Employers hoping for a complete overhaul and greater flexibility in the transfer of employee rights following a company sale or change of contractor, under what is known as TUPE legislation, are likely to be disappointed when the new regulations come into force at the end of the month.
Long-regarded by employers as over-bureaucratic and inflexible, it was hoped that reforms would liberalise the TUPE process, which is based on EU legislation to protect employee rights when a business, or the undertaking that employs them, is transferred to a new employer.
It has had far reaching effects since its introduction in 2006, extending to even the smallest business and to include teams employed by one company to work on a particular client contract being transferred to another company if they take over the contract, in what is known as a ‘Service Provision Change’.
“TUPE has been under attack for being a ‘gold plated’ version of the original EU legislation, and employers had hoped for a significant watering-down in this new form, but the final result is likely to leave many disappointed,” explained employment law expert Mark Cornish of Greenwich & Blackheath solicitors Grant Saw.
“The Government had proposed repealing the service provision change rules – which apply when a client outsources activities to a contractor and then replaces them with a different contractor or takes the work in-house – but instead has opted for an amendment, saying that a service must be fundamentally the same for TUPE to apply. It’s less than hoped for, but it will give incoming contractors more scope.”
The other main changes for employers under the new TUPE legislation include:
- A change in the place of employment will now be classed as a justifiable economic, technical or organisational reason to terminate employment, allowing for redundancy and will not lead to automatic unfair dismissal
- The dismissal of an employee under Regulation 7 of TUPE 2006 will now only be automatically unfair if the reason for the dismissal is the transfer itself
- Where there are less than 10 employees and no recognised independent union or existing representatives, employers can consult directly with employees, a move designed to ease the burden on micro businesses
- Pre–transfer consultation can be counted when calculating collective redundancy timelines
- A tightening up on the timeframe in which current employers must provide employee liability information – this will have to be provided at least 28 days before transfer instead of the current 14 days
- Collective agreements will be allowed to be varied by the new employer after one year as long as it does not result in variations that are less favourable to employees
This is not legal advice; it is intended to provide information of general interest about current legal issues.