Government publishes response to consultation on TUPE reform
The Government has published its response to the consultation on proposed changes to the TUPE Regulations.
It plans to make amendments to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246), with the aim of removing what it describes as "unnecessary gold-plating" to the TUPE Regulations, ie provisions that are not required by EU legislation, and removing "unfair legal risks to companies carrying out transfers". It is the Government's intention to lay the amending Regulations before Parliament in December 2013.
As a result of responses to the consultation, the Government has decided that some significant changes that it had proposed to TUPE will not now go ahead. In particular, the proposal to repeal the service provision change rules has been dropped. The TUPE Regulations currently provide that a service provision change (ie an outsourcing, insourcing or re-tendering of a service) is generally covered by TUPE. The Government had proposed repealing these provisions, which would have meant that a service provision change would be covered by TUPE only if it met the general definition of a transfer of an undertaking under the Regulations. The majority of respondents to the consultation were opposed to the repeal of these provisions, mainly on the basis that it would result in uncertainty over whether or not TUPE applies to a particular transfer and a corresponding increase in disputes.
The proposal to remove the duty to provide employee liability information has also been dropped (although the timeframe for providing such information will be changed) and there will be no amendment to allow a transferor to rely on a transferee's economic, technical or organisational (ETO) reasons to dismiss an employee prior to a transfer.
The TUPE Regulations will be amended so that:
- Renegotiation of terms derived from collective agreements, where the variation is by reason of the transfer, will be allowed one year after the transfer, provided that overall the change is no less favourable to the employee.
- The Regulations will expressly provide for a static approach to the transfer of terms derived from collective agreements (ie transferees should not be affected by any subsequent variations or new collective agreements relating to the transferor following the transfer).
- Changes in the location of the workforce following a transfer can be within the scope of ETO reasons entailing changes in the workforce, thereby preventing genuine place of work redundancies from being automatically unfair.
- The wording of reg.4 (on the effect of a transfer on contracts of employment) and reg.7 (on dismissal of employees because of a transfer) will be brought closer to the language of the Acquired Rights Directive (2001/23/EC). While the exact drafting is to be decided, the amended provisions are likely to refer to the "transfer itself" being the "reason" for the variation or dismissal. The Government considers that the current wording, which also refers to reasons "connected with" the transfer, is too wide.
- The Regulations will reflect the current position under case law that for there to be a TUPE service provision change, the activities carried on after the change in service provision must be "fundamentally or essentially the same" as those carried on before it (the exact wording of the amendment is still to be decided).
- Micro-businesses (those with 10 or fewer employees) will be allowed to inform and consult directly with affected employees, where there is no recognised union or existing appropriate employee representatives (so elections of representatives will not be necessary).
- The transferor will be required to provide employee liability information to the transferee 28 days before the transfer (extended from 14).
The Trade Union and Labour Relations (Consolidation) Act 1992 will be amended to make it clear that consultation which begins pre-transfer can count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee can agree and where the transferee has carried out meaningful consultation.
The Government has also said that it will work to improve guidance for businesses on conducting TUPE transfers. Further, with the aim of allowing employers to achieve harmonisation of terms and conditions across the workforce by agreeing mutually beneficial changes to terms and conditions with employees, the Government has stated that it will engage with European partners to demonstrate the potential benefits for individuals and the economy of a framework that allows such changes.
- Transfer of Undertakings (Protection of Employment) Regulations 2006: Government response to consultation (PDF format, 362K) The Goverment's response is available on the UK Government website.
For detail on the law on TUPE transfers, see Employment law manual > TUPE > Transfer of undertakings.
FAQs on TUPE include:
- FAQs > What is "employee liability information" under the TUPE Regulations 2006?
- FAQs > Where employees are dismissed as a result of a TUPE transfer, will the dismissals be unfair?
- FAQS > What is an "economic, technical or organisational reason" for dismissal under the TUPE Regulations 2006?