The draft regulations propose several key changes to the current version of TUPE including:
- Specific provision for "service provision changes" - outsourcing, including the initial contracting-out of a service, a change in service provider as well as contracting-in by taking a service back in house - will come within the scope of TUPE, subject to certain conditions
- Clarification of when transfer-related dismissals or changes to terms and conditions can be made for economic, technical or organisational reasons entailing a change in the workforce
- Provision for parties to agree to transfer-related changes to terms and conditions (even where there is no economic, technical or organisational reason) in certain types of insolvency proceedings
- A requirement for sellers to notify buyers, in writing, of all associated rights and obligations in relation to transferring employees, icluding any subsequent changes before completion
- Joint and several liability will fall on buyers and sellers where there has been a failure to comply with information and consultation requirements
- Removal of the territorial restrictions in TUPE, bringing it into line with other employment legislation where international law determines whether an employee working abroad is able to bring a tribunal claim.
The draft regulations are intended to come into effect on 1 October 2005.
A minimum standard of protection for the occupational pension rights of transferring employees is dealt with separately under the Pensions Act 2004 and the Transfer of Employment (Pension Protection) Regulations 2005, due to come into force on 6 April 2005.
What is improved?
In some respects the draft regulations offer certainty but they are likely to produce a more restrictive environment for business transactions. This is amply demonstrated in one of the headline issues - outsourcing.
A vast improvement in the draft regulations is the attempt to expressly bring outsourcing within their scope, removing the uncertainty that has pervaded this point for many years.
The draft regulations expressly cover service provision changes where there is an "organised grouping of employees… which has as its principal purpose the carrying out of the activities concerned on behalf of the client."
The definition effectively excludes situations where a contractor is engaged by a cli