Government unveils new TUPE Regulations

Earlier this year, the Government consulted on the proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) in an attempt to simplify the current legislation.

Following the Government’s response to the consultation on 5 September 2013, outlining scaled-back changes, draft legislation was published at the end of last month amending the TUPE Regulations. The Regulations are expected to be laid before Parliament next month, and come into force in January 2014.

Whilst the Regulations do not go as far to amend TUPE as proposed in the consultation, there are still significant changes which can be summarised as follows: -

  • The definition of “activities” for the purpose of service provision change has been clarified to match current case law. For TUPE to apply, the activities carried on after a service provision change must now be “fundamentally or essentially the same” as those carried on before them;
  • Businesses with 10 or fewer employees (termed ‘micro-businesses) will be able to inform and consult directly with employees where there are no pre-existing employee representatives recognised. This saves the need to appoint employee representatives;
  • The time period for the transferor to provide employee liability information to the transferee is extended from the current 14 days to not less than 28 days before the transfer;
  • Where there are provisions for collective agreements in employees’ contracts of employment that collective agreement relating to terms coming into force after transfer will not bind the new employer if they were not a party to the negotiations. The usual example would be in terms of agreed pay rates. This change clearly reduces the burden on new employers;
  • A change in location after the transfer will be included within the term “changes in the workforce” for the purposes of an economic, technical or organisational (ETO) defence. This applies for the purpose of both the dismissal of an employee or a variation of a contract of employment;
  • Current restrictions on varying employment contracts where there is a relevant transfer are relaxed for variations by reason of a transfer, so long as the changes are permitted by the employees’ contract of employment;
  • Terms agreed in a collective agreement pre-transfer can be renegotiated once a year has elapsed from the date of transfer, provided that the overall change is no less favourable to the employee.

In addition, the Regulations amend the Trade Union and Labour Relations (Consolidation) Act 1992 to allow a transferee to begin consultation prior to a TUPE transfer taking place for employees likely to be made redundant after the transfer. The transferor must agree to this pre-transfer consultation and written notice must be provided by the transferee to the transferor.  Of course, the applicability of this amendment will largely depend on the co-operation of a transferor in allowing an incoming transferee access to its workforce prior to the transfer.