Member Article

The government has today published its response to the consultation on changes to the TUPE Regulations, which are due to come into force in January 2014. 

Set to stay: service provision changes and employee liability information

The headline point is that service provision changes are set to stay.  Under the current TUPE Regulations, outsourcings, insourcings and retenders/second generation outsourcings would trigger a TUPE transfer.  The government had originally proposed to remove service provision changes from the scope of TUPE.  However, this amendment has now been dropped.  This is likely to be welcomed by businesses and practitioners, as it allows businesses to determine with reasonable certainty whether a TUPE transfer will be triggered, and to account for the apportionment of liability accordingly.

Additional clarification will be included in the new Regulations, such that a TUPE service provision change will only be triggered if the service provision after the transfer is "fundamentally or essentially the same" as before the transfer.

It was originally suggested that the requirement for transferors to provide ‘employee liability information’ to the transferee at least 14 days prior to the transfer (also known as ‘Regulation 11 information’) would also be removed.  However, the response document confirms that employee liability information is also here to stay.  This requirement will be amended such that the time limit for providing the information will now be 28 days before the transfer.

Other change not going ahead: Pre-transfer dismissals and ETO reasons

The government has opted not to allow a transferor to rely upon a transferee’s ETO reason to justify the dismissal of employees pre-transfer.  It felt that this change could result in an increase in general unfairness in the labour market.  It also recognised that the change could be subject to challenge in the Courts, based upon case law from Europe, which would reduce certainty for businesses and employers.

Key Changes

The following key changes are going ahead:

• ‘Static’ approach to be confirmed - the current TUPE Regulations will be amended to expressly provide for a static approach to the transfer of terms derived from a collective agreement.  Therefore, only the terms in existence at the date of the transfer will be binding on the transferee.

• Post-transfer changes to collective agreements - where transferring employees are subject to the terms of a collective agreement, it will now be permissible for a transferee to agree to amend the terms of the collective agreements, provided that the amendments do not take place within the first year after the transfer and that, overall, the change is no less favourable to the employee.  

• Change in location - any dismissals arising from a change in the location of the workforce, will potentially come under the scope of an economic, technical or organisational (‘ETO’) reason entailing changes in the workforce.  If this can be established, such dismissals would not be deemed to be automatically unfair (although ordinary fairness principles would still apply). 

• Redundancy / TUPE consultation - pre-transfer consultation under TUPE may now count towards any applicable collective redundancy consultation requirements, provided that the transferor and transferee can agree to this approach and that the transferee has in any event carried out meaningful consultation.  The government will amend the existing redundancy consultation legislation to reflect this. 

• Microbusinesses - businesses with fewer than 10 employees will be permitted to inform and consult directly with employees, rather than with union/employee representatives.

• TUPE guidance - the government has confirmed it will work to improve TUPE guidance so that businesses understand how to conduct a transfer fairly and in the most effective way.

• Protection against dismissal - the current TUPE Regulations will be amended in order that only dismissals that are deemed “because of the transfer” (as opposed to “because of or in connection to the transfer”) will be automatically unfair, with liability transferring to the transferee.

New TUPE Regulations, reflecting the above changes, are likely to be published shortly, and are due to be laid before Parliament in December 2013. 

If you have any questions or would like to discuss, please contact the Employment Team.