Updated TUPE puts employers in contractual straightjacket

The new Transfer of Undertakings (Protection of Employment) Regulations (TUPE) will significantly strengthen the rights of staff involved in a transfer and will be a “bitter blow” to employers, lawyers have warned.

From 6 April, employers will find it more difficult to lawfully amend contracts of transferring employees, according to Chris Mordue, employment partner at law firm Pinsent Masons.

This is because the new regulations do not allow changes to contracts for “a reason connected with the transfer” unless this is for an “economic, technical or organisational reason entailing changes in the workforce”.

The phrase “connected with the transfer” captures many more situations than the current “by reason of the transfer”, Mordue said. Critically, the phrase “entailing changes in the workforce” has been given a very narrow interpretation in UK case law, requiring changes in the number of employees or possibly their skills, he said.

“Most contractual changes following a TUPE transfer will not involve changes to numbers of employees or skills at all,” said Mordue. “The [changes] will make it almost impossible to lawfully agree changes to rates of pay, holiday and sickness entitlements, disciplinary or grievance procedures – even the date employees are paid.”

The second part of a “double whammy” for employers under the new regulations is to give employees the right to claim constructive dismissal where changes are made to non-contractual working conditions. Employees will have the right to claim constructive dismissal if material changes are made to their working conditions after a transfer.

“The new regulations are a bitter blow for employers, who expected either no change or greater clarity on when changes could be legitimately made,” said Mordue.

A DTI spokesman said: “The regulations have been the subject of very thorough consultation with stakeholders. They clarify the extent to which employers and employees can agree to vary terms and conditions for a reason connected with a transfer, and clarify the circumstances where it is unfair to dismiss an employee for a transfer-related reason.”

DTI forced to rewrite TUPE guidance

The DTI has been forced to change its guidance on TUPE after law firms pointed out it advised employers that the award they would be liable to pay workers who were not consulted on the transfer of a business was capped at £290 per week. This contradicted the TUPE legislation, which states that the weekly pay award is not subject to a cap, but is based on the actual pay of the employee.

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