The Transfer of Undertakings Regulations (or TUPE for short) have been with us since 1981. They were amended in 2006 and the Government is making further changes which it has published this week. TUPE exists to ensure that the rights of employees are protected in the event of the sale of a business or in contracting-out situations, in other words when a company loses a contract – e.g. a cleaning contract – to another contractor. It can also apply when an employer takes a contract back in-house. Contracting-out and contracting-in situations are called ‘Service Provision Changes’ in the regulations. It is unlawful for the employer to dismiss employees for a reason connected with the transfer or simply because it does not want to take the incomingstaff on. It can dismiss in certain circumstances but only where there is an ‘economic, technical or organisational’ reason entailing changes in the workforce. This may be the case when an employer has to make redundancies. Contractual variations are also prohibited. The transferor (the employer losing the business or contract) and the transferee (the employer acquiring the business or contract) both have an obligation to inform their own employees about the transfer and consult with employees in appropriate circumstances. If either the transferor or the transferee is intending taking ‘measures’ or dismissals then it also must consult with its employees about ways of avoiding the dismissals as well as other matters. The transferor has obligations to provide the transferee with information about its employees called Employee Liability Information. The transferee has an obligation to inform the transferor of any measures (dismissals) that it intends to make. The new regulations will be amended to allow for contractual variations if the reason for the variation is the transfer but the contract allows for it. It is not clear whether this means that a party will be able to rely upon a general flexibility clause in a contract of employment. Arguably it woud be able to do this in any event. Changesto the workforce entailing a change to the place of work, will be permitted on the grounds of redundancy even if this is because of the transfer.In practical terms, it is quite often the case that a transferee will take a contract over but require the employees to work from a different location. Previously this would have amounted to a fundamental change to the terms of employment giving rise to unfair dismissal. The changewill mean that redundancies arising out of a change of location will notbe unfair. Theis good news for transferees. The transferor will now have to provide employeeliability informationno later than 28 days before thetransfer, whereas the previous period was 14 days but this only applies in respect of transfers taking place three months after the regulationscome intoforce. The most notable change is tothe consultation requirement. The new regulations will allow the transferee to consult employees, including transferring employees, before the transfer. This is a significant departure and whilst in practice this already happens in some cases, the procedures in the new regulations are cumbersome as it is unclear when the consultation should commence. Read the draft TUPE regulations.
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