Proposed changes to TUPE scaled back

The Government has announced how the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations 2006 will change, having decided not to go ahead with two significant repeals it had previously proposed to the Regulations.

Neither the removal of the rules regarding “service provision changes” (SPCs) nor the repeal of the transferor’s obligation to provide employee liability information have made it past the consultation.

Announcing the Government’s response, which has been broadly welcomed by employers, employment relations minister Jo Swinson said that the changes will “remove unfair legal risks that businesses currently face, give businesses more legal certainty in what they can do and reduce the bureaucracy of a transfer”.

Only 28% of those who took part in the consultation backed the repeal of the TUPE provisions on SPCs, compared with 67% who preferred to keep them.

Swinson confirmed Personnel Today’s article last week that Government intends to lay the regulation before Parliament in December 2013. The Department for Business, Innovation & Skills said last week that it planned for the changes to come into force in January 2014 .

Changes to TUPE that have made it through the consultation include:

  • allowing renegotiation of terms agreed in collective agreement one year after transfer, provided that overall the change is no less favourable to the employee;
  • allowing businesses with 10 or fewer employees to inform and consult directly with employees; and
  • clarification that for TUPE to apply, the activities carried on after SPCs must be “fundamentally or essentially the same” as those carried on before them, reflecting the approach set out in the case law.

Draft regulations have yet to be published. Further detail on the extent of the changes to TUPE are outlined on XpertHR.

Reaction to the TUPE changes

Darren Newman, employment law trainer and contributing editor to XpertHR, said: “The Government has listened to the concerns of those who feared a return to the uncertainty that dogged TUPE prior to 2006. The inclusion of SPCs brings its own difficulties, but removing them would have created huge uncertainty in the contracting industry.

“The lesson to be learned here is that not every regulation that goes beyond the European minimum is a bad thing. Repealing ‘gold-plating’ just for the sake of it is counter-productive.”

Nick Jew, a partner at DLA Piper, said: “Few employers who dealt with the uncertainty, increased cost and potential for dispute that existed before these provisions came into force in 2006 would have wanted a return to the old position.”

Neil Carberry, director for employment and skills at the CBI, said: “Businesses will welcome these changes, particularly the Government’s commitment to make the case for EU rules to be clearer about harmonising terms and conditions.”

The TUC disagreed however, concerned that employers will now be able to renegotiate changes to collective agreements one year after transfer. General secretary Frances O’Grady said: “Weakening guarantees on pay and conditions will encourage companies to compete for contracts based solely on wage and other employment costs and not on the quality of service. This, in turn, will increase the risk of poverty wages for the many female employees who work in industries like catering, social care and cleaning where outsourcing is common.

“Today’s announcement will also see dismissal and redundancy rights watered down for outsourced workers. This is a blatant attack on the ability of unions to represent working people.”

XpertHR resources

Recognise whether or not TUPE applies to a transfer

Good practice guide: TUPE

Line manager briefing: Handling TUPE transfers

Provide a transferee with employee liability information

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