How much difference will the new changes to TUPE (The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014) actually make? For TUPE aficionados the changes are no doubt very interesting but, bearing in mind that I have already commented on the changes in general terms I will confine my observations to those most likely to be of significance for those dealing with transfers.
Guidance recently issued by the Department for Business, Innovation and Skills and commenting specifically on the new changes is also a handy general reference for those dealing with TUPE transfers. For instance, there is a useful reminder that TUPE applies to “relevant transfers”, i.e. (i) when a business, undertaking or part of one is transferred from one employer to another as a going concern or (ii) when a client engages a contractor to do work on its behalf, or reassigns such a contract (including bringing the work “in house”). The second scenario is generally referred to as a “service provision change”. Further, the guidance restates the maxims of TUPE transfers:
- the identity of the employer must change (e.g. share takeovers are not covered);
- asset only sales are generally not covered;
- the transfer must be of an economic entity that retains its identity following the transfer;
- for this purpose “economic entity” means “an organised grouping of resources which has the objective of pursuing and economic activity, whether or not that activity is central or ancillary”; and
- in the event of the transfer of part of a business the resources (including employees) do not need to be used exclusively in the transferring part of the business and by no other part.
So, what of the changes?
The first important one is a reinforcement of an existing principle concerning service provision changes – the activities carried out must be fundamentally the same before and after the transfer for TUPE to apply.
The provisions allowing for a transferee to start consultation before the transfer with the transferor’s consent have been tweaked to make it clear that if the transferee changes his mind about wanting to consult early and cancels his request he cannot then revive it.
Protection from dismissal and adverse contract changes in the event of a transfer (the core purpose of TUPE) will not apply in certain circumstances where the sole or principal reason for dismissal or a contract variation is an economic, technical or organisational (ETO) one entailing changes in the workforce. Those who have dealt with TUPE transfers will no doubt be aware that the “ETO defence” may turn an automatically unfair dismissal to a potentially unfair dismissal. Accordingly, this change takes the application of ETO reasons a little further.
There are also amendments so that a change to the place where employees are employed can fall within “changes in the workforce” and consequently trigger the ETO defence.
Potentially the most problematic change concerns permission to vary terms in collective agreements when more than a year has passed since the transfer “provided that overall, the contract is no less favourable to the employee” and that employers “can make changes permitted by the terms of the [employment] contract”. This surely opens the door for employers to include very flexible terms in employment contracts and then relying on these powers within the contract as a way of getting round TUPE. This will no doubt be a ripe area for litigation.
As I’ve mentioned previously the change that all dealing with TUPE transfers should note above all is that the deadline for the outgoing employer to provide employee liability information to the incoming employer is increased from 14 to a minimum 28 days before the transfer.
The Regulations also include “A provision allowing micro businesses to inform and consult employees directly when there are no existing appropriate representatives.”