Harmonising pay & benefits

22 July 2016
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The TUPE legislation protects the terms and conditions of staff involved in the transfer, which ensures that staff carry all of their existing terms and conditions to the new legal employer.
The contract of employment is a legal agreement between the employer and the individual employee and any changes to the existing agreement needs the employee’s consent.
Balancing the cost of payroll against providing a reward package that will retain key employees and stimulate performance can be a very demanding task. Already CU’s are encountering problems recruiting and retaining sufficient skilled and experienced staff to meet the demands of the new legal and regulatory regime.

Establish contractual arrangements
It will usually be clear who transfers with an undertaking but in some cases there may be some employees in respect of whom it is not so clear. There are obvious uncertainties where an employee may not technically be employed (volunteer) or where the employee only works part of their time or where they are employed on a temporary contract.
To decide on this issue we need to examine the following information:
• Payroll records for at least one month prior to transfer;
• Establish the rates of pay, hours of work, holiday entitlements, and general terms & conditions of employment;
• Date of hire and continuity of employment;
• Outstanding legal claims / liabilities, e.g. personal injury, employment tribunal claims;
• Performance/ disciplinary record;
• Individual agreements that may affect the employment relationship, e.g. flexible arrangements – start times, hours of work, payment arrangements;
• Pension/ PRSA arrangements.

Employee pension rights do not automatically transfer to the new employment because group pension schemes often have more than one Participating employer. The result is that the Group Pension Scheme does not transfer with the business being transferred.
However where there is a pension scheme in place at the time of transfer, the legislation provides that;
• The new employer must ensure that pension rights are protected
• If the scheme is an occupational pension scheme covered by the Pensions Acts, then the protection given by the legislation applies

Negotiations are required to establish what pension obligations transfer to the new employer and other issues need to be considered – PRSA arrangements, life insurance and health insurance.
Changing terms of employment
Following the Transfer, employers often find that they have employees doing the same job on different T&C of employment.
TUPE provides protection for the existing individual contractual arrangements, however if the employee and employer can agree to changes the strict letter of the law need not apply.
The employer may consider applying the most favourable terms or offering incentives for employees to change; buyout of the term of the contract or trade off against another entitlement (increased holiday entitlement v increased mobility).
The challenge is to review the range of options available and select the right mix – pay rates, hours of work, mobility etc. The decision-making process should include a ‘benchmarking exercise’ which will provide management information to evaluate current levels of pay + benefits; decide future remuneration policy; prepare individual pay + benefit packages.

Vincent Turley
July 2016