As we have previously reported, the Government has been consulting on changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), and has now published the amending legislation. The legislation can be found here and the associated guidance here. Some of the changes are rather legalistic, but the essence of the changes is to simplify TUPE and to reduce what has sometimes been a rather burdensome and bureaucratic process when an undertaking transfers from one employer to another. Most of the changes will come into effect on 31 January 2014.
In summary, the following changes are being made to TUPE and Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA):
- The rules on service provision changes will remain in force. However, the revised legislation will expressly state that for there to be a service provision change under TUPE, the activities carried on after the change in service provision must be “fundamentally or essentially the same” as those carried on before it. This simply clarifies the approach which has been taken by the courts over the last few years and will make it easier for the incoming service provider to potentially structure their operation so as to avoid the impact of TUPE. Whilst this will be welcome for incoming service providers, it will be less welcome for the outgoing provider who may well be left with the redundancy costs for the employees engaged in the service provision.
- The requirement to provide employee liability information will be retained, but from 1 May 2014 the information will have to be given 28 days before the transfer, rather than the current 14 days. However, the information will still only need to be given to the transferee, not prospective transferees.
- The terms of employment derived from collective agreements will still transfer, but the transferee will be able to change terms derived from collective agreements one year after the transfer, provided that the overall change is no less favourable to the employee.
- Changes in the location of the workforce following a transfer will be expressly included within the scope of an economic, technical or organisational reason entailing changes in the workforce (an ETO reason). This will prevent genuine place of work redundancies from being automatically unfair.
- One important rule under TUPE which many though would change will remain as it is. This is that the transferor will still not be able to rely on a transferee’s ETO reason to dismiss an employee prior to a transfer.
- The Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) will be amended to clarify that consultation regarding collective redundancies which begins before the transfer can count for the purposes of complying with the collective redundancy consultation rules, provided that the transferor and transferee agree and that the transferee has carried out meaningful consultation.
- From 31 July 2014, micro-businesses (that is those with less than 10 employees) will be allowed to inform and consult affected employees directly when there is no recognised independent union or existing appropriate employee representatives in place.
The changes are fairly significant, and do reduce the burden on employers in some circumstances. However, TUPE remains a complex piece of legislation and employers should seek early advice on the potential impact of TUPE to any transfer of a business or service provision change.
We have years of experience of dealing with all aspects of TUPE. If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).