Has TUPE really affected advertising?

LONDON - One year on, the TUPE doomsayers' prophecies now look a little premature, Noel Bussey writes

In the spring and summer of 2006, adland was in a frenzy as it braced itself for the introduction of the Transfer of Undertakings (Protection of Employment) regulations - better known as TUPE.

Yet one year on, the doomsayers appear to have been more than a little pessimistic in their predictions of wildly expensive litigation. TUPE's impact has been minor: there are few cases in which the law has applied, and, when it has, it has not been particularly hard-felt.

Under the TUPE regulations, any agency winning a piece of business run by a team that works wholly or predominantly on it will be obliged to employ all members of that team from the incumbent agency, should the staff decide they wish to move with the business.

Last week, the IPA released its first test case, in which Karis Hunt, a Storm account executive who spent more than 70 per cent of her time on one account, sued her company, the client and the winning agency (Wild Card) after a pitch saw the account move and she lost her job. An employment tribunal ruled under the TUPE regulations that she must therefore be employed by Wild Card.

Adland's highest-profile example of the regulations came last year when Euro RSCG London picked up the Reckitt Benckiser account and found itself taking on staff from Reckitt's former roster agencies, JWT and McCann Erickson.

While McCann and Euro RSCG came to loggerheads about which staff should move with the account (there was a particular problem with Martin Hummel, a senior suit who spent 100 per cent of his time working on the account, and eventually ended up staying at McCann), Euro RSCG had a much easier time in working out staff changes with JWT.

Mark Cadman, the chief executive at Euro RSCG London, says: "I think the success of the regulations very much depends on how the parties play it. We had a positive and constructive and collaborative discussion with JWT, and ended up with some great people."

One reason for the lack of TUPE cases could be that the introduction of the regulations was so widely publicised, scaring agencies into ensuring they had proper legal advice on the possible implications. Following the law's introduction, many agencies have put clauses in their client contracts to ensure they aren't liable for any costs of TUPE transfers or other resultant problems of accounts moving.

Many have also taken the step of ensuring that as few staff as possible spend more than 75 per cent of their time on any one account, although this alone might not prevent TUPE applying - the rules are so labyrinthine that the definition of "predominantly" is likely only to be refined by the courts on a case-by-case basis.

This preparation has been underlined by law firms and industry bodies, which have ensured that their members have been provided with as much information on the rules as possible, and with practical help should any members find themselves on the sharp end of the regulations.

"We worked very closely with organisations such as ISBA and the IPA to produce an agreed framework that set protocols on how to deal with, and prevent, possible problems," Brinsley Dresden, a partner and the head of the media, brands and technology department at Lewis Silkin, says.

Chris Hackford, the senior legal manager at the IPA, adds: "If these hadn't have been put in place, there would have been much more shouting and confusion."

Backing this forethought is an almost brotherly agreement between agencies, staff and clients not to force the regulations and work together to come to agreements between themselves.

However, Dresden says this may not be the case forever: "We seem to be enjoying good times in the industry at the moment. But the next downturn could lead to agencies' hands being forced into using the regulations to their advantage."

Despite the industry's preparation and the relatively small impact TUPE has had so far, adland cannot become complacent when dealing with regulations that many in the industry view as ridiculous when put into the context of the advertising industry. The recent PR case has shown that it can cause problems, and agencies should treat this as further warning.



Brinsley Dresden, partner/head of the media, brands and technology department, Lewis Silkin

"There was definitely a bit of exaggeration when the regulations came out about the practical impact. However, this also meant that agencies, clients and the industry as a whole have worked hard to ensure that no-one was left in the dark about the regulations.

"It also illustrates the nature of legal advice that you have to present people with the worst-case scenario, even though that may only happen in one case out of ten.

"There have also been a few occasions where agencies, clients and staff have calmly and logically handled the issue without the need for drawn-out legal cases.

"However, it is wrong to become complacent. TUPE could still be a real danger. There are still a lot of difficult negotiations about how the regulations must be dealt with."


Trade body advisor

Chris Hackford, senior legal manager, IPA

"Just because it seems like there are no real cases, it doesn't mean there aren't. Our employment lawyers get one or two calls every day, and that's only the people that come to us. A lot of agencies use their own lawyers.

"It's not the death-knell of the industry as I think the press said it might be, but it is still very significant and not to be ignored.

"We spent a lot of time before the regulations changed setting up protocols that can resolve issues in a simpler way by putting up sensible and logical guidelines.

"If agencies and clients continue to pay close attention to this, and we continue to inform and educate, the lack of problematic cases should stay to a minimum."


Agency chief

Mark Cadman, chief executive, Euro RSCG London

"Most people would like to avoid acrimony generally, so I think most agencies have tried to help each other if they have faced TUPE situations. However, if you go into these situations with an aggressive attitude of making a short-term gain by offloading staff, you are actually causing long-term damage to the industry.

"A proactive and constructive conversation is far better than sending a load of your staff to the lobby of the winning agency's office, expecting them to employ everyone.

"However, if an agency is struggling or in freefall, there is bound to be a temptation to try and claw back some profits by unloading some staff when an account moves. We have to try and convince the industry that this sort of attitude is not beneficial."


Agency chief

Alison Burns, chief executive, JWT

"It hasn't been the problem that I think a lot of people expected it to be, but that's not to say it still won't be. There was quite a lot of what quite a few people called scaremongering when the regulations first came to light, but I think agencies with their heads in the sand needed a wake-up call about the regulations.

"Also, our dealings with Euro RSCG showed that with a bit of co-operation the regulations don't even need to be a problem, they can be beneficial for both agencies, the client and the staff.

"I think the scariest problem it throws up is the danger of losing your best talent when an account moves. Every time we go into a pitch these days, we have TUPE very firmly in our mind so we can come to the best arrangement."


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