Defence Reform Bill

Written evidence from Philip Dunne MP on behalf of the Ministry of Defence (DR 10)

Thank you once again for allowing me to give evidence to the Defence Reform Bill Committee. I undertook to confirm in writing the numbers of current DE&S posts that are expected to be in the scope of the GOCO. I also undertook to provide a short note on TUPE, which is attached to this letter.

As I am sure you will understand, it is too early to make definitive statements about the precise size and shape of DE&S in the future, and which elements of the organisation, and the programme it manages, may or may not transfer to a GOCO. The numbers that follow are based on current assumptions. To date, our working assumption has been that, with the exception of changes which are happening outside the Materiel Strategy programme, the scope of DE&S should remain the same under a GOCO unless there is a compelling reason to do otherwise. That said some roles that are Department of State functions which DE&S currently carries out on behalf of the whole MOD, such as policy-setting, would remain within the MOD.

Since May 2010, and following the 2010 Strategic Defence and Security Review, we have made considerable reductions in the size of DE&S, decreasing from some 21,500 personnel to the present figure of approximately 16,300. By 2015, this will have reduced still further to approximately 14,500. This figure includes the planned outsourcing of the Logistics, Commodities and Services activity. Also outside the scope of a potential GOCO are the 1,500 people who manage our naval bases. This activity currently sits within DE&S but will be largely transferred to the Royal Navy. A further 2,100 in the Information Systems and Services organisation will be transferred out of DE&S into Joint Forces Command. Finally, we expect that approximately 1,250 of the posts in what will be the "common resource platform" (HR, Finance, Commercial, and Technical specialists) and 350 of the posts involved in Requirements Management and the Finance Military Capability transformation could be retained within the MOD as part of the intelligent customer function.

Of the remaining 9,300 posts, we would expect that some 1,500 would be military personnel. These posts are planned to transfer into the GOCO in two stages, with a first vesting day at the end of FY14/15 followed by a second vesting day at the end of FY 16/17.

I hope that this is helpful, and look forward to sitting as a member of the Committee when we meet again in October.

TUPE – An Explanatory Note

What is TUPE?

"TUPE" is the Transfer of Undertakings (Protection of Employment) Regulations 2006. These regulations implement the EU Acquired Rights Directive (Directive 2001/23EC) which ensure that employees' rights are safeguarded in the event of transfers of undertakings, businesses or parts of undertakings or businesses.

The TUPE regulations protect employees if the business in which they are employed changes hands, or the services which they provide are to be provided by another organisation. Their effect is to transfer employees and any rights, powers, duties and liabilities associated with them from the old employer to the new employer.

This includes any rights specified in their contract of employment; statutory rights; and the right to continuity of employment. It also includes employees' rights to bring a claim against their employer for unfair dismissal, redundancy or discrimination, unpaid wages, bonuses or holidays and personal injury claims. Liabilities arising from such claims also transfer to the new employer.

What does this mean for employees?

TUPE gives employees a legal right to transfer to the new employer on their existing terms and conditions of employment and with all their existing employment rights and liabilities intact (although there are special provisions dealing with old age pensions under occupational pension schemes).

Where the sole or principal reason for a dismissal is the transfer itself, it will automatically be deemed to be unfair. This is also the case where the sole or principal reason for the dismissal is a reason connected to the transfer, unless it is for an economical, technical or organisational reason (an "ETO" reason) requiring a change in the workforce (such as an organisational restructuring resulting in a reduced workforce requirement, or a business relocation). This ETO defence is narrow in scope, and it can be difficult for the new employer demonstrate. Even if the employer can rely upon an ETO defence and the dismissal is not automatically unfair, it may still be unfair for other reasons (such as a failure to consult properly in a redundancy situation).

Similarly, the new employer cannot change the terms and conditions of employment of transferred employees if the sole or principal reason for the change is the transfer. This is also the case where the sole or principal reason is connected to the transfer, unless there is an ETO reason for the change, usually requiring a change in number of the workforce. This often makes it difficult, if not impossible, for new employers to harmonise terms and conditions of employment of staff immediately after a TUPE transfer.

Status of Trades Unions

Where an independent trade union has been recognised by the outgoing employer in respect of transferring employees, recognition will transfer to the incoming employer to the same extent.

Opting out

Employees can refuse to transfer (or "opt-out") but, depending on the circumstances of the case, employees can lose valuable legal rights, such as the right to redundancy payments, if they do.

Why is TUPE included in the Defence Reform Bill?

The proposed legislation will ensure that the legal protection afforded to employees under the TUPE Regulations applies to MOD employees currently carrying out activities which are within the scope of the proposed GOCO.

This provision is required for the avoidance of doubt as the transfer could be deemed to be a Public Administrative transfer, and as such would be a transfer to which the Regulations would not normally apply.

October 2013

Prepared 9th October 2013