 PM
we are being TUPE over to another company in our T&C annual leave was Jan to Dec this company is April to March. How will my A/L be caluclated. we I lose days?
Gill - 21-Apr-13 @ 3:57 PM
My employer is outsourcing the Pensions Admin and we have been told we will be TUPe'd, does the job with the Third party administrators have to be in a certain distance from my current location ? and if it is not would I get redundancy ?
Midge - 29-Aug-12 @ 8:33 AM
I am 46yrs of age and in the process of being tuped to another company after 30yrs service with my original company. My pension T & C's state that if im 50+yrs of age I can take my pension unabated when tubed or made redundant, will these's T & C's transfer to my new employer and would I have the right to take my original deferred pension unabated in the future if tuped again (i.e. new employer lost contract) or made redundant when 50+yrs old. This is happening to a work colleague of mine who was tuped in the first round of outsourcing 3yrs ago when 48 yrs old and now being tuped again at 50+yrs old. Also the pension the new employer is offering is to be a standard 9% matched annual contribution, my previous pension is 24% annually where I contribute 1.5% with the right to pay an additional 8% matched (which I do), what are my rights as I will be severely financially disadvantaged.
bay123 - 31-Jul-12 @ 9:03 AM
The University of Strathclyde are out scourcing different aspects of the catering and obviously this will probably be the start and then progress to other area's. On these grounds were do I stand, if when I am told they out scource my job to another company and they will honour our contracts for a year, after 20 years I am in the position that if I was made redundent I would get a lump sum and a monthly pension, so do I have to transfer or am I technically being made redundent by my current employers, any help appreciated.Thanks
Crash - 8-Feb-12 @ 12:29 PM
My employer is outsourcing & we are to be made redundant even though our jobs are still being done by the compnay our jobs are outsourced to. Do I have any legal rights covering this eventuality?
fred - 20-Dec-11 @ 8:38 AM
A business hire an employee to get benefits from his services but it is only possible when the employee is capable for that job, To find the capable person the feedback system is very useful.
360 feedback - 30-Jul-11 @ 7:09 AM
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