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13 September 2013

Reforms to TUPE Regulations

Our employment team examines the latest Government plans for reform of the TUPE Regulations.

Earlier this year, the Government launched a consultation on its proposals for reforming the existing Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE Regulations).

The Government has now issued its response to the consultation, confirming the changes that will be made to the TUPE Regulations.

Key changes that will be made are as follows:

Service Provision Changes

  • The Government has decided against removing the express protection for service provision changes, which was one of the proposals included in the consultation paper.
  • Service provision changes will therefore continue to be covered, but the Regulations will be amended to reflect the position established by caselaw, providing that for a service provision change to fall under TUPE, the activities carried on after the service provision change must be “fundamentally or essentially the same” as those carried on before it.

Terms and conditions

  • The current provisions restricting the ability to change the terms and conditions of transferring employees will have a minor amendment, to more closely reflect the requirements of the European Acquired Rights Directive.  This is likely to mean that any changes to terms and conditions by reason of the transfer will continue to be void, but not changes for a reason connected with the transfer.  The practical implications of this change are likely to be minimal.
  • The Regulations will make it clear that unilateral variations to contracts will be permitted if they are pursuant to a contractual provision (eg a mobility clause), and the change would have been permitted if the transfer had not taken place.
  • Transferee employers will be permitted to renegotiate terms derived from collective agreements one year after the transfer, provided the changes are no less favourable to the employee.
  • The Regulations will make it clear that any terms derived from a collective agreement will transfer in a ‘static’ manner, meaning that the transferee employer will not be bound by any terms negotiated as part of a collective bargaining process occurring after the relevant transfer (to which the transferee is not a party). This amendment is to reflect the recent decision of the European Court of Justice in the case of Parkwood Leisure Ltd v Alemo-Herron (C-426/11), in which the court held that a transferee cannot be bound by post-transfer collectively agreed terms if it is unable to be involved in the negotiating process.

Consultation

  • Micro businesses (with 10 or fewer employees) will be permitted to inform and consult their employees directly, without any requirement to elect employee representatives, where there is no recognised trade union or existing representatives.
  • An amendment to the Trade Union and Labour Relations (Consolidation) Act 1992 will make it clear that consultation on collective redundancies can start in advance of the transfer, and will count for the purpose of complying with collective redundancy rules, provided both transferor and transferee employers agree and the transferee has carried out ‘meaningful’ consultation.

Employee liability information

  • The requirement for the transferor to provide employment liability information to the transferee in advance of the transfer will be retained, but the information will have to be provided 28 days before the transfer (rather than 14 days as at present).

Relocation

  • Changes in the location of the workforce following a transfer will be expressly covered within the scope of an ‘economic, technical or organisational reason entailing changes in the workforce’ (an ETO reason).  This will mean that genuine place of work redundancy situations will no longer be regarded as automatically unfair dismissals.

In addition to the revised Regulations, the Government has also promised that improved guidance on the Regulations will be issued.

The Government is limited in its ability to make fundamental changes to the Regulations, as they must meet the requirements of the Acquired Rights Directive.  These changes, whilst less radical than originally proposed, will go some way to assist businesses by clarifying and simplifying the TUPE process.

Indications are that the proposed amendments will come into force in January 2014, although the draft legislation is still being finalised and the date has yet to be confirmed.

A copy of the Government’s consultation response is available here.