The Government has published its proposals for reform of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). The big news is that the Government has decided not to scrap the service provision change (SPC) rules. Instead, there is a relatively minor (and arguably unnecessary) amendment to reflect case law to the effect that the activities carried on after the change in service provision must be ‘fundamentally or essentially the same’ as those carried on before it for the SPC to be caught by TUPE.
The Government intends to lay the new regulations before Parliament in December 2013, with them likely to come into effect in mid-January 2014. There will be transitional and savings provisions to allow employers a ‘lead–in’ period to plan future transfers in line with the new rules, although given the nature of the new rules, which I summarise below, I would query whether such a lead in period is really necessary.
The key changes include:
• allowing the renegotiation of terms derived from collective agreements one year after the transfer, even though the reason for seeking to change them is the transfer, provided that overall the change is no less
favourable to the employee;
• expressly providing for a ‘static approach’ to the transfer of terms derived from collective agreements. The ECJ recently considered the issue in Alemo-Herron and ors v Parkwood Leisure Ltd (the Government proposal is in line with this decision);
• allowing changes in the location of the workforce following a transfer to fall within the scope of ‘economic, technical or organisational reasons entailing changes in the workforce’, to prevent genuine place of work
redundancies from being automatically unfair;
• amending Regs 4 and 7 on probitions on changing terms and conditions of employment and dismissing staff in connection with the transfer, to bring them closer to the language of the Acquired Rights Directive, from which TUPE derives (although this does not represent any major change of substance);
• amending the Trade Union and Labour Relations (Consolidation) Act 1992 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;
• allowing micro businesses to inform and consult directly affected employees when there is no recognised independent union, nor any existing appropriate representatives , and
• bringing forward the deadline by which employee liability information has to be provided to the transferee from 14 days to 28 days before the transfer.
Overall, I consider these to be a sensible and pragmatic set of proposals which, from an employer’s perspective, address a number of anomalies and frustrations with the current TUPE regulations. The implemention of these proposals should result in less uncertainty around TUPE transfers, and ought to make the practical aspects of managing TUPE transfers more straightforward for business.
Clearly, the proposals will not please everyone and perhaps the biggest bug bear of TUPE, the inability of a transferee to harmonise terms and conditions of transferring staff post-transfer, has not really been addressed. However, to be fair to the Government it has not been addressed for a good reason, namely that the Acquired Rights Directive, as interpreted by case law of the European Court of Justice (ECJ), give the Government very little room for manoeuvre on this issue. The Government states that it will engage with European partners to “demonstrate the potential benefits of a harmonisation framework for individuals and the economy”.
Whether the Government is able to achieve anything at EU level remains to be seen but from a legal point of view I do think that that is the correct forum to address any fundamental changes to TUPE. To do so at a domestic level would probably have resulted in satellite litigation to the ECJ on whether TUPE properly implements the Directive; and ensuing uncertainty for business.
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