September 30, 2014

TUPE Reforms Update – The Never Ending Story

The Transfer of Undertakings for the Protection of Employment (TUPE), which became UK law over 30 years ago, is tinkered with nearly every year – and 2014 is no different.

There are several major changes this year. The first change is that work that is to be transferred must be; “fundamentally the same” for TUPE to apply. What does; ”fundamentally the same” mean? We have a very good understanding but until case law is to be set by Judges in Upper Courts there is no definitive answer.

Other new legislative provisions incorporate changes to the terms and conditions of employment of the employees you are inheriting. Dismissals are no longer automatically unfair because of a change in the workplace location.

It is now possible for you to buy a business, close it down, and if the geography is too great for staff to transfer, you may then dismiss safely. You may have other connected liability in Tribunal but any reduction as a business owner must come as blessed relief.

Further 2014 TUPE changes include the ability to renegotiate any Trade Union collective agreement that you inherited from the business purchase.

The key is that these cannot be done in the first year after transfer and the changes are; “no less favourable” to the employees. If you swapped private healthcare provision for a pay increase for your staff would this be “less favourable”?

A fully fit 19 year old employee may have a different view to a 70 year old employee with complex health problems. This will be an interesting area to watch as case law develops. Unsurprisingly Trade Unions have already taken a robust stance of defending the employees.

Another notable change is that it is now possible to begin redundancy consultation with staff prior to TUPE occurring whilst they are still the employees of the business you are buying.  The practicalities of this happening are very questionable.

Often several companies are completing due diligence with a view to buying a business. Are the affected employees supposed to consult with every company interested in purchasing the business they work for?

In 2014 a company is expected to have all ‘due diligence’ completed at least 28 days prior to transfer doubled from the previous 14.

This is an additional burden to any business and may actually cost jobs. If you tried to buy an insolvent business and were exposed to two additional weeks of uncertainty this may well put you off.

It is interesting to note that small businesses (fewer than 10 employees) are now exempt for electing  Representatives for TUPE but it is worth stressing that this is for employers having fewer then 10 employees in total and not fewer than 10 employees connected to the transfer.

More changes are expected for 2015 and beyond so the key is to call the Advice Line as soon as possible and we can protect your business from the very start.

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