The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) protect employees when the business or undertaking for which they work transfers to a new employer.
Following responses to a call for evidence and a subsequent consultation on proposed changes to TUPE, the government decided to amend the legislation in certain areas to improve its effectiveness and flexibility and to align TUPE more closely with the ARD. However, the changes that are actually going to be made are much less far-reaching than originally envisaged. Several key proposals have been dropped.
The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 have been laid before Parliament. They will amend TULRCA and TUPE and come into force on 31 January 2014, subject to saving and transitional provisions. The final form of the regulations broadly reflects the wording of the draft regulations which were published on 31 October 2013. In summary the following changes are being made to TUPE and Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
- The rules on service provision changes will remain, but the legislation will clarify that for there to be a TUPE service provision change, the activities carried on after the change in service provision must be “fundamentally or essentially the same” as those carried on before it.
- The requirement to provide employee liability information will be retained, but from 1 May 2014 the information will have to be given 28 days before the transfer, rather than the current 14 days.
- There will be a static approach to the transfer of terms derived from collective agreements and transferees will be able to change terms derived from collective agreements one year after the transfer, provided that the overall change is no less favourable to the employee.
- Changes of the location of the workforce following a transfer will be expressly included within the scope of an economic, technical or organisational reason entailing changes in the workforce (ETO reason), thereby preventing genuine place of work redundancies from being automatically unfair.
- Regulation 4 (restriction on changes to terms) and regulation 7 (protection against dismissal) will more closely reflect the wording of the ARD and ECJ case law.
- The provisions in regulation 4 (9) will not be changed. This enables employees to claim that they have been dismissed where there is a substantial change in working conditions to their material detriment.
- The legislation will not enable transferors to rely on a transferee’s ETO reason to dismiss an employee prior to a transfer (which had previously been suggested).
- TULRCA will be amended to clarify that consultation which begins before the transfer can count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee can agree and the transferee has carried out meaningful consultation.
- From 31 July 2014, micro-businesses will be allowed to inform and consult affected employees directly when there is no recognised independent union, nor any existing appropriate representatives.
- The existing government guidance on TUPE will be improved.
The final form of the regulations broadly reflects the wording of the draft regulations which were published on 31 October 2013. However the key changes are:
- In relation to pre-transfer collective consultation, a new clause 198A of TULRCA will make it clear that the transferee can elect to carry out pre-transfer consultation, and can cancel that election, but cannot then make another election. The draft regulations permitted the transferee to make as many elections as it wished.
- In relation to dismissals and changes to terms, the phrase “if the reason for the (variation/dismissal) is the transfer” has been amended to refer to the “sole or principal reason”.
- The increase in the period in which the transferor must provide the employee liability information will apply to transfers that take place on or after 1 May 2014, not 30 April 2014 as was expected. However, the changes to the obligations to inform and consult for micro-businesses will apply to transfers that take place on or after 31 July 2014.
Given the government’s surprise decision not to proceed with its initial plan to remove the rules on service provision changes, the amendments to TUPE are far less significant than had previously been expected.
In fact, it is probably the amendment to TULRCA, enabling the transferee to collectively consult the transferor’s employees prior to the transfer that is likely to have the most important practical impact.
For more information on this contact us on 01483 303636.
Helen Phillips, Solicitor, Just Employment Ltd.