Following a TUPE transfer, can the transferee change employees' terms and conditions that were incorporated from a collective agreement prior to the transfer?

In general, employees who transfer to a new employer under TUPE retain their terms and conditions of employment and the transferee's ability to make changes to those terms and conditions is restricted. However, the TUPE Regulations 2006 allow transferees to vary terms and conditions that derive from collective agreements that were incorporated into employees' contracts prior to the transfer, provided that:

  • the variation takes effect more than one year after the transfer; and
  • following the variation, the rights and obligations in the employee's contract, when considered together, are no less favourable to the employee than those that applied immediately before the variation.

An employer that wishes to make such a variation to terms and conditions derived from a collective agreement must still comply with the normal rules on effecting a variation of contract, such as consulting with the employees and seeking their consent to the variation as appropriate.