Pension protection under transfers

The Government has given its strongest indication that staff pensions are to
be protected by law for the first time when employees transfer from one
business to another.

The proposals are part of the Government’s push to convince public sector
staff that it is safe to move to private sector employers, and are outlined in
a long-awaited consultation document on changes to Transfer of Undertakings
Protection of Employment regulations.

Currently pensions are not covered under Tupe, but in practice public-sector
employers have had to ensure private contractors provide staff with similar

John McMullen, national head of employment law at Pinsent Curtis Biddle,
said the proposals mean private-sector employees’ pensions will for the first
time be protected when staff transfer.

McMullen, who advises the CBI on Tupe, added, "As a contractor, you
will write the cost of providing a pension scheme into the overall cost.

"What it may mean is that the cost imperative of contracting out may
not be as high as before. You cannot do it much more cheaply because the labour
saving is not there."

The consultation document also includes proposals to make it easier for
employers to change terms and conditions, provided there is an economic,
technical or organisational reason to do so.

But McMullen thinks this proposal is contrary to European case law.

Other plans include consideration of whether Tupe should apply when service
contracts change hands from company to company and greater flexibility over
when the regulations apply to transfers of insolvent businesses.

By Ben Willmott

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