Our continuing series of quick
guides to major employment legislation, which puts key information at your
fingertips and brings you up to date with the latest developments. This week
Sarah Lamont, partner at Bevan Ashford, Bristol, looks at the notorious Tupe
legislation and the areas within it which are still causing headaches for
employers and lawyers alike. As she explains, the Government’s proposed
amendments to Tupe could help address some of the ongoing issues
One
of the most notorious pieces of employment legislation has to be the Transfer
of Undertakings (Protection of Employment) Regulations 1981 or
"Tupe", as it is known. Tupe was enacted in the UK, with marked
reluctance by the Government at the time, to implement the Acquired Rights
directive, the European legislation on which it is based. Perhaps it is because
the regulations were introduced at the eleventh hour that it has caused –Â and still causes – so much difficulty in
interpretation, or perhaps it is because their application in practice is so
much wider than originally envisaged. Â
Whatever the reason,
there are still a number of areas within Tupe which cause employers and lawyers
headaches. So it has been with interest that the Government’s proposed
amendments to the regulations have been awaited and, at last, the Government
has issued its consultation paper. This article looks how the proposals may
help to address some of the issues within Tupe. Â
Scope of the
regulations
This is the most
extensively debated and litigated aspect of Tupe. To combat this the Government
proposes to adopt a definition of a transfer of an undertaking which is, for
the first time, set out in the Acquired Rights directive, which was amended in
1998. But also, recognising that this may not be a complete answer, it proposes
measures in the context of transfers within public administration and where
there is a change in the service provider in "contracting out" or
"outsourcing". Â
In the former case the
Cabinet Office Statement of Practice "Staff Transfers in the Public
Sector" (January 2000) will be applied (which in effect encourages parties
to act in accordance with Tupe even where it is not clear it would apply as a
matter of law). In the latter case, the Government wishes to consult on whether
and how the regulations should be amended to ensure that changes in service
provision are covered. Â
Occupational pensions
Currently, even when
Tupe applies, an employee is not entitled to the transfer of any pre-existing
right to continue active membership of an occupational pension scheme.
For public-sector
staff transferring to the private sector, the Government has for some time
taken the view that such employees should continue to have pension provision
made for them.
Central guidance to
government departments and local authorities states that the transferee
employer is generally required to offer transferred employees an occupational
pension scheme which is "broadly comparable" to that afforded by the
public-sector transferor. Obviously,
however, this has not affected transfers of employees in the private sector. Â
The Government
suggested two approaches: either preserving the current public-sector policy or
by amending Tupe to provide some protection for occupational pension rights for
both public- and private-sector staff. The aim is to "strike a balance
between protecting transferred employees and minimising extra burdens on
private-sector employers" and it has outlined options for providing a
level of protection through Tupe which are set out in a background paper which
accompanies the consultation paper.
Transfer-connected
dismissals
There has been some
confusion as to the inter-relationship between regulation 8(1), which makes a
dismissal automatically unfair where it is connected with a transfer, and
regulation 8(2) which provides an exception from this general rule where there
is an "economic, technical or organisational reason entailing changes in
the workforce" (ETO), for the dismissal. Where there is an ETO, the dismissal
can be fair, if the employer has acted reasonably.
Some cases suggested
that regulation 8(1) and regulation 8(2) are mutually exclusive, so that if
transfer is the reason or principal reason for the dismissal, it is not
possible to look then to see whether regulation 8(2) also applied – ie, whether
there was an ETO justifying the dismissal. The proposal is to clarify that
these regulations are not mutually exclusive; ETO reasons are a subset of
reasons for a dismissal connected with the transfer.
Changes to contracts
Another live issue has
been the extent to which changes can be made to the terms and conditions of
employees affected by a transfer, even where the employee agrees to the
changes. Again, case law has suggested
that any such changes are invalid and therefore not binding on the employee who
has purported to agree them. This has caused uncertainty for transferee staff
in particular.
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The Government
proposes to make it clear that Tupe does not preclude transfer-related changes
to terms and conditions where the reason for making the changes is an
"economic, technical or organisational reason entailing changes in the
workforce". But while this comfort is to be welcomed, it may not prove to
be a cure for all ills in the context of changing terms and conditions because
of the requirement that an ETO must "entail changes to the
workforce". Case law on ETOs has shown that this will not cover
harmonisation of terms and conditions, for example.
To
view the proposals, go to: www.dti.gov.uk/er/tupe/consult.htm
