The Government has published draft legislation amending TUPE and the law relating to collective redundancies. This is expected to become law in January 2014.
The government has been working at reforming TUPE over the last few years with the aim of establishing fairness for both employers and employees. The government is also seeking to increase the effectiveness of employment law and increase liquidity in the labour market by removing the level of legal risks to businesses when carrying out transfers.
At the current time it is proposed that new regulations will be introduced to Parliament in December 2013 with implementation planned for January 2014. New guidance on TUPE will also be produced at that time.
Changes to Provisions
Part of the proposals were the repealing the service provision change regime, primarily as it goes beyond the requirements of the Acquired Rights Directive. However, this is apparently now not going to happen. The government was persuaded that going back to the pre-2006 position would have made it very difficult to predict whether TUPE was going to apply.
Keeping Service Provision Changes expressly within TUPE also has the benefit that usually:
- Â· If work is outsourced, brought back in-house or if the service provider is changed, the employees are protected under the TUPE Regulations;
- Â· All bidders at the tender stage know that TUPE applies and so start from the same level playing field when pricing their bids; and
- Â· Current service providers do not need to worry about unbudgeted redundancy liabilities.
The government does still plan to amend the Service Provision Change rules. Case law has established that part of the test of whether a TUPE Service Provision Change occurs is whether the activities carried on after the transfer are â€˜fundamentally or essentially the sameâ€™ as those carried on before. As such, differences in the service after a change in provider could mean that the change is not caught by the Service Provision Change rules (although it may still be caught by the other TUPE provisions).
The governmentâ€™s consultation and forthcoming amendment of the Service Provision Change rules serves as a reminder that TUPE may be amended from time to time. Businesses may want to reflect on whether their contracts have been drafted with this in mind as continual amendments can be expensive and time consuming.
Â Employee liability information
The rules on employee liability information will be retained but the transferor (current employer) will be required to provide the information to the transferee (proposed new employer) 28 days (rather than 14 days) before the transfer. The existing defence where providing the information within 14 (now 28) days is not reasonably practicable will continue. There is a lot of information with reference to the content and obligation of the employer towards the employee liability information, which for matters of length, cannot be adequately covered here, For full guidance please contact rhw solicitors directly.
Harmonisation of terms
The renegotiation of terms derived from collective agreements will be allowed one year after the transfer,provided that overall the change is no less favourable to the employee. Any proposed variation would be subject to the general rules on lawfully varying terms and conditions with employees.
Changes to individually, rather than collectively, agreed terms which are ‘by reason of a transfer’ will remain unlawful. The wording in the TUPE Regulations which also prevents changes which are ‘connected with the transfer‘ is going to be removed. It is difficult to see whether this will provide businesses with increased scope to make changes.
Transfer of collectively agreed terms
The TUPE Regulations provide for a “static approach” to the transfer of terms derived from collective agreements, where the current employer is not a party to the collective agreement or bargaining process. This will mean that only those terms in collective agreements in existence at the date of the transfer will be binding on such a transferee. Transferred employees will not benefit from any terms agreed at a later date as part of the pre-transfer collective bargaining arrangements.
Location of the workforce
A transfer-related dismissal is automatically unfair unless it is for an “economical, technical or organisational reason entailing changes in the workforce“. This is interpreted as “entailing changes in the workforce” as being limited to changes in the number of employees or the functions performed by employees. It did not cover dismissals arising from a change in location. This meant that if, because of the transfer, the transferee intended to carry on the business at a difference place, but with the same number of employees overall, then any dismissals as a result of this change in location would be automatically unfair under TUPE. To address this discrepancy, the TUPE Regulations will be amended so that changes in the location of the workforce following a transfer will be able to fall within the scope of “economic, technical or organisational reasons entailing changes in the workforce“. The conclusion from this change is that redundancies due to a change in location following a TUPE transfer will not be automatically unfair (although may still be unfair in terms of the general protection against redundancy dismissals in the ERA).
It will be made clear that consultation by the transferee (proposed new employer) which begins pre-transfer can count for the purposes of complying with the collective redundancy rules, provided that the transferor (current employer) and transferee can agree and where the transferee has carried out meaningful consultation. This change reflects a practice that was already well-established, particularly in public sector transfers, but which was technically not recognised as lawful.
Permitting pre-transfer consultation will potentially increase business efficiency and the speed of any restructuring process; and reduce the impact on employees who can be subject to two periods of consultation in quick succession and long periods of uncertainty.
Small businesses (few than 10 employees) will be allowed to inform and consult directly with affected employees if there is no union representation.
If you would like advice on this matter or to speak to one of our lawyers in connection with any other Employment Law matter please speak to rhw directly on 01483 302000 or contact the author, Charmaine Dudmanvia e-mail: firstname.lastname@example.org