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TUPE changes 2013

17 September 2013

In January of this year the Government announced a consultation to review the TUPE Regulations. This review formed part of a wider government programme which aims to improve "laws around taking people on, managing staff and letting people go." The proposed reforms were considerable and one which was met with particular fanfare was the suggested repeal of the regulations relating to service provision changes (SPC). It was anticipated that life could become simpler for employers by removing the uncertainty as to whether TUPE applied in outsourcing, insourcing or re-tendering arrangements. It was not to be.

The Government has now published its response to the consultation on TUPE and 67 of those who replied to the consultation did not support removal of the SPC provisions. The responses identified SPC as somewhat of a marmite provision. The fact that a customer can choose to change its service provider because it is unhappy with the service but end up with the same staff is often criticised. Yet the respondents to the consultation say that the operation of the SPC provision ensures continuity of staffing (noted to be particularly important for the voluntary sector) and increased security for service sector workers. Many respondents took the view that the benefit of the SPC provisions was the certainty and that there was less room for parties to disagree over whether TUPE would apply.

The Government has now responded on the proposed reforms and watered-down the overhaul. With reference to SPC, the existing definition will simply be altered to reflect case law, that is that for there to be an SPC under TUPE, the activities carried on after the change in service provision must be "fundamentally or essentially the same" as those carried on before it.

Little has changed the spirit of the Cabinet Office Statement of Practice, when encountering a SPC, in practice little has changed. When (and if) the amendments come into force, the position will be the same as it is now: if unsure, assume TUPE does apply and take advice.

A summary of the rest of the proposed improvements which have weathered the consultation are as follows:

  • the Government will amend the TUPE Regulations to allow renegotiation of terms derived from collective agreements one year after the transfer, even though the reason for seeking to change them is the transfer, provided that overall the change is no less favourable to the employee
  • the Government will amend TUPE to provide expressly for a static approach to the transfer of terms derived from collective agreements
  • the Government will amend TUPE so that changes in the location of the workforce following a transfer can be within the scope of economic, technical or organisational reasons entailing changes in the workforce, thereby preventing genuine place of work redundancies from being automatically unfair
  • the Government will amend Regulation 4 (restriction on changes to terms) and Regulation 7 (protection against dismissal) to bring them closer to the language of the Acquired Rights Directive, namely by the removal of the word connected so that variations to the contract of employment are only void, and dismissals only automatically unfair, if by reason of the transfer itself
  • the Government will make an amendment to reflect the approach set out in the case law, namely that for there to be a TUPE service provision change, the activities carried on after the change in service provision must be "fundamentally or essentially the same" as those carried on before it
  • the Government will amend the Trade Union and Labour Relations (Consolidation) Act 1992 to make it clear in statute that consultation which begins pre-transfer can count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee can agree and where the transferee has carried out meaningful consultation
  • the Government will improve the TUPE process for micro businesses (10 or fewer employees) by allowing such businesses to inform and consult directly affected employees when there is no recognised independent union, nor any existing appropriate representatives
  • the Government will retain the rules about employee liability information and extend the time before the transfer when it must be given to the transferee to 28 days
  • the Government will work to improve TUPE Guidance.

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