The Government is to push forward with the long-delayed reforms to the
Transfer of Undertakings regulations.
A second consultation on draft regulations will start in the next few months,
with the aim of bringing the revised legislation into effect in spring 2004.
The Department for Trade and Industry has dropped the main contentious issue
from the consultation process – whether occupational pension rights should be
protected by TUPE – which was thought to be holding up progress on the reforms.
This will now be included in the more general overhaul of pensions provision.
The TUPE reforms aim to:
– clarify the circumstances when TUPE will apply to service contracting
operations such as cleaning, catering and security
– ensure the new employer is better informed of the ongoing employment
rights of the employees transferring from the old employer
– improve the way TUPE operates when insolvent businesses are sold, to help
promote the rescue culture and save businesses and jobs that would otherwise be
– clarify situations where an employer may lawfully make transfer-related
changes to staff terms and conditions.
Trade and Industry Secretary Patricia Hewitt said the Government wanted to
"support business flexibility and restructuring and help take the fear out
of transfer for those affected."
One of the main problems for employers taking on staff through a transfer is
that making any changes to terms and conditions, for example, to harmonise them
with the existing workforce, is risky.
Case law has shown that even variations agreed with the employees will be
judged void if the reason for them was the transfer itself.
"There is nothing in the [Acquired Rights] Directive… that would allow
considerable relaxation of the rules preventing employers from restructuring
and renegotiating employment terms," said John McMullen, head of
employment law at Pinsent Curtis Biddle.