An end to the gold-plating of TUPE?

In 2012 the Government issued a call for evidence on the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) and how they affect businesses. TUPE implements the EU Acquired Rights Directive in the UK. The Government has now issued a consultation which sets out the proposals for reform of TUPE which show that some significant changes are in contemplation.

One of the most interesting of the proposed changes is to repeal the ‘service provision change’ aspect of TUPE. This aspect means that outsourcing, contracting in and retendering exercises have been included within the scope of TUPE. The repeal of the ‘service provision change’ aspect comes in response to business concerns that TUPE has been ‘gold-plated’ in the UK, and sets standards far higher than those which the EU Directive requires.

Another proposals for reform of TUPE includes changing the wording of the restrictions on varying contracts in relation to a TUPE transfer, so that these restrictions more closely reflect the minimum requirements in the Directive. This is to assist employers in grappling with the difficulties with harmonising the terms and conditions of employment between existing employees with those of the employees transferring across to them. The Government is proposing that TUPE could be amended so that changes to terms by reason of the transfer itself would still be prohibited, but parties would be able to agree any change that they could have agreed had there not been a transfer, and the parties could still agree a variation for an ‘economic, technical or organisational’ reason (ETO reason).

Other proposed changes include:

• A change to the wording of the restriction on TUPE-related dismissals so that dismissals that are only connected to the transfer, and not by reason of the transfer itself, may not be automatically unfair.
• Widening the definition of ETO reason which currently must entail “changes in the workforce” to include changes in workforce location.
• Narrowing the scope of the right for an employee to resign and be treated as dismissed in response to a ‘material detriment’ as a result of on the transfer.

TUPE has long proved to be a complex area of employment law and as such the reforms, whenever they are implemented, are likely to be welcomed by employers. However we suspect that these changes may lead to uncertainty and therefore more litigation.

If you need TUPE advice, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.