Can the transferee change the contracts of the incoming employees following a TUPE transfer, to harmonise them with those of its existing employees?
When a transferee employer acquires employees as a result of the transfer of a business that is covered by the TUPE Regulations 2006, the transferring employees will retain their contractual terms and conditions. Therefore, the terms and conditions of the incoming employees could be significantly different to those of the existing employees.
Any purported variation by the transferee of the contracts of employment of the transferred employees will be void where the sole or principal reason for the variation is the transfer itself, unless it is an economic, technical or organisational (ETO) reason entailing changes in the workforce. The requirement for "changes in the workforce" means that an ETO reason can be relied on only where there is a change in the overall numbers or functions of employees in the workforce, such as in a redundancy situation or, potentially, a reorganisation, or where there is a change in the location of the workforce.
This restriction on the ability to vary the contract applies even if the employees are happy to accept such purported variations and are no worse off as a result. However, the employer and employees may agree a variation of the employment contract if the sole or principal reason for the variation is an ETO reason entailing changes in the workforce or a reason unrelated to the transfer. What is not possible is for a transferee to purport to change employment contracts for the sole purpose of harmonising the terms and conditions of transferring employees with the terms and conditions of employees in its existing workforce.