Last year the Government consulted on its proposed changes to the existing TUPE Regulations and collective consultation requirements under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). The TUPE Regulations have been criticised by the business sector in the past as being ‘gold-plated’, going beyond what is strictly necessary under the European Acquired Rights Directive (2001/23/EC).
The final amending Regulations have now been published and laid before Parliament, to come into force on 31 January 2014. The Explanatory Memorandum to accompany the amending Regulations states that the intention behind the amendments is to reduce the risk that they are interpreted more restrictively than is required by the 2001 Directive.
The key changes resulting from the amended Regulations are as follows:
- The express provisions covering ‘service provision changes’ (outsourcing) will remain, but are clarified to provide that the activities carried out after the change in service provider must be “fundamentally or essentially the same” as those carried on by the previous service provider;
- The requirement for transferors to provide employee liability information increases from a minimum of 14 days to 28 days before the transfer, for transfers taking effect on or after 1 May 2014;
- Terms derived from collective agreements will transfer and remain ‘static’ post-transfer (ie if any changes are subsequently collectively agreed without the transferee’s involvement). Transferee employers will be able to change any such terms one year after the transfer, provided the changes are no less favourable to the employee overall;
- Minor changes to the wording of existing provisions relating to dismissal because of a transfer, and a new provision that changes in the workplace location following a transfer are expressly included within the scope of an ‘economic, technical or organisational reason’ entailing changes in the workforce (meaning that a ‘place of work’ redundancy resulting from a transfer is no longer automatically unfair);
- Minor changes to the wording of existing provisions and restricting the variation of terms post-transfer, and now permitting variations that are either for an ‘economic, technical or organisational reason’ and are agreed by the employee, or if the terms of the contract permit the employer to make the variation;
- Amendments to TULRCA will clarify that consultation that begins prior to the transfer can count for the purposes of the collective redundancy consultation requirements, provided both the transferor and transferee agree and that the transferee carries out meaningful consultation;
- Micro-businesses (10 or fewer employees) will not be required to hold an election and will be permitted, from 31 July 2014, to consult directly with affected employees about the transfer if there is no recognised union or existing representatives.
In practical terms, the changes to TUPE are unlikely to have a significant impact on the majority of transfers. Many of the amendments only serve to ensure that the revised TUPE Regulations reflect the current interpretation of TUPE resulting from existing caselaw, both domestic and European.
Interestingly, the Government’s Impact Assessment, published alongside the new Regulations, suggests that the number of employment tribunal claims arising from TUPE will be reduced by 50% as a result of the amendments, providing an annual reduction in costs to businesses of an estimated £6.5m annually. This contributes to an estimated overall annual net benefit of £8.7m resulting from the reforms to TUPE.
Whilst the amendments may go some way in clarifying and simplifying the TUPE process for employers, it seems rather optimistic that TUPE-related claims will be reduced by such a large percentage. There will no doubt be future litigation concerning the scope and effect of the amended provisions, but it is perhaps too early to speculate to what extent, if at all, the overall number of claims will be reduced as a result of these amendments.