A move between 3PLs, or a decision to bring fulfilment in-house, usually starts as an operations project. Stock has to be counted, systems connected and a cutover planned so that orders keep shipping. But a warehouse is run by people, and a change of provider can affect their jobs, their terms and the way they are consulted. If that is left until the contract is signed, it can force a late change to the timetable.
This article gives general information for business owners. It is not legal advice. TUPE depends heavily on the facts, so take specialist legal advice on your own situation.
Why TUPE can apply
The Transfer of Undertakings (Protection of Employment) Regulations 2006, known as TUPE, protect employees when a business or part of one transfers. They can also apply to a service provision change, which is where an activity is outsourced, brought back in-house, or passes from one contractor to another. A change of 3PL can fall into that category.
Whether it does depends on the facts. A key question is whether there is an organised group of employees whose main job is to carry out the work for your brand. A shared warehouse where staff pick for many clients is very different from a dedicated team working on one account, so the answer is rarely the same for two businesses.
What it can mean if TUPE applies
- Affected employees can transfer to the new provider, or to you, on their existing terms and with their continuity of service.
- There are duties to inform, and in some cases consult, representatives of the affected employees before the transfer. These apply to the current employer and the new one.
- The outgoing employer has to provide information about the transferring employees to the incoming one, and the rules set a minimum notice period for it.
- Dismissals connected to the transfer are likely to be unfair unless there is a specific economic, technical or organisational reason involving changes to the workforce.
Questions to ask before you choose a provider
- Who currently works on our account, how many people, and on what terms?
- Does our contract with the current 3PL say anything about staff, costs or cooperation at exit?
- Will the new provider assume TUPE applies, and have they priced that in?
- Who is responsible for any costs, such as redundancy or unpaid holiday pay, if the answer turns out to be different from the one you assumed?
- How long do consultation and information steps take, and can the go-live date allow for them?
Build the people plan into the project plan
The practical fix is to put the people questions on the same timeline as stock, systems and cutover. That means raising TUPE at the tender stage, so every bidder prices on the same assumption, and agreeing in the contract who handles what. It also means planning communications, so the warehouse team hears about the change from you or their employer and not from rumour.
If you are moving to a new 3PL or bringing fulfilment in-house, Lindsay Barnett can build the people plan alongside the operational one, and will say when a point needs specialist legal advice.