January 30, 2014

TUPE changes are now in force

The latest shake up to employment law has now come into force.

‘TUPE’ is an acronym for the Transfer of Undertakings (Protection of Employment) Regulations 2006. There are currently between 25,000 and 50,000 TUPE transfers in the UK each year.

The Government believes that the provisions set out in the 2006 Regulations “gold plate” the European Acquired Rights Directive which underpins UK legislation. It is therefore making changes to the Regulations which are expected to be implemented on 31 January 2014.

When do the TUPE Regulations apply?

TUPE currently applies in a number of circumstances:

  • When a business is sold
  • When a service is outsourced for the first time
  • When a service changes hands subsequently
  • When a service is brought back in-house

Where a TUPE situation arises, an employee’s employment and their associated employment rights, transfer from the old employer to the new employer. Duties of the old employer (the transferor) include the need to inform and consult staff about the transfer and any implications – such as possible redundancies. They must also provide the new employer (the transferee) with information relating to potential employee liabilities. Small businesses in particular have said they find such obligations very burdensome.

Other major difficulties that have been identified by employers include:

  • The difficulty for a transferee trying to introduce efficiencies following a transfer.
  • The Regulations being a barrier to reducing the size of the workforce.
  • Difficulties harmonising terms and conditions to bring the newly acquired workforce in line with existing employees.
  • The lack of clarity about making changes to the workforce for “economic, technical or organisational” (ETO) reasons.

What will change when the new Regulations are implemented?

The TUPE changes will not go as far as initially proposed by the Government in its consultation. There will, however, be significant amendments. The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 have recently been published. The Regulations (which will not apply in Northern Ireland) will supplement, not replace, the 2006 Regulations.

The main changes to the Regulations are set out below:

  • Service provision changes – a transfer will only arise where the transferring activities are “fundamentally the same”.
  • Employee liability information – the time frame for providing this information will be increased from 14 to 28 days pre-transfer.
  • Change of location – the meaning of “entailing changes in the workforce” may now include changes to the place of work for the purposes of an ETO defence (so genuine place of work redundancies will no longer automatically be unfair).
  • Consultation – micro businesses – those with fewer than 10 employees may consult directly with affected staff (rather than via elected representatives) where there is no recognised union or employee representative body.
  • Pre-transfer consultation – consultation about proposed redundancies (carried out by the transferee and representatives of transferring employees before the transfer) may count for the purposes of collective redundancy consultation.
  • Collective agreements – collectively agreed terms will be frozen at the point of transfer where the transferee is not involved in subsequent negotiations. Terms derived from collective agreements may be renegotiated one year after the transfer, provided the changes are overall no less favourable to the employee.
  • Dismissals – are currently automatically unfair when they are “by reason of” or “connected with” a transfer. The “connected with” qualification will be dropped. Therefore, dismissals will only be automatically unfair where “the reason” for them is the transfer.

The following transitional periods will apply:

  • The change relating to employee liability information will be effective three months after the amendments come into force.
  • The provisions relating to micro businesses and consultation will come into force six months after the Regulations are introduced.

Where can I get further advice and support?

Full assistance on managing a TUPE situation can be provided by our HR Advice Line.  Please telephone an adviser on 0845 073 0240 who will be happy to guide you through the process.

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