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TUPE changes

Meredith Hurst Tuesday, November 19, 2013

The draft TUPE amendment regulations have now been published due to be in force January 2014.

This follows consultation this year by the Government on changes.  This arose from concerns that the regulation caused difficulties for businesses in practice and went beyond the requirements of the European legislation, the Acquired Rights Directive.

A number of changes were considered including the abolition of the service provision changes and removal of the requirement to provide employee liablility information.  Some of our clients were involved in the lobbying on the issue.  In particular there were serious concerns about the proposal to remove this provision. The outcome of consultation is that the requirement is retained.  Indeed the provision has been improved from a transferee's point of view requiring this to be provided 28 days before the transfer rather than 14 days at present. 

There was also significant lobbying in the industry concerning the abolition of service provision changes.  It is understood that some 67% of respondents were against this.  Anybody with memories of the situation prior to 2006 will realise that, for all their faults, the service provision changes have increased certainty in a situation where contracts change hands.  While service provision changes will remain it has been clarified that the activities carried on before and after the change in the service provision must be "fundamentally or essentially the same". 

In the old regulations and case law there was a rather unjust principal that a change of location could not be considered an economic technical organisational reason or ETO (applied in theTaperecase).  This could give rise to a claim for automatic unfair dismissal by an employee who has transferred and then asked to work somewhere else.  The new provisions will close this gap in the protection for employers. 

The protection of employees in relation to dismissal will be narrowed.  Dismissals will be automatically unfair where they are by reason of the transfer.  The current provision is that they will be unfair also if connected with the transfer which is rather broader.  This more closely reflects the European legislation.  The government believes that in the medium term there will be more certainty about when dismissals will be automatically unfair. 

A similar narrowing of the definition applied to restriction on variations of contract.  Under the new provisions this becomes changes by reason of the transfer.  The previous provision was changes due to reasons connected with the transfer.

Other changes include:-

  • Confirming that contract provisions subject to a Collective Agreement cannot be changed by that agreement if the employer is not a party: this is known as the "static" approach.
  • Microbusinesses (with less than 10 employees) will be able to inform and consult employees directly without appointed representatives
  • Pre-transfer consultation with representatives on redundancy can be credited when calculating the minimum period of such consulation

Our view is that the decision to retain service provision transfers and the requirement to provide employee liability hearing information is positive news as is the extension of the ETO defence to change of location.