TUPE: response to consultation on proposed changes

On the 5th September 2013, the government published its response to the consultation on proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006  (SI 2006/246) (TUPE), and set out the changes that it will be making to them. It has now confirmed that it hopes to lay the draft regulations before Parliament in December. The Department for Business, Innovation & Skills (BIS) has confirmed that the changes are likely to come into force in January 2014

In January 2013, the government issued a consultation on a number of proposed changes to the Regulations. Any employer who has been through a TUPE exercise will be aware that this area of law is a minefield and can be extremely frustrating for outgoing (transferor) and incoming employers (transferee).  The Government’s intention is that these changes will alleviate some of those frustrations, however only time will tell!

The response to proposed changes published by the government confirmed it will amend TUPE, in order to:

  • Allow transferees to renegotiate terms derived from collective agreements one year after the transfer, provided the changes are no less favourable to the employee.
  • Expressly provide for a static approach to the transfer of terms derived from collective agreements. Provide that changes to the workforce’s location following a transfer can amount to an economic, technical or organisational reason entailing changes in the workforce (ETO reasons).
  • Amend the provisions restricting changes to terms and giving protection against dismissal in each case to reflect the wording of the underlying Directive and/or ECJ case law more closely.
  • Provide that, for there to be a TUPE service provision change, the activities carried on after the service provision change must be “fundamentally or essentially the same” as those carried on before it.
  • Allow micro businesses (less than 10 employees) to inform and consult with their employees directly where there is no recognised independent union or existing appropriate representatives.

In addition, the government will amend the Trade Union and Labour Relations (Consolidation) Act 1992 to clarify that consultation on collective redundancies can start before the transfer provided the transferor and transferee agree and the transferee has carried out meaningful consultation.  It has also confirmed that guidance on TUPE will also be improved, which will hopefully be of assistance to employers embarking on a TUPE exercise.

Concluding the consultation period the government has confirmed it will not:

  • Repeal regulation 3(1)(b) of TUPE, which provides that there is a transfer where there is a service provision change.
  • Allow transferors to rely on the transferee’s ETO reasons in respect of pre-transfer dismissals.
  • Remove the transferor’s obligation to provide employee liability information. However, such information will have to be provided 28 days before the transfer, rather than 14 days as present.
  • Amend regulation 4(9) in respect of an employee’s ability to resign and claim unfair dismissal in response to substantial changes to their working conditions to their material detriment.

As mentioned earlier, TUPE is a minefield for either transferor or transferee and the law on this subject is often subject to ever changing case law. Therefore if you are considering the purchase or sale of a business or part of, or service changes which might give rise to a TUPE situation; then do speak with your HR Consultant for advice and guidance.