On 17 January 2013, the Government issued a consultation on a number of proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’). TUPE’s purpose is to protect employee’s employment rights when the business or undertaking for which they work transfers to a new employer or where the work they are doing on behalf of a particular client transfers to a new contractor. The Government has said the proposed changes will “improve and simplify” TUPE for all parties involved. The consultation follows the call for evidence in November 2011 on the effectiveness of TUPE.
SERVICE PROVISION CHANGES
The most significant of the proposed changes is the repeal of the regulations relating to service provision changes. TUPE was amended in 2006 to bring most service provision changes (i.e. outsourcing, insourcing and retendering) within the scope of TUPE. The Government proposes reversing this change. However, it recognises that service providers may have entered into existing contracts on the assumption that TUPE will apply at the end of the contract. The Government also notes that the outsourcing process can be a long period and, for larger and more complex services, could take a year or longer. In light of these factors, the Government has asked for views on the length of any “lead in” period that would be required before the change comes into effect.
EMPLOYEE LIABILITY INFORMATION
Regulation 11(2) of TUPE sets out information that must be provided by the transferor to the transferee prior to the transfer. The Government is proposing the removal of the transferor’s obligation to provide employee liability information. However, it will make it clear that a transferor should disclose information to the transferee where it is necessary for either party to meet their obligations to inform and consult on a TUPE transfer.
CONTRACTUAL CHANGES, PROTECTION AGAINST DISMISSAL AND SUBSTANTIAL CHANGES TO WORKING CONDITIONS
The consultation document includes proposals to amend the provisions of TUPE that restrict post-transfer changes to employment contracts, the provisions that give protection against dismissal and the provisions concerning a substantial change in the working conditions to the material detriment of the employee so that they more closely reflect the wording of the underlying Acquired Rights Directive (2001/23/EC) and case law of the European Court of Justice.
DISMISSALS ARISING FROM A CHANGE IN THE WORKPLACE
The Government proposes to amend TUPE so that an “economic, technical or organisational reason entailing changes in the workforce” (an ETO reason) includes changes to the workforce’s location.
Currently, there is no statutory definition of “entailing changes in the workforce”, but the UK courts have restricted it to mean changes in the numbers employed or the functions performed by employees. Under the proposed changes, the definition of an ETO reason would be aligned with the definition of redundancy under the Employment Rights Act 1996, so that dismissals arising from a change in the place of work following a transfer will not be automatically unfair.
COLLECTIVE REDUNDANCY CONSULTATION
It is common for redundancies to take place after a TUPE transfer. If so, there may be overlapping obligations to inform and consult under TUPE and in respect of collective redundancies. The Government believes that the consultation process should be able to start before the transfer and proposes to amend TUPE to provide that the transferee can consult with the transferring employees prior to the transfer about proposed collective redundancies.
The Government proposes allowing “micro businesses” (those with fewer than ten employees) to inform and consult with their employees directly with regard to TUPE, rather than through representatives, in cases where there is neither a recognised union nor existing representatives.
TERMS AND CONDITIONS DERIVED FROM COLLECTIVE AGREEMENTS
The Government is seeking views on whether it should amend TUPE to limit the period for which terms derived from collective agreements apply to one year from the transfer.
The Government has also asked for views on whether or not a transferor should be able to rely on the transferee’s ETO reason in respect of pre-transfer dismissals.
WHAT HAPPENS NEXT?
Responses to the consultation are required by 11 April 2013. The Government has said that it will respond within 12 weeks of the consultation closing. If the consultation supports the proposed changes, the Government intends to introduce them (save probably those relating to service provision changes) in October 2013. The consultation paper can be found following the link below:
Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006: consultation on proposed changes, 17 January 2013
Please contact Richard Monkcom, Charles Avens or Toby Stroh for further information.This note does not constitute legal advice but is intended as general guidance only. It is based on the law in force in January 2013.