PR industry gets a TUPE wake-up call in light of Lexis story

The potential TUPE transfer of eight Lexis PR staff to The Red Consultancy after losing a £1m-plus account has been described as a 'wake-up call' to PR agencies and clients.

Jason Gallucci: 'surprised' by industry's lack of TUPE knowledge (Alex Deverill)
Jason Gallucci: 'surprised' by industry's lack of TUPE knowledge (Alex Deverill)

The Transfer of Undertakings Protection of Employment regulations were updated in 2006 to effectively mean that employees that are largely dedicated to an account could move to a new agency if the account changes hands.

Despite the laws being in place for more than five years, there have been surprisingly few TUPE cases in PR.

Insiders agreed that the number of people set to transfer from Lexis to Red was an industry first.

One obvious reason for this is the lack of multi-millionpound accounts in comms, compared with other creative industries where TUPE transfers are more common.

However, there have been a number of seven-figure accounts changing hands in recent years, including LG Electronics shifting to LG-One, The Royal Mint moving from Grayling to Porter Novelli and MS&L losing Philips to an Omnicom consortium.

It is thought that LG and Philips were affected by TUPE, but the number of people involved were minimal.

One agency source told PRWeek that PROs did not know the 'ins and outs' of TUPE because they thought it 'doesn't apply to them'.

The source added that agencies would rather 'absorb the costs' than see their talent move to a competitor.

Lexis CEO Jason Gallucci was surprised by the lack of TUPE knowledge in the industry.

'TUPE is the law - not a rule that can be used willy nilly,' he said.

'In most cases in PR, it affects one or two people who are offered alternative roles and give up their right to transfer. However, if you have 23 people working on an account, as we did with Boots, it changes everything.'

Christopher Head, director of specialist employment law consultancy Irenicon, worked on the Storm Communications case in June 2007 (see timeline).

He told PRWeek the Lexis case was a wake-up call to the industry and that most cases in the PR industry 'don't come to the surface because most don't have people dedicated to one account'.

He advised: 'Clients and agencies need to speak early about TUPE regulations when accounts are up for repitch. Only then can decisions on staffing and costs be agreed.'

Read Brand Media editor in chief Danny Rogers on why 'ignorance of TUPE law will no longer wash'.

HOW I SEE IT

Brendon Craigie, CEO, Hotwire

When it comes to TUPE, there is not a right or wrong answer - and it is not necessarily a bad thing. It might be that the people who are moving over are the stars of the account and are people the client would miss.

So, there might be an advantage for the winning agency to take them.

However, if the client was unhappy with every single aspect of the account, including the people, then it is not good that its hands are tied.

One thing that should be noted is that when TUPE is used, it is not a surprise to the winning agency, as it would have had to sign agreements to accept the TUPE liabilities.

In the ongoing war for talent in this industry, using TUPE is the last possible resort. No agency wants to lose talent it has developed. When TUPE is used, it is unpleasant for all parties.

Stuart Bruce, principal, Stuart Bruce Associates

This legislation does not appear to make sense in cases such as this, but that is a reason to continue to lobby collectively as an industry for a law change again.

The issue has been covered before, so there is no excuse for agencies not knowing about TUPE. Just because it has not happened yet is not an excuse for ignorance. You could almost employ that logic to any law.

There is also the question of whether the client had fully thought through the implications before putting the account out to pitch. TUPE only applies when more than 50 per cent of an employee's time is spent on one client.

Therefore, it is easy for agencies to avoid and if individuals are spending more than 50 per cent of their time on one client, then both client and agency need to be aware of it and take action.

IN NUMBERS

£1.2m The amount the Boots account was worth to Lexis

23 The number of Lexis staff who worked on the Boots account

8 Members of the Lexis Boots team involved in TUPE proceedings

5 Years since TUPE rules were updated to take account of PR outsourcing

TUPE TIMELINE

September 2011 Lexis PR starts TUPE proceedings after losing £1.2m Boots brief.

November 2009 Firefly starts TUPE proceedings after LG Electronics shifted its £1m UK work to LG-One.

January 2008 The PRCA lobbies ministers for an exemption for the PR industry from TUPE rules.

June 2007 A tribunal rules that Karis Hunt, from Storm Communications, has the right to follow her client Brown Brothers Wines to Wild Card after the account changed hands.

April 2006 TUPE is updated to protect employees where services, such as PR, are reassigned to a new firm.

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