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Update on TUPE Reform: Much Ado About Nothing

Update on TUPE Reform: Much Ado About Nothing

The Government has now published its eagerly anticipated (by me anyway!) response to its consultation on reform of the TUPE regulations.  It now proposes a number of specific reforms intended to remove the “unfair legal risks that businesses currently face” when involved in a TUPE transfer.  But, most notably, the Government has pulled back from repealing in their entirety the existing provisions with regard to “service provision changes”, as discussed in my last TUPE blog (http://bit.ly/1dVmITe).

So what will change?

The following key changes to the existing TUPE regulations are proposed:

  • TUPE will be amended to allow for the so-called “static” approach to the transfer of terms derived from collective agreements.  This will mean that only those collective agreements in place at the time of the transfer will transfer to the new employer, reflecting recent case law in the area.  No longer will new employers be bound by collective agreements negotiated after the relevant transfer and which they were not involved in negotiating but which are incorporated into transferred employee’s contracts;
  • TUPE will be amended so as to allow renegotiation of any employment terms derived from collective agreements after a period of one year following the transfer, regardless that the reason for seeking the change is the transfer itself, provided that the change is no less favourable overall to the employee;
  • TUPE will be amended so that changes in the location of a workforce following a transfer can be within the scope of an economic, technical or organisational reason for dismissal.  This will prevent genuine place of work redundancies after a transfer from being automatically unfair, as is currently the case;
  • The timescale for the provision of “employee liability information” by the outgoing employer to the new one will be changed from at least 14 to 28 days prior to the transfer; and
  • The Government proposes to amend collective redundancy legislation to make clear that consultation which begins prior to a TUPE transfer can count for the purposes of complying with collective redundancy rules provided that consultation has been meaningful.

Although not the subject of a current reform, the Government has also acknowledged the difficulties which TUPE presents in relation to the harmonisation of terms and conditions of employees following TUPE transfers.  With that, it proposes to engage with European partners on amending European legislation to provide for a harmonisation “framework”.  This change may prove easier said than done…

Sounds good…

The Government’s changes are certainly to be welcomed.  But perhaps the most notable feature of its proposals relates to what it will not be doing…

Previously, the Government had suggested repealing the service provision change provisions of TUPE in their entirety.  These currently apply in respect of the contracting in, contracting out or retendering of services by clients such that, provided the requirements of TUPE are met, employees of the existing provider will be entitled to transfer with all the protections of TUPE to the employment of the new service provider.

Taking on board responses to its consultation document, the majority of which were against the proposed change, the Government has now shied away from implementing it.  Instead, it proposes merely that TUPE will be clarified so as to require that, for there to be a “service provision change” within the meaning of TUPE, the services carried out after the change in service provision must be “fundamentally or essentially the same” as those carried on before it.  Again, this is in keeping with recent case law.

I think this shift in the Government's approach is to be welcomed.  As discussed in my last blog (http://bit.ly/1dVmITe), some recent cases have already significantly narrowed the circumstances in which TUPE will apply to service provision changes.  The complete repeal of the TUPE provisions on these would have created further unwelcome uncertainty in what had become a reasonably, dare I say it, settled area of TUPE law.

What’s next?

It is the Government’s intention that the new amended TUPE regulations will be laid before Parliament in December 2013.  No implementation date has been given but it is expected that this will be in the first half of 2014.  We will keep you updated.

The verdict…

On balance, although perhaps not as radical as its original consultation document had alluded to, the Government’s changes are to be welcomed.  They will bring TUPE into line with recent case law in a number of respects and address certain anomalies which those have thrown up.  And in other areas left unchanged, in these uncertain economic times, there is much to be said for maintaining the status quo.

Morag Moffett

Burness admin