Changes to TUPE arrive but employers disappointed

Employers hoping for a complete overhaul and greater flexibility in the transfer of employee rights following a business sale or change of contractor, under what is known as TUPE legislation, are likely to be disappointed when the new regulations come into force at the end of the month warns Howard Robson, Employment Partner.

The new Collective Redundancies & Transfer of Undertakings (Protection of Employment) Regulations 2013 came into effect on 31 January.

Long-regarded by employers as over-bureaucratic and inflexible, it was hoped that reforms would simplify the TUPE regime, which is based on EU legislation, to protect employee rights when a business, or the undertaking that employs them, is transferred to a new employer.

The TUPE regulations, introduced in 1981 and updated in 2006 have had far reaching effects. They  impact upon even the smallest business and may include individuals (or teams) assigned by an employer to work on one  particular client contract which is subsequently acquired by another business, perhaps after a tender process; in what is known as a ‘Service Provision Change’.

“TUPE has been under attack for being a ‘gold plated’ version of the original EU legislation, and employers had hoped for significant simplification in this new form, but the final result is likely to leave many disappointed, it is broadly ‘TUPE as usual’” explained Howard.

“The Government had proposed repealing the service provision change rule,  which applies when a client outsources activities to a contractor and then replaces them with a different contractor or takes the work in-house,  but instead has opted for an amendment, saying that a service must be fundamentally the same for TUPE to apply.  It’s less than hoped for, but it will give incoming contractors more scope.” 

The other main changes for employers under the new TUPE legislation include:

• A change in the workplace location will now be classed as a potentially justifiable reason to terminate employment as a fair redundancy. Previously, redundancies that arose simply by reason of the workplace re-location were automatically unfair if they arose for a TUPE related reason unless there were also changes to the staffing levels or functions carried out.
• The dismissal of an employee under Regulation 7 of TUPE 2006 (dismissal because of a transfer of the business) will now only be ‘automatically unfair’ if the reason for the dismissal is actually the transfer itself.
• If there are less than 10 employees affected by the transfer and no recognised trade union or existing workplace representatives, employers can consult directly with employees, a move designed to ease the burden on micro businesses.
• Pre–transfer consultation can be counted when calculating collective redundancy timelines.
• A tightening up on the timeframe in which current employers must provide employee liability information – this will have to be provided at least 28 days before transfer instead of the current 14 days.
• Collective agreements will be allowed to be varied by the new employer after one year as long as it does not result in variations that are less favourable to employees.

If you might be involved in the sale or acquisition of a business or have lost (or won) a contract for services, whether private or public, and might be affected by the TUPE regime you can contact Howard or any of the Employment Team on 02380 717717.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.