TUPE or not TUPE

HR expert Sandra Beale gives the low down on the latest changes to TUPE.

On 5 September the Government issued its response to consultation over TUPE reform.

The purpose of TUPE [Transfer of Undertakings (Protection of Employment) Regulation] is to protect employees if the owner of their business changes. Its effect is to move employees and any liabilities associated with them from the old employer to the new employer.

TUPE has often caused lots of problems for employers and the consultation exercise was meant to iron out some of the difficult issues that arise. However, surprisingly the changes to the 2006 TUPE regulations are not as significant as previously anticipated. The revised regulations are expected to be laid before parliament in December 2013.

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These are the main issues:

– There will be no repeal of service change provisions so this aspect will be retained. The provisions only apply where the services involved are fundamentally or essentially the same. The wording of the 2006 regulations are to be revised.

– There will be a longer timeframe for employee liability information to be provided by the transferor (outgoing employer) to the transferee (incoming employer), meaning there will be a 28-day timeframe for the process compared to that of 14 days with the existing regulations.

– Contractual changes following transfer will be permitted after one year. This means there will be a limited relaxation of post transfer harmonisation which should help the longstanding current frustration of employers who are unable to harmonise terms and conditions of transferring and existing members of staff even with agreement. Contractual changes will be permitted as long as the transfer is not the main reason for the change and that the change is based on an Economical, Technical or Organisational [ETO] reason. There will also need to be an appropriate contractual clause to allow any changes.

– Collectively agreed terms will freeze at the point of transfer and clarification on this process will be included in the new regulations.

– Change of business location will be an ETO reason. This change will allow redundancies to be made due to change of location and will not be automatically unfair as currently.

– Pre-transfer collective redundancy consultation will count as part of due process. This change will be voluntary and there will be no new obligation to consult pre-transfer. The transferor may permit access to the transferee and consultation must be meaningful. Even if redundancy is inevitable the transferee cannot issue any notices of redundancies until after a notional transfer. The transferor cannot make any redundancies if it cannot demonstrate any ETO reason. Employers will be given guidance on what is a reasonable time to elect employee representatives.

– Micro businesses of 10 or fewer employees will be removed from collective consultation so employers can inform and consult directly with employees.

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