TUPE ruling puts industry on alert

An employment tribunal has fired a ‘legal warning shot' at the PR industry by ruling that agency PROs have the right to transfer to a rival firm following a client re-tender.

The tribunal ruled that Karis Hunt, a former account manager at Storm Communications, had the right to follow her client, Brown Brothers Wines, to a different agency.

The precedent-setting case saw Hunt win an unfair dismissal claim in a first instance tribunal under the recently amended Transfer of Undertakings (Protection of Employment) regulations, commonly known as TUPE.

Hunt was made redundant from Storm when Brown Brothers Wines – her biggest client – stopped using the agency and turned instead to Wild Card PR, following a competitive pitch.

Under TUPE, if a PRO’s principal purpose at an agency is to serve one particular client, he or she is automatically entitled to continue employment with another age­n­cy, should another agency. In this case, ‘principal purpose’ is defined as spending 52% of her time on the client.

Bob Mecrate-Butcher, partner at employment law firm Pinsent Masons, said the landmark case was ‘big news for the PR profession’. He added: ‘The kicker is for the client. This undermines their decision to re-tender, which is ultimately to have new blood on an account.’

Employment law firms are adapting in anticipation of an increase in TUPE cases in the PR, marketing and adv­er­tising industries. Mec­rate-Butcher warned that PR agencies may consider sprea­d­ing more of their employees across the business.

Patrick Barrow, MD at the PRCA, said: ‘This is a legal warning shot for the industry.’ However, he added that there was a danger of similar cases ‘collapsing under the weight of legal argument’.

There will be a further hearing at the end of the summer to decide the extent of Hunt’s financial compensation, according to David Grey-Jones, solicitor at law firm Thomas Mansfield, who is representing Hunt.

Brown Brothers Wines shifted its PR account to Wild Card in August last year.

WHAT TUPE MEANS

Implications for agencies...

  • If an agency wins a new client, it could be forced to hire staff from the client’s previous retained agency.
  • A TUPE claim relies on a PRO serving one ‘principal’ client

Implications for clients...

  • Despite a re-tender, a client may find the same team PROs working on an account

 

The CIPR has created guidelines on employment to take into account the implications of TUPE. Download them at www.cipr.co.uk/research

 

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