Employers will be given access to fast-track advice from tribunals on whether Tupe applies to staff transfers, under far-reaching proposals due later this year.
The DTI is set to issue a consultation paper on Tupe over the summer which many expect will widen its scope.
The paper will include a proposal to allow employers to be given direction by tribunals about whether a transfer would be covered by the directive ahead of the transaction being completed. This could create demands for such directions to be legally binding.
The Government will also propose that Tupe applies to pension rights for the first time, although a flexible approach is being taken. Firms will only be required to provide "broadly comparable" rather than "mirror-image" benefits. Employers may be allowed to make a cash payment in lieu of pension benefits.
The broad thrust of the paper is also expected to widen the application of Tupe. One source said it would apply "in almost all transfer cases."
John Twitchen, policy executive at the Environmental Services Association, a founder member of the Tupe Forum, said, "For some of the smaller companies dealing with local authorities it will be difficult because local authorities provide very good pensions."
He added that fast-track rulings would be welcome in setting out ground rules for employers, but that they are waiting for the consultation document to find out how it will work.
John McMullen, head of employment law at Pinsent Curtis, said the DTI was trying to achieve consensus and the extension of the scope of Tupe would make the law more clear.
He added extra costs resulting from applying Tupe to pensions might not act as an impediment to transfers as they might be passed on to customers.
By Tom Powdrill